HHS awards $21.4M for PC refresh, with Lenovo securing the contract

Contract Overview

Contract Amount: $21,413,108 ($21.4M)

Contractor: Lenovo (united States) Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2007-07-09

End Date: 2010-09-30

Contract Duration: 1,179 days

Daily Burn Rate: $18.2K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PC REFRESH LAPTOP COMPUTERS AND PERIPHERALS

Place of Performance

Location: MORRISVILLE, WAKE County, NORTH CAROLINA, 27560, UNITED STATES OF AMERICA

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $21.4 million to LENOVO (UNITED STATES) INC. for work described as: PC REFRESH LAPTOP COMPUTERS AND PERIPHERALS Key points: 1. Value for money appears reasonable given the scope of IT hardware and peripherals. 2. Competition dynamics indicate a competitive award, potentially driving favorable pricing. 3. Risk indicators are low, with a firm-fixed-price contract and established vendor. 4. Performance context suggests a standard IT refresh cycle for agency operations. 5. Sector positioning is within the broader IT hardware and services market.

Value Assessment

Rating: good

The contract value of $21.4 million for PC refresh and peripherals over approximately three years appears to be within a reasonable range for a federal agency of this size. Benchmarking against similar large-scale IT hardware procurements suggests that the pricing is likely competitive, especially considering the inclusion of peripherals and potential maintenance. The firm-fixed-price structure further supports value by capping costs for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that multiple vendors had the opportunity to bid. The presence of four bidders suggests a healthy level of competition for this requirement. A competitive process generally leads to better price discovery and ensures that the government receives the most advantageous terms and conditions available in the market.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers, as it likely resulted in lower prices than a sole-source or limited competition procurement would have yielded.

Public Impact

Federal employees within the Food and Drug Administration will benefit from updated computing equipment. The services delivered include the provision of laptop computers and associated peripherals. The geographic impact is primarily within the operational locations of the FDA. Workforce implications include improved productivity and efficiency for agency staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded to a well-established vendor (Lenovo) with a track record in government contracting.
Firm-fixed-price contract type mitigates cost overrun risks.
Competitive award process suggests potential for good value.
Contract duration aligns with typical IT refresh cycles.

Sector Analysis

This contract falls within the Information Technology sector, specifically IT hardware procurement and maintenance. The market for enterprise-level computer hardware is dominated by a few large manufacturers, with significant competition often occurring through government-wide acquisition contracts (GWACs) or other competitive solicitations. The total federal spending on IT hardware is in the billions annually, making this a relatively small but essential component of overall IT infrastructure.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large manufacturer like Lenovo suggests that the primary focus was on meeting the agency's hardware needs through established channels, rather than specifically promoting small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Food and Drug Administration's contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price contract type, requiring the vendor to deliver specified goods. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not always be publicly available.

Related Government Programs

IT Hardware Procurement
Computer Equipment
End-User Devices
Federal IT Modernization

Risk Flags

Potential for vendor lock-in on future support or upgrades.
Risk of technology obsolescence if refresh cycle is misaligned with rapid advancements.
Dependence on a single vendor for a large quantity of critical hardware.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $21.4 million to LENOVO (UNITED STATES) INC.. PC REFRESH LAPTOP COMPUTERS AND PERIPHERALS

Who is the contractor on this award?

The obligated recipient is LENOVO (UNITED STATES) INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Food and Drug Administration).

What is the total obligated amount?

The obligated amount is $21.4 million.

What is the period of performance?

Start: 2007-07-09. End: 2010-09-30.

What is Lenovo's track record with federal IT hardware contracts?

Lenovo (United States) Inc. has a significant track record of supplying IT hardware, including laptops and desktops, to various U.S. federal agencies. They frequently secure contracts through competitive bidding processes, often leveraging government-wide acquisition contracts (GWACs) or direct solicitations. Their awards typically involve large quantities of devices for agency-wide refreshes and deployments. Historical data indicates they are a consistent and major player in the federal IT hardware market, competing with other established vendors like Dell and HP. Their ability to win these contracts suggests a strong understanding of federal procurement requirements, competitive pricing strategies, and reliable product delivery.

How does the per-unit cost of these laptops compare to market rates or similar federal contracts?

Without specific details on the exact models and configurations of the laptops and peripherals purchased under this $21.4 million contract, a precise per-unit cost comparison is challenging. However, given the competitive nature of the award and the volume typically associated with such a contract, the per-unit cost is likely to be competitive within the federal market. Federal agencies often negotiate favorable pricing through bulk purchasing and established vendor relationships. To perform a detailed benchmark, one would need to compare the specific product SKUs and quantities against publicly available pricing from other federal contracts (e.g., through GSA schedules or other GWACs) or against commercial enterprise pricing for similar configurations, factoring in any government-specific discounts or support agreements.

What are the primary risks associated with this type of IT hardware refresh contract?

The primary risks associated with IT hardware refresh contracts include potential delays in delivery, issues with product quality or compatibility, and the risk of obsolescence if the refresh cycle is too long or if technology rapidly advances. For the government, there's also the risk of vendor lock-in if support or future upgrades are not well-defined. However, this specific contract appears to mitigate some of these risks. The firm-fixed-price structure caps financial exposure. Awarding to a major vendor like Lenovo suggests a lower risk of delivery failure or significant quality issues. The contract duration (approximately three years) is also typical for laptop refreshes, balancing cost with the need for reasonably current technology.

How effective is a competitive delivery order process for ensuring value in IT hardware procurement?

A competitive delivery order process, as used in this contract, is generally effective for ensuring value in IT hardware procurement. It allows multiple vendors to bid on a specific requirement, fostering price competition and encouraging vendors to offer their best terms. This process typically leads to lower prices and better quality products compared to non-competitive methods. The 'full-and-open' competition aspect ensures a broad range of potential suppliers can participate, maximizing the chances of finding the most cost-effective solution. The effectiveness is further enhanced when agencies clearly define their requirements and evaluation criteria, ensuring that the lowest price technically acceptable or best value determination is truly aligned with the government's needs.

What is the historical spending trend for PC refresh contracts at the FDA or similar agencies?

Historical spending on PC refresh contracts at agencies like the FDA typically follows a cyclical pattern tied to the lifespan of computer hardware, usually every 3-5 years. Spending can fluctuate based on agency budget allocations, technological advancements, and specific modernization initiatives. Agencies often consolidate their PC procurement through larger contracts or GWACs to achieve economies of scale and streamline the process. Analyzing past FDA IT hardware spending would reveal trends in contract values, vendor choices, and the frequency of these refresh cycles. Significant increases in spending might indicate a push for modernization or expansion, while decreases could suggest budget constraints or a shift in IT strategy.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Computer and Office Machine Repair and Maintenance

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: FDASOL0700274

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1009 THINK PLACE, MORRISVILLE, NC, 27560

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,413,108

Exercised Options: $21,413,108

Current Obligation: $21,413,108

Parent Contract

Parent Award PIID: GS35F0592S

IDV Type: FSS

Timeline