HHS awards $26.1M for IT hosting services to General Dynamics, raising value-for-money questions

Contract Overview

Contract Amount: $26,121,740 ($26.1M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2007-09-25

End Date: 2011-09-24

Contract Duration: 1,460 days

Daily Burn Rate: $17.9K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TAS::75 4554::TAS C-2554 HOSTING SERVICES FOR SBA

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20892

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $26.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TAS::75 4554::TAS C-2554 HOSTING SERVICES FOR SBA Key points: 1. Contract awarded on a competitive basis, but limited details on bidder numbers and pricing structure. 2. Pricing is Time and Materials, which can pose risks for cost control without strong oversight. 3. Duration of the contract (4 years) suggests a need for stable IT infrastructure support. 4. The National Institutes of Health (NIH) is a major consumer of IT services, indicating this is a typical requirement. 5. Small business participation is not explicitly detailed, warranting further investigation into subcontracting. 6. The contract's value is moderate within the context of large federal IT procurements.

Value Assessment

Rating: fair

The contract's value of $26.1 million over four years for IT hosting services appears within a reasonable range for federal IT support. However, the Time and Materials pricing model introduces uncertainty regarding the ultimate cost-effectiveness. Without detailed comparisons to similar NIH hosting contracts or market benchmarks for specific services, a definitive value assessment is challenging. The absence of a fixed-price component or clear cost-saving incentives in the contract terms warrants closer scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that multiple vendors had the opportunity to bid. However, the specific number of bidders and the details of the competitive process are not fully elaborated in the provided data. A competitive award generally suggests a degree of price discovery, but the effectiveness of this competition in securing optimal pricing is not immediately apparent without more information on the bidding process and evaluation criteria.

Taxpayer Impact: A competitive award process is generally favorable for taxpayers as it encourages vendors to offer competitive pricing. However, the specific outcomes in terms of cost savings for this particular contract require further analysis of the bid submissions and final pricing.

Public Impact

Federal researchers and staff at NIH benefit from reliable IT hosting services, enabling their scientific and administrative operations. The services delivered are critical for maintaining the availability and performance of essential IT systems supporting health research. The contract's impact is primarily within Maryland, where NIH facilities are located. The contract supports IT professionals employed by General Dynamics Information Technology, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to cost overruns if not managed diligently.
Lack of detailed competition metrics makes it difficult to assess the full extent of price discovery.
Potential for limited small business subcontracting opportunities if not actively managed.

Positive Signals

Awarded through a competitive process, suggesting potential for fair pricing.
Contract duration indicates a stable requirement for essential IT services.
General Dynamics Information Technology is an established federal IT contractor with a track record.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services, including hosting. The federal government is a significant purchaser of such services, with spending often concentrated in areas like data center operations, cloud hosting, and IT infrastructure management. Benchmarks for comparable federal IT hosting contracts vary widely based on scope, duration, and service level agreements, but this $26.1 million award over four years represents a moderate investment for a major agency like NIH.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While General Dynamics Information Technology, Inc. is a large business, there is no explicit information provided regarding subcontracting plans or actual performance with small businesses. Further review would be needed to determine if adequate opportunities for small business participation were included in the subcontracting strategy.

Oversight & Accountability

Oversight for this contract would typically reside with the contracting officers and program managers within the National Institutes of Health. The Time and Materials pricing structure necessitates robust oversight to monitor labor hours, material costs, and ensure that the services provided align with the contract's objectives and are delivered efficiently. Transparency would be enhanced by public reporting of performance metrics and expenditures.

Related Government Programs

NIH IT Infrastructure Support
Federal Data Center Consolidation
Cloud Computing Services
IT Professional Services

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Limited transparency on specific competition metrics.
Need for detailed review of small business subcontracting.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $26.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TAS::75 4554::TAS C-2554 HOSTING SERVICES FOR SBA

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 (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $26.1 million.

What is the period of performance?

Start: 2007-09-25. End: 2011-09-24.

What is the historical spending pattern for IT hosting services at NIH?

Historical spending on IT hosting services at the National Institutes of Health (NIH) has been substantial, reflecting the agency's significant research and data management needs. While specific figures for past hosting contracts are not detailed here, NIH consistently ranks among the top federal agencies for IT expenditures. Trends often show a shift from traditional on-premise data centers towards cloud-based solutions and managed services. Analyzing prior contracts for similar hosting services would reveal spending levels, contract durations, and the types of vendors utilized, providing context for the current $26.1 million award. This historical data is crucial for understanding if current spending aligns with past investments and evolving technological strategies.

How does the Time and Materials pricing model compare to other contract types for IT hosting?

The Time and Materials (T&M) pricing model, used in this contract, compensates the contractor for the actual cost of labor hours and materials used, plus a fixed fee or profit. This contrasts with fixed-price contracts, where the total cost is predetermined, or cost-plus contracts, which reimburse costs plus a negotiated profit. For IT hosting, T&M can be advantageous when the scope of work is uncertain or likely to change, allowing flexibility. However, it carries a higher risk for the government, as costs can escalate if not closely monitored. Fixed-price contracts offer better cost certainty but require a well-defined scope. Cost-plus contracts provide flexibility but also require stringent oversight. The effectiveness of T&M hinges on robust government oversight to control labor hours and material costs.

What is General Dynamics Information Technology's track record with federal IT hosting contracts?

General Dynamics Information Technology, Inc. (GDIT) has a significant and extensive track record as a federal IT contractor, including substantial experience in providing IT hosting and infrastructure services across various government agencies. They have held numerous large-scale contracts involving data center management, cloud migration, cybersecurity, and application hosting. Their history includes supporting complex IT environments for agencies like the Department of Defense, Department of Homeland Security, and Health and Human Services (HHS), of which NIH is a part. While GDIT possesses the scale and expertise for such services, the performance on specific contracts, including adherence to budget, delivery timelines, and service level agreements, would require a detailed review of past performance evaluations and contract close-out data.

What are the potential risks associated with this contract's duration and value?

The contract's duration of four years (1460 days) and a total value of $26.1 million present several potential risks. Firstly, the extended period increases the risk of technology obsolescence if the hosting solutions are not regularly updated or adaptable to new standards. Secondly, the Time and Materials (T&M) pricing model, combined with a long duration, amplifies the risk of cost overruns if contractor effort is not efficiently managed and closely monitored by the government. Scope creep, where requirements expand beyond the initial agreement without corresponding adjustments to cost controls, is also a heightened concern over a longer period. Finally, locking into a single vendor for four years might reduce the government's agility in adopting potentially more cost-effective or technologically superior solutions that emerge during the contract term.

How does this contract fit within the broader landscape of federal IT procurement for hosting services?

This contract for IT hosting services at NIH fits within the substantial and ongoing federal investment in IT infrastructure. Agencies like NIH require robust, secure, and scalable hosting solutions to support critical research, data analysis, and administrative functions. The federal government's strategy often involves consolidating data centers and migrating services to cloud environments (public, private, or hybrid) to improve efficiency and reduce costs. Contracts like this, whether for traditional hosting or cloud-based services, are essential components of maintaining operational capabilities. The value and duration are typical for supporting significant agency operations, and the competitive award mechanism aligns with federal procurement mandates aimed at achieving best value for taxpayer dollars.

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: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sterling Parent Inc. (UEI: 968838909)

Address: 4300 FAIR LAKES CT, FAIRFAX, VA, 22033

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

Financial Breakdown

Contract Ceiling: $39,246,711

Exercised Options: $31,620,828

Current Obligation: $26,121,740

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 263010050

IDV Type: IDC

Timeline