HHS awarded $14M for computing infrastructure, data processing, and web hosting to Global Net Services, Inc

Contract Overview

Contract Amount: $13,954,096 ($14.0M)

Contractor: Global NET Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2004-02-06

End Date: 2010-09-10

Contract Duration: 2,408 days

Daily Burn Rate: $5.8K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: FURLS

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20857

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $14.0 million to GLOBAL NET SERVICES, INC. for work described as: FURLS Key points: 1. The contract value of $13.95 million over approximately 200 months represents a significant investment in essential IT services. 2. Competition dynamics for this contract are not fully detailed, but the 'COMPETITIVE DELIVERY ORDER' designation suggests some level of bidding. 3. The long duration of the contract (over 200 months) could introduce risks related to technological obsolescence and price escalation. 4. Performance context is limited without specific metrics, but the services provided are critical for FDA operations. 5. This contract falls within the broader IT services sector, specifically focusing on data processing and hosting. 6. The firm fixed-price contract type aims to provide cost certainty for the government. 7. The contract was awarded to Global Net Services, Inc., a single entity, highlighting the importance of specialized providers in this domain.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service level agreements or comparable contract data. The firm fixed-price nature suggests an attempt to control costs, but the extended duration could lead to inefficiencies if technology or market rates shift significantly. The total award amount of $13.95 million spread over 200 months averages to approximately $69,770 per month, which needs to be evaluated against the specific services rendered and the scale of operations supported.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract is designated as a 'COMPETITIVE DELIVERY ORDER,' indicating that while competition was involved, it may not have been a full and open solicitation. The presence of '2' bidders suggests a limited competitive landscape for this specific delivery order. This level of competition might not yield the most aggressive pricing compared to a broader, more open competition, potentially impacting price discovery.

Taxpayer Impact: A limited number of bidders means taxpayers may not have benefited from the lowest possible prices achievable through a wider bidding process.

Public Impact

The Food and Drug Administration (FDA) benefits directly from these services, ensuring the availability of critical IT infrastructure. Services include computing infrastructure, data processing, and web hosting, essential for the FDA's regulatory and scientific functions. The geographic impact is primarily within the operational scope of the FDA, likely supporting its Maryland-based facilities and remote users. Workforce implications are indirect, supporting the IT personnel who manage and utilize these outsourced services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (2008-2010, over 2 years) increases risk of technology obsolescence.
Limited competition (2 bidders) may have resulted in higher costs for taxpayers.
Firm Fixed Price contract with a long duration could lead to vendor lock-in or difficulty adapting to changing needs.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a single vendor streamlines management and accountability for these specific services.
Services provided are critical for the operational continuity of the FDA.

Sector Analysis

This contract falls under the Information Technology (IT) sector, specifically within the sub-sector of computing infrastructure, data processing, and web hosting services. This is a mature market with numerous providers, ranging from large cloud service providers to specialized IT firms. Government spending in this area is substantial, driven by the need for secure, reliable, and scalable IT solutions to support agency operations. Comparable spending benchmarks would typically involve analyzing the monthly or annual costs of similar hosting and data processing contracts across federal agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract appears minimal, with opportunities likely concentrated among larger IT service providers.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services' procurement and program management offices, with potential involvement from the FDA's own oversight bodies. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is generally facilitated through contract databases like FPDS, though detailed performance reports are often internal.

Related Government Programs

IT Infrastructure Services
Data Center Operations
Cloud Computing Services
Web Hosting Services
Information Technology Support Services

Risk Flags

Long contract duration may lead to technological obsolescence.
Limited competition could result in suboptimal pricing.
Potential for price misalignment due to fixed price over extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $14.0 million to GLOBAL NET SERVICES, INC.. FURLS

Who is the contractor on this award?

The obligated recipient is GLOBAL NET SERVICES, 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 $14.0 million.

What is the period of performance?

Start: 2004-02-06. End: 2010-09-10.

What was the specific nature of the 'COMPETITIVE DELIVERY ORDER' and how did the limited number of bidders impact the final pricing?

A 'Competitive Delivery Order' implies that the order was competed among multiple vendors, but likely within an existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract or a pre-qualified list, rather than a full and open solicitation. The fact that only two bidders participated suggests a niche service or a specific set of requirements that narrowed the field of potential contractors. While competition occurred, having only two bidders typically results in less aggressive pricing compared to solicitations attracting five or more qualified offers. This limited competition could mean that the government paid a premium, as the winning contractor faced less pressure to offer the absolute lowest price to secure the award. Without access to the bid proposals and the government's cost analysis, it's difficult to quantify the exact price impact, but it's reasonable to infer that a broader competition might have yielded savings for taxpayers.

How does the firm fixed-price contract type align with the long duration of this IT services contract?

A Firm Fixed Price (FFP) contract is generally preferred by the government as it shifts the risk of cost overruns to the contractor, providing budget certainty. However, applying an FFP to a very long-duration contract (over 200 months in this case) for IT services presents inherent challenges. Technology evolves rapidly in the IT sector, and market prices for services like computing infrastructure and web hosting can fluctuate significantly over such an extended period. If the initial fixed price was set too high to account for potential future cost increases or technological shifts, the government might overpay. Conversely, if the price was set too low, the contractor might struggle to deliver services profitably without compromising quality or seeking modifications. The long duration increases the risk that the FFP becomes misaligned with current market conditions and technological capabilities, potentially leading to either overpayment or underperformance.

What are the potential risks associated with the extended contract duration of over 200 months for IT infrastructure services?

The primary risk associated with a contract duration exceeding 200 months (over 16 years) for IT infrastructure services is technological obsolescence. The IT landscape changes at an exponential pace; hardware, software, and service delivery models that are cutting-edge at the start of the contract can be outdated or inefficient by its end. This could force the government to operate with suboptimal technology, incur additional costs for workarounds, or face security vulnerabilities. Another significant risk is price escalation. While the contract is firm fixed-price, the initial pricing might not accurately reflect future market rates, potentially leading to the government paying above-market prices as the contract progresses. Furthermore, long-term contracts can lead to vendor lock-in, making it difficult and costly to switch providers even if better or more cost-effective solutions become available. Finally, maintaining consistent service quality and performance over such a long period can be challenging for both the contractor and the government oversight team.

Can we assess the value for money provided by Global Net Services, Inc. based on the available data?

Assessing the value for money for this contract is difficult with the provided data. The total award of $13.95 million over approximately 200 months averages to roughly $70,000 per month. This figure needs to be contextualized against the specific services rendered, the scale of operations supported (e.g., number of users, data volume, uptime requirements), and the prevailing market rates for comparable services during the contract period (2008-2010). The firm fixed-price nature suggests an attempt to control costs, and the competitive delivery order indicates some level of market vetting. However, without detailed performance metrics, service level agreements, and comparative pricing data from similar contracts awarded around the same time, a definitive judgment on value for money cannot be made. The long duration also introduces uncertainty regarding whether the price remained competitive throughout the contract's life.

What is the typical track record of contractors providing computing infrastructure and data processing services to the federal government?

Contractors in the computing infrastructure, data processing, and web hosting space serving the federal government vary widely in size and track record. Large, established companies like IBM, Dell, HP, and major cloud providers (AWS, Azure, Google Cloud) often hold significant portions of this market, bringing extensive experience, robust security protocols, and economies of scale. However, numerous mid-sized and smaller specialized firms also compete, often focusing on niche services or specific agency needs. Success for these contractors typically hinges on their ability to meet stringent federal security requirements (e.g., FedRAMP), provide reliable and scalable services, offer competitive pricing, and demonstrate a strong understanding of government procurement processes. A positive track record often includes consistent performance, successful contract renewals, positive past performance reviews, and adherence to compliance standards. Conversely, negative track records can involve service disruptions, security breaches, cost overruns, or failure to meet performance metrics.

How does spending on computing infrastructure and data processing services compare across federal agencies?

Spending on computing infrastructure, data processing, and web hosting services is a substantial and consistent expenditure across virtually all federal agencies, reflecting the increasing reliance on digital operations. Agencies like the Department of Defense (DoD), Department of Homeland Security (DHS), and the General Services Administration (GSA) are typically among the largest spenders due to their vast IT footprints and complex mission requirements. However, even smaller agencies dedicate significant portions of their budgets to these services to support essential functions, data storage, application hosting, and citizen-facing portals. Spending patterns can be influenced by factors such as agency size, the nature of its mission (e.g., research-intensive vs. administrative), the age of its IT infrastructure, and its adoption rate of cloud technologies. Benchmarking requires careful consideration of the scope and scale of services provided, as direct comparisons can be misleading without accounting for these variables.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11820 PARKLAWN DR STE 310, ROCKVILLE, MD, 08

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $132,875,042

Exercised Options: $59,885,449

Current Obligation: $13,954,096

Parent Contract

Parent Award PIID: GS35F0241L

IDV Type: FSS

Timeline