HHS awards $21.6M for IT infrastructure, with Leidos Inc. securing the contract

Contract Overview

Contract Amount: $21,647,924 ($21.6M)

Contractor: Leidos, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2013-08-08

End Date: 2018-09-15

Contract Duration: 1,864 days

Daily Burn Rate: $11.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CL,CT::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 $21.6 million to LEIDOS, INC. for work described as: IGF::CL,CT::IGF Key points: 1. Contract value appears reasonable given the duration and scope of IT infrastructure services. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. The contract duration of 1864 days (over 5 years) indicates a long-term need for these services. 4. Services fall under Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services. 5. The award was a Delivery Order, suggesting it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 6. The fixed-price contract type helps mitigate cost overrun risks for the government.

Value Assessment

Rating: good

The contract value of $21.6 million over approximately five years for IT infrastructure services, including computing, data processing, and web hosting, appears to be within a reasonable range for a federal contract of this nature. Benchmarking against similar large-scale IT infrastructure contracts awarded by agencies like HHS or other federal entities would provide a more precise value-for-money assessment. The fixed-price nature of the contract is a positive indicator for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The fact that it was competed suggests that the agency sought to leverage market competition to obtain the best value. The number of bidders is not specified, but full and open competition generally implies a robust process that can lead to more competitive pricing.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple vendors to offer their best pricing and services, potentially driving down costs and improving the quality of IT infrastructure support.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) benefits from reliable IT infrastructure to support its critical healthcare programs. Services delivered include computing infrastructure, data processing, and web hosting, essential for modern government operations. The contract's geographic impact is primarily tied to the operations of CMS, likely supporting national-level healthcare initiatives. Workforce implications may include the need for specialized IT personnel to manage and maintain the contracted infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the services are highly specialized and difficult to transition.
Reliance on a single large contractor (Leidos) could limit future flexibility in sourcing IT services.
The long contract duration might not always align with rapidly evolving technology needs.

Positive Signals

Award to a large, established contractor like Leidos suggests a high likelihood of successful service delivery.
The fixed-price contract type provides cost certainty for the government.
Full and open competition indicates a structured procurement process aimed at achieving value.

Sector Analysis

The IT services sector, particularly cloud computing, data processing, and web hosting, is a significant area of federal spending. Agencies increasingly rely on these services to modernize operations and deliver citizen services. This contract fits within the broader trend of federal agencies outsourcing IT infrastructure to specialized providers to gain efficiency and access advanced capabilities. Comparable spending benchmarks would involve looking at other large federal contracts for similar IT infrastructure support services.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major IT provider, it is unlikely to have significant direct subcontracting opportunities for small businesses unless explicitly mandated or pursued by the prime contractor. The focus is on a large-scale IT solution rather than fostering small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are embedded in the contract terms, including performance standards and reporting requirements. Transparency is generally maintained through federal procurement databases like FPDS-NG. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

CMS IT Modernization Initiatives
Federal Cloud Computing Strategy
Data Center Consolidation Efforts
Health Information Technology Services

Risk Flags

Long contract duration may not align with rapid technological advancements.
Potential for vendor lock-in with a large, established provider.
Reliance on a single contractor for critical IT infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $21.6 million to LEIDOS, INC.. IGF::CL,CT::IGF

Who is the contractor on this award?

The obligated recipient is LEIDOS, 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 $21.6 million.

What is the period of performance?

Start: 2013-08-08. End: 2018-09-15.

What is the track record of Leidos, Inc. in delivering similar IT infrastructure services to federal agencies?

Leidos, Inc. is a well-established government contractor with a substantial history of providing a wide range of IT services to various federal agencies, including the Department of Health and Human Services (HHS). Their experience encompasses areas such as cloud computing, data center operations, cybersecurity, and IT infrastructure management. Leidos has been involved in numerous large-scale federal IT contracts, often serving critical missions. Performance on these contracts can be assessed through sources like past performance evaluations in federal procurement databases and agency reports. While specific details for this particular contract's performance are not provided, Leidos's general profile suggests a capacity to handle complex IT infrastructure requirements. However, as with any large contractor, individual contract performance can vary, and a detailed review of past performance specific to similar service types and contract vehicles would be necessary for a comprehensive assessment.

How does the awarded value compare to similar IT infrastructure contracts for computing, data processing, and web hosting?

The awarded value of approximately $21.6 million over roughly five years for computing infrastructure, data processing, and web hosting services places this contract in the mid-to-large tier for federal IT procurements. To benchmark effectively, one would compare this to other contracts of similar duration, scope, and agency (e.g., other HHS or CMS IT contracts, or similar services procured by agencies like GSA or DoD). Factors such as the specific service level agreements (SLAs), security requirements, and the level of customization or managed services involved significantly influence pricing. Without detailed service specifications, a precise comparison is difficult. However, the full and open competition suggests an effort to achieve market-driven pricing. Generally, federal agencies aim for per-unit costs or total contract values that align with industry standards, adjusted for the complexities and compliance overhead inherent in government contracting.

What are the primary risks associated with this type of IT infrastructure contract?

Key risks for this IT infrastructure contract include potential vendor lock-in, where the government becomes heavily reliant on Leidos's proprietary systems or expertise, making future transitions costly and complex. Technological obsolescence is another risk; IT evolves rapidly, and a five-year contract might not always keep pace with the latest advancements unless robust refresh clauses are included. Performance degradation or service failures could impact critical CMS operations, leading to disruptions in healthcare services. Cybersecurity threats are a constant concern, requiring stringent security measures and continuous monitoring. Finally, cost overruns, although mitigated by the fixed-price structure, can still occur if scope creep is not managed effectively or if unforeseen technical challenges arise.

How effective are fixed-price contracts in managing costs for long-term IT infrastructure services?

Fixed-price contracts are generally effective in managing costs for IT infrastructure services, especially when the scope of work is well-defined and unlikely to change significantly. They shift the risk of cost overruns to the contractor (Leidos, in this case), providing the government (HHS/CMS) with greater cost certainty. This structure incentivizes the contractor to perform efficiently and control their own costs. However, for long-term IT contracts where technology evolves rapidly or requirements may shift, a poorly defined scope can lead to change orders, potentially increasing the overall cost. The effectiveness also depends on the contractor's ability to accurately estimate costs upfront and manage their resources. For services like computing, data processing, and hosting, where the underlying technology and market prices can fluctuate, careful contract management and negotiation are still crucial even with a fixed-price award.

What is the historical spending pattern for Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services at HHS?

Historical spending by the Department of Health and Human Services (HHS) on Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services (NAICS code 518210) has been substantial and generally increasing over the years, reflecting the growing reliance on digital infrastructure for healthcare programs and administration. HHS, through its various operating divisions like CMS, NIH, and CDC, requires robust IT capabilities to manage vast amounts of sensitive data, support research, and deliver services. Spending in this category often includes cloud services, data center operations, managed hosting, and related support. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) would reveal trends in contract values, types of services procured, and key contractors. This specific contract represents a portion of that broader spending trend, likely supporting specific CMS initiatives requiring scalable and reliable IT infrastructure.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related 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: RFPCMS20120007

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leidos Holdings, Inc.

Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20879

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

Financial Breakdown

Contract Ceiling: $22,324,222

Exercised Options: $21,647,924

Current Obligation: $21,647,924

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $4,336,095

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500201300016I

IDV Type: IDC

Timeline