HHS awarded $27M for IT services to Cormac Corporation, with 5 orders over 4 years

Contract Overview

Contract Amount: $27,078,316 ($27.1M)

Contractor: Cormac Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2012-02-01

End Date: 2016-01-31

Contract Duration: 1,460 days

Daily Burn Rate: $18.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: IT AND TELECOM- PROGRAMMING

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $27.1 million to CORMAC CORPORATION for work described as: IT AND TELECOM- PROGRAMMING Key points: 1. Contract value appears reasonable given the duration and scope of IT services. 2. Full and open competition after exclusion of sources suggests a competitive process, though details are limited. 3. The contract type (Cost Plus Award Fee) can incentivize performance but requires careful oversight. 4. Performance occurred over a significant period, allowing for assessment of sustained service delivery. 5. This contract falls within the IT and Telecom sector, specifically focusing on computer facilities management. 6. The award was made by CMS, a major health agency, indicating critical IT support needs.

Value Assessment

Rating: good

The total award of $27.1 million over approximately four years for IT services, specifically computer facilities management, appears to be within a reasonable range for a federal contract of this nature. Benchmarking against similar IT support contracts awarded by agencies like HHS or CMS would provide a more precise value-for-money assessment. The Cost Plus Award Fee (CPAF) structure, while allowing for performance incentives, necessitates robust monitoring to ensure costs remain controlled and that award fees are justified by exceptional performance. Without specific details on the services rendered and their impact, a definitive value assessment is challenging, but the overall expenditure seems aligned with typical federal IT procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the initial solicitation was open, certain sources were excluded before the final award decision. The specific reasons for exclusion are not provided, making it difficult to fully assess the breadth of competition. The presence of 5 delivery orders suggests ongoing engagement with the contractor. A more transparent competition process, such as a standard full and open competition with multiple bidders, would typically yield better price discovery and potentially lower costs for the government.

Taxpayer Impact: The limited competition aspect means taxpayers may not have benefited from the lowest possible price that a broader, unrestricted competition might have achieved. The exclusion of sources warrants scrutiny to ensure fairness and maximize taxpayer value.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially healthcare providers and beneficiaries who rely on the IT infrastructure managed under this contract. Services delivered include computer facilities management, crucial for the operation of CMS's IT systems. The geographic impact is primarily within the operational sphere of CMS, likely supporting its headquarters and potentially remote operations. Workforce implications involve the IT professionals employed by Cormac Corporation to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition details could obscure potential cost savings.
Cost Plus Award Fee contracts require diligent oversight to prevent cost overruns.
The exclusion of sources needs clear justification to ensure fairness and prevent potential favoritism.

Positive Signals

Contract awarded to Cormac Corporation, indicating a potentially established relationship and capability.
Multiple delivery orders suggest successful performance and ongoing need for services.
The contract duration allowed for sustained IT support, contributing to system stability.

Sector Analysis

This contract falls within the Information Technology and Telecommunications sector, specifically under the subcategory of Computer Facilities Management Services. This is a critical area for government operations, as robust IT infrastructure is essential for data management, system accessibility, and operational efficiency. The market for IT services is highly competitive, with numerous large and small businesses offering specialized capabilities. Federal spending in this area is substantial, reflecting the increasing reliance on technology across all government functions. Comparable spending benchmarks would typically involve analyzing IT support contracts of similar scope and duration awarded to other federal agencies.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The contract was awarded to Cormac Corporation, a company that may or may not be classified as a small business itself. Further analysis would be needed to determine the extent of small business participation, either as prime contractors or subcontractors, and its impact on the broader small business ecosystem within the federal IT contracting landscape.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS). As a Cost Plus Award Fee (CPAF) contract, rigorous oversight is crucial to monitor costs, evaluate performance against established criteria, and ensure that award fees are appropriately earned. Transparency would be enhanced by public reporting of performance metrics and fee structures. Inspector General jurisdiction would apply to investigate any potential fraud, waste, or abuse related to the contract.

Related Government Programs

IT Services Contracts
Computer Facilities Management
Health Information Technology
CMS IT Support
Federal IT Procurement

Risk Flags

Limited competition details
Potential for cost overruns in CPAF contracts
Justification for source exclusion unclear

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $27.1 million to CORMAC CORPORATION. IT AND TELECOM- PROGRAMMING

Who is the contractor on this award?

The obligated recipient is CORMAC CORPORATION.

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 $27.1 million.

What is the period of performance?

Start: 2012-02-01. End: 2016-01-31.

What specific computer facilities management services were provided under this contract?

The contract, NAICS code 541513, specifies 'Computer Facilities Management Services.' This typically encompasses a range of activities essential for maintaining and operating IT infrastructure. Services could include data center operations, network management, server maintenance, hardware and software installation and configuration, system monitoring, troubleshooting, help desk support, and ensuring the availability and performance of critical IT systems. For CMS, these services are vital for supporting the complex systems that manage Medicare and Medicaid programs, ensuring data integrity, and facilitating access for healthcare providers and beneficiaries. The exact scope would be detailed in the contract's Statement of Work (SOW).

How does the $27 million award compare to similar IT services contracts at CMS or HHS?

Comparing the $27 million award for approximately four years of computer facilities management services requires context. Federal IT contracts vary significantly based on scope, duration, complexity, and the specific services required. A contract of this value for facility management suggests a substantial operational footprint or critical system support. To benchmark effectively, one would need to analyze similar contracts awarded by CMS or HHS for comparable services, considering factors like the number of users supported, the criticality of the systems managed, and the specific technologies involved. Without access to a comprehensive database of comparable contracts and their specific performance metrics, a precise comparison is difficult. However, $27 million over four years averages around $6.75 million annually, which is a moderate to significant investment for specialized IT support within a large federal agency.

What are the potential risks associated with a Cost Plus Award Fee (CPAF) contract structure for IT services?

Cost Plus Award Fee (CPAF) contracts present unique risks, primarily centered around cost control and performance validation. The 'cost-plus' component means the contractor is reimbursed for allowable costs, plus a fee that includes a base amount and an award amount determined by performance. The risk is that contractors may have less incentive to control costs rigorously compared to fixed-price contracts, as costs are generally covered. The 'award fee' portion introduces subjectivity; while intended to incentivize superior performance, it requires well-defined, objective criteria and robust government oversight to ensure award fees are truly earned and not merely granted. If performance metrics are poorly defined or oversight is lax, the government could end up paying higher costs without achieving commensurate performance improvements, leading to potential waste.

What does 'Full and Open Competition After Exclusion of Sources' imply about the procurement process?

The term 'Full and Open Competition After Exclusion of Sources' suggests a procurement process that began with the intent of broad competition but subsequently excluded certain potential bidders before the final award. This could occur for various reasons, such as prior performance issues with excluded vendors, specific technical requirements that only a limited number of vendors could meet, or consolidation of requirements. However, it implies that the competition was not as broad as a standard 'Full and Open Competition' where all responsible sources are considered without restriction. The exclusion of sources necessitates a clear justification documented in the procurement record to ensure fairness and prevent potential challenges. It raises questions about whether the government obtained the maximum possible competition and the best value for taxpayers.

How has federal spending on IT services, particularly computer facilities management, evolved over the period of this contract (2012-2016)?

The period of this contract (2012-2016) falls within a time of significant evolution in federal IT spending. Agencies were increasingly focused on modernizing legacy systems, adopting cloud computing, enhancing cybersecurity, and improving data analytics capabilities. Spending on IT services, including facilities management, remained substantial as agencies relied heavily on robust infrastructure. Trends during this era included a push towards shared services, greater emphasis on agile development, and increased scrutiny of IT investments to ensure they aligned with agency missions and delivered measurable outcomes. While specific figures for computer facilities management are hard to isolate, overall federal IT spending remained a major budgetary item, reflecting the critical role of technology in government operations.

What is the significance of Cormac Corporation being awarded this contract by CMS?

Cormac Corporation being awarded this significant IT services contract by the Centers for Medicare and Medicaid Services (CMS) indicates that the agency deemed Cormac to possess the necessary capabilities, experience, and qualifications to manage its computer facilities. CMS operates some of the most critical and complex IT systems within the federal government, supporting the administration of Medicare and Medicaid. An award of this nature suggests Cormac has a proven track record in delivering reliable IT support services, potentially including experience with large-scale government systems and stringent security requirements. The award signifies CMS's trust in Cormac's ability to maintain the operational integrity and performance of its essential IT infrastructure.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management 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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 13921 PARK CENTER RD STE 180, HERNDON, VA, 20171

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Small Business, Small Disadvantaged Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $39,460,346

Exercised Options: $27,078,316

Current Obligation: $27,078,316

Actual Outlays: $737,966

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: HHSM500201100021I

IDV Type: IDC

Timeline