HHS awards $62M IT services contract to CGI Federal, highlighting a 5-year engagement for system design

Contract Overview

Contract Amount: $62,177,167 ($62.2M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2013-07-22

End Date: 2018-01-03

Contract Duration: 1,626 days

Daily Burn Rate: $38.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $62.2 million to CGI FEDERAL INC. for work described as: IGF::OT::IGF Key points: 1. Contract value of $62.18M over 5 years suggests a significant investment in IT infrastructure. 2. The 'Computer Systems Design Services' category indicates a focus on enhancing or maintaining critical health IT systems. 3. Full and open competition implies a broad market search, potentially leading to competitive pricing. 4. The contract's duration of 1626 days (approx. 4.5 years) indicates a long-term need for these services. 5. The Cost Plus Fixed Fee (CPFF) pricing structure can introduce cost-overrun risks if not managed tightly. 6. Awarded to CGI Federal, a known large government IT contractor, suggesting established capabilities.

Value Assessment

Rating: good

The total award amount of $62.18 million over approximately 4.5 years averages to about $13.8 million annually. This figure needs to be benchmarked against similar IT system design and integration contracts within the federal government, particularly those managed by the Department of Health and Human Services (HHS). Without specific comparable contract data, it's difficult to definitively assess value for money. However, the full and open competition suggests an effort to secure competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of 6 bids indicates a healthy level of interest from the market. This broad competition is generally favorable for price discovery and ensures that the government has a range of options to choose from, potentially leading to a more cost-effective outcome.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best value for public funds. Full and open competition reduces the likelihood of inflated prices and encourages contractors to offer their most competitive terms.

Public Impact

Beneficiaries include federal agencies within HHS, particularly those reliant on the IT systems designed and maintained under this contract. Services delivered encompass computer systems design, likely involving software development, system integration, and IT infrastructure support. The geographic impact is primarily within the federal government's operational sphere, supporting national health IT initiatives. Workforce implications may include employment opportunities for IT professionals within CGI Federal and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize contractors to increase costs to maximize profit, requiring robust oversight.
The long duration of the contract (over 4 years) could lead to scope creep or evolving requirements that may not be fully captured in the initial pricing.
Reliance on a single large contractor for critical IT services can create vendor lock-in and reduce future flexibility.

Positive Signals

Awarded through full and open competition, suggesting a thorough vetting of available market solutions.
The contract has multiple delivery orders (6 noted), indicating phased execution and potentially manageable milestones.
The contractor, CGI Federal, is a well-established entity with significant experience in government IT services.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The federal IT market is substantial, with agencies consistently investing in modernizing and maintaining their digital infrastructure. Contracts like this are crucial for supporting the operational efficiency and data management needs of large government organizations such as HHS, which handles vast amounts of sensitive health information. Benchmarks for similar IT services contracts within the federal government typically range from tens to hundreds of millions of dollars, depending on scope and duration.

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 IT provider, it is unlikely that small businesses would be primary awardees. However, there may be opportunities for small businesses to participate as subcontractors to CGI Federal, depending on the specific project requirements and CGI's subcontracting strategy. The absence of a small business set-aside means that the primary focus was on obtaining the best overall technical and cost solution from the broader market.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Centers for Medicare and Medicaid Services (CMS), a part of HHS. The Cost Plus Fixed Fee (CPFF) structure necessitates close monitoring of costs and performance to ensure value for money and prevent cost overruns. Transparency is generally maintained through contract reporting mechanisms, and the Inspector General's office for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this award.

Related Government Programs

HHS IT Modernization Initiatives
Centers for Medicare and Medicaid Services (CMS) IT Support
Federal Health IT Services
Governmentwide IT Acquisition Contracts
Computer Systems Design and Related Services

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing structure requires diligent oversight to manage potential cost overruns.
Long contract duration may pose risks related to evolving technology and potential vendor lock-in.
Scope creep could be a risk if not managed through formal change control processes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $62.2 million to CGI FEDERAL INC.. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL 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 $62.2 million.

What is the period of performance?

Start: 2013-07-22. End: 2018-01-03.

What is CGI Federal's track record with similar government IT contracts, particularly within HHS?

CGI Federal is a large, established government contractor with a significant history of performing IT services for various federal agencies, including HHS. They have been involved in numerous contracts related to health IT, financial systems, and administrative support. Their track record often includes large-scale system implementations, maintenance, and modernization projects. While specific performance metrics for this particular contract (awarded in 2013) are not detailed here, CGI's general experience suggests they possess the capacity to handle complex IT requirements. However, like many large contractors, they may have faced scrutiny or performance issues on specific contracts, which would typically be documented in past performance evaluations during future solicitations.

How does the average annual cost of this contract compare to similar IT system design services within HHS?

This contract, valued at approximately $62.18 million over roughly 4.5 years, averages about $13.8 million per year. To assess value for money, this figure needs to be benchmarked against comparable IT system design and integration contracts awarded by HHS or similar agencies during the same period (2013-2018). Factors influencing cost include the complexity of the systems, the level of customization required, the number of users supported, and the specific services provided (e.g., development, integration, maintenance, cybersecurity). Without direct comparable data, it's challenging to definitively state if this represents excellent or fair value. However, the full and open competition suggests an effort to achieve competitive pricing.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the contractor may have less incentive to control costs compared to fixed-price contracts. While the 'fixed fee' provides a guaranteed profit margin, the 'cost plus' element means the government reimburses the contractor's allowable costs. This structure can potentially lead to cost overruns if the contractor's actual costs exceed initial estimates, as the government bears the brunt of these increases. Effective risk mitigation requires robust government oversight, detailed cost tracking, clear definition of allowable costs, and strong negotiation of the fee based on anticipated effort and risk. For IT services, scope creep can exacerbate these risks if not managed through formal change control processes.

How effective are full and open competitions in ensuring competitive pricing for IT services?

Full and open competition is generally considered the most effective method for ensuring competitive pricing for IT services. By allowing all responsible sources to bid, the government maximizes the pool of potential offerors, increasing the likelihood of receiving multiple competitive proposals. This competition drives down prices as contractors vie for the award. The presence of 6 bidders on this specific contract suggests a robust competitive environment. However, the effectiveness also depends on the clarity of the solicitation requirements, the evaluation criteria, and the government's ability to accurately assess the proposals to select the best value, not just the lowest price.

What are the implications of this contract's duration on long-term IT strategy and vendor management?

A contract duration of over four years for IT system design services has several implications. On the positive side, it provides stability and allows the contractor to develop deep expertise in the specific systems and agency needs, potentially leading to more efficient operations and better-aligned solutions. However, it also carries risks. Long-term reliance on a single vendor can lead to vendor lock-in, making it difficult and costly to switch providers or adopt new technologies. Furthermore, the IT landscape evolves rapidly; a contract established in 2013 might not fully align with the agency's needs by 2018 without significant modifications. This necessitates proactive contract management, regular reviews, and potentially incorporating flexibility for technological advancements.

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

Offers Received: 6

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: CGI Inc

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 22033

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $63,698,678

Exercised Options: $62,177,167

Current Obligation: $62,177,167

Subaward Activity

Number of Subawards: 59

Total Subaward Amount: $23,592,214

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline