General Dynamics IT contract for engineering services awarded by HHS nears $40M over 5 years

Contract Overview

Contract Amount: $40,003,499 ($40.0M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2017-09-27

End Date: 2023-02-26

Contract Duration: 1,978 days

Daily Burn Rate: $20.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $40.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IGF::OT::IGF Key points: 1. Contract value of $40M over 5 years suggests a significant investment in engineering services. 2. Full and open competition indicates a potentially competitive bidding process. 3. The contract's duration of nearly 2000 days points to a long-term need for these services. 4. The award was made by the Centers for Medicare and Medicaid Services, highlighting its importance to healthcare operations. 5. The Cost Plus Fixed Fee (CPFF) pricing structure requires careful monitoring to ensure cost control.

Value Assessment

Rating: good

The contract's total value of approximately $40 million over nearly six years is substantial for engineering services. Benchmarking against similar contracts for complex IT and engineering support within federal health agencies is necessary for a precise value-for-money assessment. However, the duration and scope suggest a critical function. The CPFF structure, while allowing flexibility, necessitates robust oversight to prevent cost overruns and ensure the fixed fee remains reasonable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. With 3 bidders identified, this indicates a moderate level of competition. While not a vast number, it is sufficient to provide some price discovery and ensure the government receives proposals from qualified sources. The specific details of the evaluation criteria and the winning proposal's advantages would further clarify the competitive outcome.

Taxpayer Impact: A competitive bidding process generally leads to better pricing for taxpayers by encouraging vendors to offer their best terms. This contract's full and open competition suggests that taxpayer funds were likely used more efficiently than in a sole-source scenario.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) benefits from these engineering services, likely supporting critical healthcare IT infrastructure and program development. The services delivered are essential for the ongoing operation and modernization of healthcare systems managed by CMS. The geographic impact is primarily national, given CMS's role in administering federal healthcare programs. The contract supports a workforce of engineers and technical specialists, contributing to employment in the IT and engineering sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can lead to higher costs if not managed diligently, as the contractor is reimbursed for all allowable costs plus a fixed fee.
The long duration of the contract (nearly 2000 days) increases the risk of scope creep or evolving requirements that may not be adequately captured in the initial pricing.
Reliance on a single large contractor for critical engineering services could pose a risk if the contractor faces financial difficulties or performance issues.

Positive Signals

Awarded under full and open competition, indicating a potentially robust selection process and competitive pricing.
The contract's significant value suggests a long-term commitment and likely importance to the agency's mission.
The contractor, General Dynamics Information Technology, is a large, established entity with a track record in government contracting, potentially indicating reliability.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Information Technology and professional services market for the federal government. The federal IT services market is vast, with agencies like HHS consistently investing billions annually in technology modernization, cybersecurity, and operational support. This specific contract's focus on engineering for CMS places it within the healthcare IT sub-sector, which is characterized by complex regulatory environments and a continuous need for advanced technical solutions to manage healthcare programs and data.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major prime contractor, it is possible that General Dynamics Information Technology may engage small businesses as subcontractors. However, without specific subcontracting plans or data, the direct impact on the small business ecosystem is unclear. Large prime contracts can sometimes limit opportunities for small businesses to compete directly, but they can also provide subcontracting avenues.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services (CMS). Mechanisms likely include regular performance reviews, milestone tracking, and financial audits, especially given the Cost Plus Fixed Fee (CPFF) structure. The contract's duration and value suggest it would fall under the purview of CMS's contracting officers and potentially the HHS Office of Inspector General (OIG) for audits and investigations into waste, fraud, or abuse.

Related Government Programs

HHS IT Modernization Projects
CMS Healthcare IT Support
Federal Engineering Services Contracts
Large-Scale IT Service Delivery

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires diligent oversight to manage costs.
Long contract duration increases risk of scope changes and potential cost escalation.
Limited number of bidders (3) may reduce competitive pressure compared to higher bidder counts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $40.0 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 $40.0 million.

What is the period of performance?

Start: 2017-09-27. End: 2023-02-26.

What is the historical spending pattern for engineering services by the Centers for Medicare and Medicaid Services (CMS) over the last five fiscal years?

Analyzing historical spending by CMS on engineering services requires accessing detailed federal procurement data. While this specific contract represents a significant award of approximately $40 million over its period of performance (2017-2023), understanding the broader trend involves looking at all engineering service procurements by CMS. Typically, agencies like CMS have consistent needs for engineering support related to their vast IT systems, program development, and infrastructure maintenance. Spending can fluctuate based on major modernization initiatives, system upgrades, or the introduction of new healthcare programs. A review of FPDS or USASpending.gov data for relevant NAICS codes (like 541330 for Engineering Services) specifically filtered for CMS would reveal if this $40M contract is an outlier, a consistent level of investment, or a decrease/increase compared to prior periods. Factors such as budget allocations, agency priorities, and the lifecycle of existing systems heavily influence these spending patterns.

How does the Cost Plus Fixed Fee (CPFF) pricing structure of this contract compare to industry standards for similar engineering services?

The Cost Plus Fixed Fee (CPFF) pricing model is common in federal contracting, particularly for complex projects where the scope may evolve or is not fully defined at the outset. In this model, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. For engineering services, especially those involving research, development, or intricate system design, CPFF offers flexibility. However, it places a significant burden on the government to meticulously track and audit costs to ensure they are reasonable and allocable. Industry standards suggest that while CPFF can be appropriate, it carries a higher risk of cost overruns compared to fixed-price contracts. The 'fixed fee' component is intended to incentivize efficiency, but its adequacy and fairness require careful negotiation and oversight. Benchmarking this fee against similar contracts and the complexity of the services provided is crucial for assessing value for money.

What specific engineering challenges or projects is General Dynamics Information Technology addressing under this contract for CMS?

The provided data indicates the contract is for 'Engineering Services' (NAICS 541330) awarded to General Dynamics Information Technology (GDIT) by the Centers for Medicare and Medicaid Services (CMS). While the specific engineering challenges are not detailed, given CMS's mission, these services likely pertain to the design, development, integration, and maintenance of complex healthcare IT systems. This could include work on the Medicare and Medicaid IT infrastructure, data analytics platforms, patient portals, claims processing systems, or cybersecurity enhancements. Engineering services in this context often involve software engineering, systems engineering, network engineering, and potentially hardware integration. The long duration and substantial value suggest support for critical, ongoing operational needs or significant modernization efforts within CMS's vast technological landscape.

What is GDIT's track record with similar large-scale engineering contracts within the federal government, particularly within the healthcare sector?

General Dynamics Information Technology (GDIT) has a substantial track record as a major federal contractor, frequently winning large-scale IT and engineering service contracts across various agencies, including the Department of Health and Human Services (HHS). Within the healthcare sector, GDIT has historically supported agencies like CMS, the Military Health System, and others with complex IT solutions, data management, and system modernization. Their experience often encompasses managing large, multi-year contracts with significant budgets, similar to this $40 million award. A thorough review of their past performance evaluations (e.g., CPARS) and contract awards would provide deeper insights into their success rates, areas of expertise, and any past performance issues on comparable projects. Their established presence suggests they possess the resources and experience to handle such demanding engagements.

How does the competition level (3 bidders) for this contract potentially impact the final price and service quality compared to contracts with more bidders?

A competition level with 3 bidders, as seen in this contract, generally offers a moderate degree of price discovery and choice for the government. While more bidders (e.g., 5-10+) could theoretically drive prices down further and increase the pool of innovative solutions, 3 bidders suggest that the market for these specific engineering services is not overly concentrated nor extremely limited. This number typically indicates that several capable firms were interested and qualified, allowing the agency to select a strong offer. The impact on price and quality depends heavily on the specific requirements, the evaluation criteria used, and the competitiveness of the proposals submitted. If the 3 bidders were all highly capable and aggressively priced their offers, the outcome could be excellent. Conversely, if the requirements were highly specialized or barriers to entry were high, 3 bidders might represent the feasible market, and the price might reflect that.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corporation

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: $40,003,499

Exercised Options: $40,003,499

Current Obligation: $40,003,499

Actual Outlays: $11,409,692

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $6,790,121

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q14OADU135

IDV Type: IDC

Timeline