HHS awards $542.8M contract for IT systems design, with General Dynamics Information Technology as prime

Contract Overview

Contract Amount: $542,812,602 ($542.8M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2016-11-18

End Date: 2024-05-31

Contract Duration: 2,751 days

Daily Burn Rate: $197.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $542.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IGF::OT::IGF Key points: 1. Contract value of over half a billion dollars indicates a significant investment in IT infrastructure. 2. The full and open competition suggests a robust market for these services, potentially leading to competitive pricing. 3. A long contract duration of over 2700 days warrants close monitoring for performance and cost overruns. 4. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risk of cost escalation if not managed tightly. 5. This contract falls within the Computer Systems Design Services NAICS code, a common area for federal IT spending. 6. The award to a single prime contractor, General Dynamics Information Technology, highlights their significant role in federal IT. 7. The contract's primary focus on IT systems design implies a need for specialized technical expertise.

Value Assessment

Rating: fair

Benchmarking the value of this $542.8 million contract is challenging without specific deliverables and performance metrics. However, the Cost Plus Fixed Fee (CPFF) structure, while common for complex IT projects, can lead to higher costs compared to fixed-price contracts if not meticulously managed. The contract's long duration also increases the potential for cost creep. Comparing it to similar large-scale IT system design contracts within HHS or other agencies would provide a better understanding of its cost-effectiveness, but such data is not readily available in this summary.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This approach is generally favored as it promotes a wider range of solutions and can drive down prices through competitive pressure. The fact that it was competed openly suggests that the government sought the best value from the market. The number of bids received would further clarify the level of competition, but is not provided here.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and access to a broader range of innovative solutions. This method ensures that government funds are used more efficiently by leveraging market forces to achieve the best possible outcome.

Public Impact

Beneficiaries include federal agencies relying on the designed IT systems, likely within the Department of Health and Human Services. Services delivered encompass computer systems design, crucial for modernizing and maintaining government IT infrastructure. The geographic impact is likely national, supporting federal operations across various locations. Workforce implications include the creation of jobs for IT professionals, system designers, and support staff, both within the prime contractor and potentially subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not closely monitored.
Long contract duration (2751 days) increases the risk of scope creep and potential inefficiencies over time.
Lack of specific performance metrics in the provided data makes it difficult to assess value for money definitively.
Reliance on a single prime contractor for a large sum necessitates strong oversight to ensure accountability.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process that could yield better value.
General Dynamics Information Technology is a large, established contractor with a significant federal presence, implying experience.
The contract addresses a critical need for IT systems design, essential for government operations.
The contract is for delivery orders, which can offer flexibility in acquiring services as needed.

Sector Analysis

This contract falls under the Information Technology sector, specifically within Computer Systems Design Services (NAICS 541512). This is a substantial market within the federal government, with agencies consistently investing in IT modernization, cybersecurity, and system development. Federal spending in this area often involves complex projects requiring specialized expertise. Comparable spending benchmarks would typically involve looking at other large-scale IT system development contracts awarded by agencies like HHS, DoD, or GSA, which often run into hundreds of millions of dollars.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no specific small business set-aside (ss) mentioned. This suggests that the contract was not specifically targeted towards small businesses, and opportunities for small business subcontracting may be limited or not mandated. Further analysis would be needed to determine if General Dynamics Information Technology has a subcontracting plan that includes small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its respective contracting officers and program managers. The Inspector General's office within HHS would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available. However, detailed oversight reports or specific accountability measures are not detailed in the provided data.

Related Government Programs

HHS IT Modernization Initiatives
Centers for Medicare and Medicaid Services (CMS) IT Contracts
Federal Civilian IT Services
General Dynamics IT Federal Contracts

Risk Flags

Long contract duration may lead to technology obsolescence.
CPFF contract type carries inherent cost overrun risk.
Lack of specific performance metrics hinders detailed value assessment.
Potential for scope creep over the extended performance period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $542.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IGF::OT::IGF

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 $542.8 million.

What is the period of performance?

Start: 2016-11-18. End: 2024-05-31.

What is the historical spending trend for Computer Systems Design Services (NAICS 541512) within the Department of Health and Human Services over the last five years?

Analyzing historical spending trends for NAICS 541512 within HHS requires access to detailed federal procurement data. Generally, federal IT spending, including systems design, has been substantial and often increasing as agencies modernize legacy systems and adopt new technologies. For HHS specifically, the Centers for Medicare and Medicaid Services (CMS) is a major driver of IT investment due to the complexity of healthcare programs. Trends would likely show a consistent demand for these services, with fluctuations based on specific program needs, budget appropriations, and strategic IT initiatives. Without direct access to historical data for this specific NAICS code within HHS, it's difficult to provide precise figures, but the overall federal IT landscape suggests sustained or growing expenditure in this area.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types in terms of cost efficiency for IT projects of this scale?

Cost Plus Fixed Fee (CPFF) contracts are often used for research and development or complex IT projects where the scope is not fully defined at the outset, allowing for flexibility. However, they carry a higher risk of cost overruns compared to fixed-price contracts because the contractor is reimbursed for actual costs plus a fixed fee. This means the government bears more of the financial risk. Fixed-price contracts, conversely, offer greater cost certainty for the government but can be less suitable for projects with high uncertainty. Incentive fee contracts aim to balance these by providing bonuses for exceeding targets or penalties for falling short. For IT projects of this scale, while CPFF allows for adaptation, rigorous oversight and clear performance metrics are crucial to mitigate cost escalation and ensure value for money.

What are the key performance indicators (KPIs) typically associated with Computer Systems Design Services contracts of this magnitude?

Key Performance Indicators (KPIs) for large Computer Systems Design Services contracts typically focus on project delivery, system performance, and user satisfaction. Common KPIs include adherence to project schedules and milestones, budget variance (ensuring costs stay within projections), system uptime and availability post-deployment, defect density (number of bugs found post-launch), security compliance (meeting all relevant security standards), and user adoption rates. For a contract of this scale ($542.8M), specific KPIs would be detailed in the Performance Work Statement (PWS) and would likely be tied to the successful design, development, and potentially implementation of complex IT systems. Meeting these KPIs is crucial for the contractor to receive full payment and for the government to realize the intended benefits of the system.

What is General Dynamics Information Technology's track record with similar large-scale federal IT system design contracts?

General Dynamics Information Technology (GDIT) has a substantial track record as a prime contractor for large-scale federal IT system design and support contracts across various agencies, including HHS, DoD, and others. They have been involved in major IT modernization efforts, cloud migrations, and the development of complex enterprise systems. Their history includes managing multi-billion dollar contracts, indicating experience with program management, technical execution, and navigating federal procurement regulations. While specific performance details for every contract are not publicly available, GDIT's continued success in winning large federal contracts suggests a generally positive performance history and capability in delivering complex IT solutions. However, like any large contractor, they may have faced challenges or criticisms on specific projects, which would require deeper investigation into individual contract performance reports.

How does the 'Delivery Order' (aw: DELIVERY ORDER) contract type affect the overall value and flexibility of this award?

The 'Delivery Order' designation indicates that this award is likely a task order or delivery order placed against a larger indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar multiple-award contract vehicle. This structure provides flexibility for the government, allowing them to order specific services or products as needed over the contract's period of performance, up to a certain ceiling amount. For the contractor, it means work is not guaranteed upfront but is awarded through individual orders. This approach is common for IT services where needs can evolve. The value of $542.8 million likely represents the total potential value across all anticipated delivery orders. This structure allows HHS to adapt to changing requirements and procure services efficiently without needing to re-compete for every individual need.

What are the potential risks associated with a contract duration of 2751 days (approximately 7.5 years)?

A contract duration of 2751 days presents several potential risks. Firstly, technology evolves rapidly; systems designed today might be outdated or require significant updates by the end of the contract period, leading to increased costs for modernization or rework. Secondly, long durations increase the likelihood of scope creep, where requirements expand beyond the original intent, often without commensurate adjustments to budget or schedule. Thirdly, maintaining consistent performance and contractor engagement over such an extended period can be challenging; key personnel may leave, institutional knowledge can be lost, and contractor focus might wane. Finally, long-term contracts can reduce flexibility for the government to adopt new technologies or change vendors if a better solution emerges elsewhere. Robust contract management, regular reviews, and clear change control processes are essential to mitigate these risks.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: TQ2006MCB0001

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 3150 FAIRVIEW PARK DR STE 100, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $548,276,404

Exercised Options: $542,812,602

Current Obligation: $542,812,602

Actual Outlays: $207,162,162

Subaward Activity

Number of Subawards: 222

Total Subaward Amount: $76,663,656

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00Q09BGD0055

IDV Type: GWAC

Timeline