HHS Awards $165M for IT Services to CGI Federal, Raising Competition Concerns
Contract Overview
Contract Amount: $16,552,811 ($16.6M)
Contractor: CGI Federal Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2004-09-01
End Date: 2009-08-31
Contract Duration: 1,825 days
Daily Burn Rate: $9.1K/day
Competition Type: NON-COMPETITIVE DELIVERY ORDER
Number of Offers Received: 1
Pricing Type: TIME AND MATERIALS
Sector: IT
Official Description: AUTOMATED INFORMATION SYSTEMS SVCS
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033
State: Virginia Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $16.6 million to CGI FEDERAL INC. for work described as: AUTOMATED INFORMATION SYSTEMS SVCS Key points: 1. Significant contract value of $165.5 million over five years. 2. Sole-source award to CGI Federal Inc. limits competitive pricing. 3. Potential for inflated costs due to lack of competition. 4. IT services sector is highly competitive, making non-competitive awards notable.
Value Assessment
Rating: questionable
The contract's Time and Materials (T&M) pricing structure, combined with a non-competitive award, raises concerns about cost control. Benchmarking against similar IT service contracts is difficult without competitive data, but T&M can often lead to higher costs than fixed-price arrangements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This was a non-competitive delivery order, meaning CGI Federal Inc. was the only vendor considered. This lack of competition likely prevented the government from obtaining the best possible pricing through a competitive bidding process.
Taxpayer Impact: Taxpayers may have paid a premium for these IT services due to the absence of competitive pressure to lower costs.
Public Impact
Citizens rely on CMS for essential healthcare services, making the efficiency and cost-effectiveness of IT support critical. The large contract value suggests a significant impact on the federal IT services market. Lack of transparency in pricing due to sole-source award can erode public trust.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Non-competitive award
- Time and Materials pricing
- Lack of small business participation
Positive Signals
- Long-term contract provides stability for essential services
Sector Analysis
This contract falls under IT services, specifically 'Other Computer Related Services.' The federal IT services market is vast and competitive, with numerous vendors capable of providing such support. Benchmarks for similar services vary widely based on complexity and scope.
Small Business Impact
The data indicates that small businesses were not involved in this contract (sb: false). This represents a missed opportunity to support small business growth within the federal contracting landscape.
Oversight & Accountability
The non-competitive nature of this award warrants scrutiny from oversight bodies to ensure the government received fair value and that such awards are justified exceptions rather than the norm.
Related Government Programs
- Other Computer Related Services
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Lack of competition
- Potential for cost overruns (T&M)
- No small business participation
- Limited transparency in pricing
Tags
other-computer-related-services, department-of-health-and-human-services, va, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $16.6 million to CGI FEDERAL INC.. AUTOMATED INFORMATION SYSTEMS SVCS
Who is the contractor on this award?
The obligated recipient is CGI FEDERAL INC..
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).
What is the total obligated amount?
The obligated amount is $16.6 million.
What is the period of performance?
Start: 2004-09-01. End: 2009-08-31.
What was the justification for awarding this contract on a non-competitive basis, given the competitive nature of the IT services market?
The justification for a non-competitive award typically stems from specific circumstances such as urgent needs, unique capabilities of a single vendor, or follow-on work where only one vendor can provide the required services. Without explicit documentation, it's presumed that CMS had a rationale, but the lack of competition inherently limits the government's ability to validate the necessity and cost-effectiveness against alternatives.
How does the Time and Materials pricing structure compare to fixed-price contracts for similar IT services in terms of overall cost to the government?
Time and Materials (T&M) contracts generally carry a higher risk of cost overruns for the government compared to fixed-price contracts. While T&M offers flexibility, it lacks the cost certainty of fixed-price agreements. In a competitive environment, fixed-price contracts often drive efficiency and cost savings. The absence of competition here exacerbates the potential for higher overall costs under the T&M structure.
What measures were in place to ensure the quality and effectiveness of the IT services provided by CGI Federal under this contract?
While the contract details don't specify quality assurance measures, government contracts typically include performance standards, service level agreements (SLAs), and inspection clauses. The Centers for Medicare and Medicaid Services (CMS) would be responsible for monitoring CGI Federal's performance against these requirements throughout the contract's duration to ensure the effectiveness of the automated information systems services.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: NON-COMPETITIVE DELIVERY ORDER
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Parent Company: Groupe CGI Inc (UEI: 246801237)
Address: 12601 FAIR LAKES CIRCLE, FAIRFAX, VA, 11
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $17,331,583
Exercised Options: $16,552,811
Current Obligation: $16,552,811
Parent Contract
Parent Award PIID: GS35F4797H
IDV Type: FSS
Timeline
Start Date: 2004-09-01
Current End Date: 2009-08-31
Potential End Date: 2009-08-31 00:00:00
Last Modified: 2010-03-13
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