HHS awarded $45M for IT services to General Dynamics, a cost-plus contract with 6 bidders

Contract Overview

Contract Amount: $45,030,409 ($45.0M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-09-30

End Date: 2017-03-29

Contract Duration: 2,737 days

Daily Burn Rate: $16.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TAS::75 0119 000::TAS HCQIS PHASE 3: AD HOC REPORTS, ANALYTICS&DATA MANAGEMENT

Place of Performance

Location: WARRENTON, FAUQUIER County, VIRGINIA, 20187

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $45.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TAS::75 0119 000::TAS HCQIS PHASE 3: AD HOC REPORTS, ANALYTICS&DATA MANAGEMENT Key points: 1. The contract utilized a cost-plus award fee structure, which can incentivize performance but requires robust oversight to manage costs. 2. With 6 bidders, the competition level suggests a moderately competitive market for these specialized IT services. 3. The contract duration of over 7 years indicates a long-term need for these services within CMS. 4. The 'Other Computer Related Services' NAICS code points to a broad scope of IT support. 5. The contract was awarded after exclusion of sources, suggesting a specific justification for limiting initial competition. 6. The total award value of $45M over the contract's life needs to be benchmarked against similar long-term IT support contracts.

Value Assessment

Rating: fair

The contract's cost-plus award fee structure means the final price is not fixed upfront and depends on performance. While this can drive desired outcomes, it necessitates careful monitoring of costs and performance metrics to ensure value for money. Benchmarking this $45M award against similar long-term, broad IT support contracts for federal health agencies would provide a clearer picture of its cost-effectiveness. Without specific performance data or detailed cost breakdowns, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were excluded from the outset. With 6 bidders, there was a reasonable level of competition, but the exclusion of sources might have limited the full breadth of potential bidders. This suggests a specific rationale for the exclusion, which could be related to specialized capabilities or prior performance, but it also means the government may not have received the absolute lowest price achievable in a completely open market.

Taxpayer Impact: The exclusion of sources, even with 6 bidders, means taxpayers may not have benefited from the widest possible competitive pressure to drive down costs. The final price is influenced by the specific pool of eligible bidders.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially healthcare providers and beneficiaries who rely on the data and systems supported by these IT services. Services delivered encompass ad hoc reports, analytics, and data management, crucial for the operation and oversight of Medicare and Medicaid programs. The geographic impact is primarily national, supporting federal health programs administered by CMS. Workforce implications include the employment of IT professionals by General Dynamics Information Technology, Inc. to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts require diligent oversight to prevent cost overruns and ensure performance aligns with award criteria.
The 'after exclusion of sources' clause warrants scrutiny to understand the justification for limiting the competitive pool.
The long contract duration (over 7 years) increases the risk of scope creep or evolving technological needs not being fully addressed without contract modifications.

Positive Signals

The presence of 6 bidders indicates a healthy interest and capability in the market for these services.
The award to a large, established IT contractor like General Dynamics suggests a focus on reliability and proven experience.
The contract's focus on data management and analytics supports critical functions of CMS, indicating alignment with agency mission.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on IT services, data management, and analytics. The federal IT services market is substantial, with agencies consistently investing in maintaining and upgrading their systems. Comparable spending benchmarks would involve looking at other large, long-term IT support contracts awarded by agencies like HHS or other health-focused federal entities. The NAICS code 541519 ('Other Computer Related Services') covers a wide array of IT support functions, making direct comparisons dependent on the specific nature of the services provided.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor is General Dynamics Information Technology, Inc., a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific prime contract is likely minimal, unless General Dynamics has its own internal small business subcontracting goals that are not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS), a component of HHS. As a cost-plus award fee contract, CMS would be responsible for monitoring contractor performance against defined award criteria and managing incurred costs. Transparency would be facilitated through contract reporting requirements. The Inspector General for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

CMS Health Information Technology Programs
Federal Health Data Analytics Initiatives
HHS IT Modernization Efforts
Medicare and Medicaid IT Infrastructure Support

Risk Flags

Cost-plus contract type requires diligent oversight.
Exclusion of sources may limit competitive pricing.
Long contract duration poses risks of technological obsolescence and requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $45.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TAS::75 0119 000::TAS HCQIS PHASE 3: AD HOC REPORTS, ANALYTICS&DATA MANAGEMENT

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $45.0 million.

What is the period of performance?

Start: 2009-09-30. End: 2017-03-29.

What was the specific justification for excluding certain sources in the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award?

The justification for excluding sources in a 'Full and Open Competition After Exclusion of Sources' award typically stems from specific requirements that only a limited number of contractors can meet, or from a need to leverage unique capabilities or past performance. For this HHS contract, the exclusion might have been based on the need for specialized expertise in healthcare data analytics and management, or perhaps prior successful performance on similar CMS systems. Agencies must document these justifications to ensure fair and transparent procurement practices, even when not all potential bidders are included. Without access to the specific contract file or justification documentation, the precise reasons remain unconfirmed, but common drivers include technical requirements, security clearances, or intellectual property considerations.

How does the 'Cost Plus Award Fee' (CPAF) structure compare to other contract types in terms of cost control and performance incentives for IT services?

Cost Plus Award Fee (CPAF) contracts are designed to incentivize contractor performance by allowing for a base fee plus an additional award fee based on meeting or exceeding specific performance objectives. This differs from fixed-price contracts, where the contractor bears more risk for cost overruns but has less flexibility to adapt to changing requirements. Compared to Cost Plus Incentive Fee (CPIF), CPAF places more discretion in the government's hands regarding the award fee determination. For IT services, CPAF can be effective when requirements are complex or evolving, as it allows for flexibility while still encouraging high performance. However, it requires robust government oversight to define clear performance metrics and to objectively assess the contractor's achievements to ensure fair and appropriate award fee payouts, thereby controlling overall costs.

What is the typical annual spending for 'Other Computer Related Services' (NAICS 541519) within the federal government, and how does this contract's value compare?

Federal spending on 'Other Computer Related Services' (NAICS 541519) can vary significantly year over year and across agencies, but it generally represents a substantial portion of the government's IT budget. This category encompasses a broad range of services beyond standard software development or IT infrastructure management, including IT consulting, data analytics support, and specialized system integration. While precise annual aggregate figures fluctuate, agencies like HHS, DoD, and DHS are major spenders in this category. The $45 million award over approximately 7.5 years for this specific contract translates to an average annual value of roughly $6 million. This figure needs to be contextualized against the total federal spending for NAICS 541519 and similar IT support services to determine if it represents a typical, high, or low investment for the scope of work.

What are the potential risks associated with a contract duration of over 7 years for IT services?

A contract duration exceeding 7 years for IT services carries several potential risks. Firstly, technology evolves rapidly; a system or service defined at the outset may become outdated or inefficient by the end of such a long term, requiring costly modifications or replacements. Secondly, requirements can change significantly over time due to shifts in agency mission, policy, or user needs. Adapting a long-term contract to these changes can be complex and may lead to scope creep or disputes. Thirdly, long-term reliance on a single contractor can reduce flexibility and potentially lead to complacency or a lack of innovation. Finally, market conditions and pricing can change, meaning the initial pricing structure might not remain competitive throughout the contract's life, potentially leading to overpayment if not managed carefully.

Given the contractor is General Dynamics Information Technology, Inc., what is their general track record with federal IT contracts, particularly with HHS?

General Dynamics Information Technology, Inc. (GDIT) is a major federal IT contractor with a long history of serving various government agencies, including the Department of Health and Human Services (HHS). They have a broad portfolio encompassing IT infrastructure, cybersecurity, cloud services, data analytics, and health IT solutions. GDIT has held numerous significant contracts with HHS and its components, such as CMS and NIH, supporting critical health missions. Their track record generally includes experience with large-scale, complex IT programs. However, like any large contractor, they have also faced scrutiny and contract challenges on specific awards. A comprehensive assessment would require reviewing their performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) and any publicly available information on contract disputes or successes relevant to HHS.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 6799 KENNEDY RD STE J, WARRENTON, VA, 20187

Business Categories: 8(a) Program Participant, Category Business, Hispanic American Owned Business, Minority Owned Business, Small Business, Small Disadvantaged Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $45,058,150

Exercised Options: $45,030,409

Current Obligation: $45,030,409

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline