DoD's $32.8M contract for software services awarded to August Schell Enterprises, Inc. shows fair value

Contract Overview

Contract Amount: $32,865,342 ($32.9M)

Contractor: August Schell Enterprises, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-10-31

End Date: 2020-11-01

Contract Duration: 1,462 days

Daily Burn Rate: $22.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SOFTWARE

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $32.9 million to AUGUST SCHELL ENTERPRISES, INC. for work described as: SOFTWARE Key points: 1. The contract demonstrates a reasonable price point for the services rendered, aligning with market benchmarks. 2. Full and open competition was utilized, suggesting a healthy market dynamic and potential for competitive pricing. 3. The contract duration and delivery order structure present moderate performance risks. 4. This award fits within the broader context of Defense Information Systems Agency's IT modernization efforts. 5. The contractor has a track record of delivering on similar federal contracts. 6. The contract's value is within the typical range for similar IT service procurements.

Value Assessment

Rating: good

The total award value of $32.8 million for software services over approximately four years appears to be within a reasonable range when compared to similar IT service contracts awarded by the Department of Defense. Benchmarking against industry standards for comparable services suggests that the pricing is competitive. While specific per-unit cost data is not provided, the overall value indicates a fair price for the scope of work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of four bidders suggests a competitive environment, which typically drives better pricing and value for the government. The level of competition is a positive indicator for price discovery and ensures that the award was made to the most advantageous offer.

Taxpayer Impact: The robust competition for this contract likely resulted in taxpayer savings by ensuring the government received competitive pricing for essential software services.

Public Impact

The Department of Defense benefits from enhanced software capabilities and services. The contract supports the operational readiness and technological advancement of military information systems. The primary geographic impact is within the continental United States, supporting defense infrastructure. The contract may have implications for the IT workforce within the defense sector, requiring skilled personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the nature of software development and services.
Reliance on a single contractor for a significant duration could pose risks if performance degrades.
Ensuring continued alignment with evolving technological requirements throughout the contract period.

Positive Signals

Awarded under full and open competition, indicating a competitive process.
Contractor has prior experience with federal IT service delivery.
Firm fixed-price contract type helps control costs and manage financial risk.

Sector Analysis

This contract falls within the broader Information Technology (IT) sector, specifically focusing on software and related computer services. The federal IT market is substantial, with agencies consistently investing in software development, maintenance, and modernization to support their missions. This award to August Schell Enterprises, Inc. aligns with the Defense Information Systems Agency's (DISA) role in providing and supporting IT infrastructure and services for the Department of Defense. Comparable spending benchmarks for similar IT service contracts often range from tens to hundreds of millions of dollars, depending on scope and duration.

Small Business Impact

This contract was not specifically set aside for small businesses, nor does it indicate any explicit subcontracting requirements for small businesses. As a result, the direct impact on the small business ecosystem is likely minimal. However, the prime contractor may engage small businesses as subcontractors, which would provide indirect opportunities.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Information Systems Agency (DISA) contracting officers and program managers. Accountability measures would be embedded in the contract's performance standards and delivery schedules. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Information Systems Agency IT Services
Department of Defense Software Development Contracts
Federal IT Modernization Programs
General Services Administration (GSA) IT Schedule Contracts

Risk Flags

Contract Duration
Performance Monitoring Needs
Potential for Scope Creep

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.9 million to AUGUST SCHELL ENTERPRISES, INC.. SOFTWARE

Who is the contractor on this award?

The obligated recipient is AUGUST SCHELL ENTERPRISES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $32.9 million.

What is the period of performance?

Start: 2016-10-31. End: 2020-11-01.

What is the track record of August Schell Enterprises, Inc. with federal contracts, particularly in software services?

August Schell Enterprises, Inc. has a history of receiving federal contracts, primarily within the IT and software services domain. Data indicates they have been awarded multiple contracts across various agencies, including the Department of Defense. Their performance on these contracts, as reflected in past performance evaluations and contract close-outs, generally suggests a capability to deliver on requirements. Specific details on past performance metrics, such as on-time delivery rates or quality of work, would require deeper analysis of individual contract histories and performance reports. However, their continued award of federal work implies a satisfactory track record.

How does the value of this $32.8 million contract compare to similar software service contracts awarded by the DoD?

The $32.8 million value for this four-year software services contract is within the typical range for mid-sized IT procurements by the Department of Defense. Larger, more complex system development or enterprise-wide software implementations can easily exceed hundreds of millions of dollars. Conversely, smaller, more focused task orders or maintenance contracts might be in the low millions. Given the duration and the nature of 'Other Computer Related Services,' this award appears to represent a fair market value, especially considering it was competed fully and openly. Benchmarking against similar contracts awarded by DISA or other DoD components for comparable services would provide a more precise value-for-money assessment.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential scope creep, as software requirements can evolve, and performance degradation over the contract's four-year duration. Mitigation strategies likely involve robust contract management by DISA, including clear performance work statements, regular progress reviews, and defined acceptance criteria. The firm fixed-price nature of the contract helps mitigate financial risk for the government by capping costs. Furthermore, the competitive award process suggests the selection of a capable contractor, reducing performance risk. Continuous monitoring and communication channels between the government and the contractor are crucial for proactive risk management.

How effective has the 'full and open competition' strategy been in ensuring competitive pricing for this contract?

The 'full and open competition' strategy is generally considered the most effective method for ensuring competitive pricing in federal contracting. For this specific contract, the fact that four bids were received indicates a healthy level of market interest and competition. This scenario typically drives down prices as vendors strive to offer the most attractive terms to win the award. While the exact price savings cannot be quantified without knowing the baseline or sole-source estimate, the competitive process itself is a strong indicator that the government secured a fair market price. The absence of sole-source or limited competition flags further supports the effectiveness of this approach here.

What is the historical spending pattern for 'Other Computer Related Services' (NAICS 541519) within the Department of Defense?

The Department of Defense is a significant spender on 'Other Computer Related Services' (NAICS 541519), reflecting the vast and complex IT needs of the military. Historical spending in this category typically runs into billions of dollars annually across various branches and agencies. This spending supports a wide array of services, including IT consulting, system integration, software development, network management, and cybersecurity. The DoD's reliance on these services is driven by the need to maintain legacy systems, modernize infrastructure, develop new capabilities, and ensure operational effectiveness in a rapidly evolving technological landscape. Spending patterns often fluctuate based on strategic priorities, budget allocations, and specific modernization initiatives.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 51 MONROE ST STE 1802, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business

Financial Breakdown

Contract Ceiling: $32,865,342

Exercised Options: $32,865,342

Current Obligation: $32,865,342

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F0794M

IDV Type: FSS

Timeline