HHS awards $26.7M for data center hosting, with Peraton Enterprise Solutions LLC as the prime contractor

Contract Overview

Contract Amount: $26,752,243 ($26.8M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2015-09-17

End Date: 2023-09-30

Contract Duration: 2,935 days

Daily Burn Rate: $9.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF VDC-ESMD HOSTING DATA CENTER

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $26.8 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: IGF::OT::IGF VDC-ESMD HOSTING DATA CENTER Key points: 1. The contract value of $26.7 million over its period of performance suggests a significant investment in essential IT infrastructure. 2. Full and open competition was utilized, indicating a potentially competitive bidding process that could lead to favorable pricing. 3. The contract's duration of approximately 8 years (2935 days) points to a long-term need for these hosting services. 4. The primary service category, Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services, is critical for government operations. 5. The contract was awarded as a Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or a similar framework. 6. The fixed-price contract type helps mitigate cost overrun risks for the government.

Value Assessment

Rating: good

The contract value of $26.7 million over nearly 8 years averages to approximately $3.3 million per year. Benchmarking this against similar large-scale data center hosting contracts for federal agencies is challenging without more specific service level agreements and scope details. However, given the critical nature of hosting services for CMS, the pricing appears reasonable for a full and open competition, assuming competitive bids were received and evaluated thoroughly. The firm fixed-price structure provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically involves soliciting bids from all responsible prospective contractors. With 4 bidders identified, this suggests a healthy level of interest and competition for this requirement. A competitive process generally allows for price discovery and can lead to more favorable terms and pricing for the government compared to sole-source or limited competition awards.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of securing services at competitive market rates, preventing potential overpayment and ensuring efficient use of public funds.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and, by extension, the millions of individuals who rely on their healthcare programs. The services delivered are crucial for the operation and availability of critical healthcare data and IT systems. The geographic impact is primarily within Maryland, where the services are likely hosted or managed, supporting federal IT infrastructure. Workforce implications may include specialized IT professionals employed by the contractor to manage and maintain the data center 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 contractor for critical data center operations could pose a risk if the contractor experiences financial instability or operational failures.
Ensuring ongoing compliance with evolving data security and privacy regulations (e.g., HIPAA) is paramount.

Positive Signals

The use of full and open competition suggests a robust market assessment and potential for competitive pricing.
The firm fixed-price contract type provides cost predictability and reduces the government's financial risk.
The long contract duration indicates a stable, long-term partnership for essential services.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computing infrastructure and data hosting. The market for data center services is highly competitive, with numerous providers ranging from large cloud providers to specialized hosting companies. Federal agencies increasingly rely on such services to manage vast amounts of data and ensure the availability of critical applications. Comparable spending benchmarks would depend on the specific service level agreements, data volumes, and security requirements, but $26.7 million over nearly 8 years for dedicated hosting services is within a typical range for government IT infrastructure.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides. This suggests the contract was not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist if Peraton Enterprise Solutions LLC chooses to engage them, but this is not guaranteed by the contract terms. The impact on the small business ecosystem would be neutral to negative if larger firms dominate this contract category without significant subcontracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within CMS. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified services. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General for the Department of Health and Human Services would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

General Services Administration (GSA) IT Schedule Contracts
Cloud Computing Services
Data Center Modernization Programs
Health Information Technology Services

Risk Flags

Potential for vendor lock-in
Reliance on a single provider for critical infrastructure
Ensuring ongoing compliance with evolving regulations

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $26.8 million to PERATON ENTERPRISE SOLUTIONS LLC. IGF::OT::IGF VDC-ESMD HOSTING DATA CENTER

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

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 $26.8 million.

What is the period of performance?

Start: 2015-09-17. End: 2023-09-30.

What is the specific scope of services provided under this contract, and how do they align with CMS's mission-critical IT needs?

The contract falls under the North American Industry Classification System (NAICS) code 518210, which covers Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services. This implies services such as server hosting, data storage, network connectivity, and potentially managed IT services necessary for CMS's operations. These services are fundamental to CMS's ability to manage Medicare, Medicaid, and other healthcare programs, process claims, maintain beneficiary data, and provide online services. The specific alignment would detail how these hosting capabilities directly support the availability, security, and performance of CMS's core applications and databases, ensuring uninterrupted service delivery for healthcare stakeholders.

How does the pricing of this contract compare to industry benchmarks for similar data center hosting services, considering the contract's duration and scope?

Benchmarking this $26.7 million contract over approximately 8 years requires a detailed understanding of the service level agreements (SLAs), including uptime guarantees, bandwidth, storage capacity, security protocols, and disaster recovery capabilities. Without these specifics, a precise comparison is difficult. However, the average annual cost of roughly $3.3 million suggests a significant commitment. In the broader market, large-scale, secure, and compliant federal data center hosting can command premium pricing due to stringent security requirements (e.g., FedRAMP, HIPAA) and reliability demands. If the competition was robust and Peraton Enterprise Solutions LLC offered competitive terms within these constraints, the pricing could be considered fair. Further analysis would involve comparing specific metrics like cost per terabyte of storage or cost per server instance against market data.

What are the key performance indicators (KPIs) used to measure the success of this contract, and what has been the contractor's performance against them?

Key performance indicators for data center hosting contracts typically include metrics such as service availability (uptime percentage), network latency, response times for technical support, data backup and recovery success rates, and adherence to security protocols. While the provided data does not detail the specific KPIs for this contract, CMS would have established these in the contract's performance work statement (PWS). Assessing Peraton Enterprise Solutions LLC's performance would require access to performance reports, quality assurance surveillance plans (QASPs), and any documented instances of non-compliance or exceptional service. Without this performance data, it's impossible to definitively state how well the contractor has met expectations.

What is the historical spending pattern for data center hosting services by CMS, and how does this contract fit into that trend?

Analyzing historical spending requires access to prior contract awards for similar services by CMS. If CMS has consistently awarded large, multi-year contracts for data center hosting, this $26.7 million award suggests a continued reliance on such services. Trends might indicate a shift towards cloud migration or consolidation of data centers. This contract, awarded in 2015 and ending in 2023, represents a significant portion of CMS's IT infrastructure budget during that period. Understanding if spending has increased, decreased, or remained stable over time would provide context on CMS's strategic IT investments and its approach to managing its data infrastructure.

What are the potential risks associated with relying on Peraton Enterprise Solutions LLC for critical data center hosting, and what mitigation strategies are in place?

Potential risks include service disruptions due to technical failures, cyberattacks, or natural disasters; contractor performance issues (e.g., failure to meet SLAs); financial instability of the contractor; and potential security breaches. Mitigation strategies typically involve robust contract terms with defined penalties for non-performance, clear SLAs, regular performance reviews, security audits, contingency and disaster recovery plans mandated by the contract, and potentially backup providers or alternative solutions. The government's oversight mechanisms and the Inspector General's office also serve as risk mitigation tools by ensuring accountability and investigating issues.

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: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 15050 CONFERENCE CENTER DR, CHANTILLY, VA, 20151

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $27,888,442

Exercised Options: $26,752,243

Current Obligation: $26,752,243

Actual Outlays: $6,305,395

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $8,733,062

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500201300014I

IDV Type: IDC

Timeline