DHS awards $101.6M for computer systems design, with a significant portion as award fee

Contract Overview

Contract Amount: $101,623,947 ($101.6M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2015-09-24

End Date: 2019-12-31

Contract Duration: 1,559 days

Daily Burn Rate: $65.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: IGF::OT::IGF THIS IS A HYBRID FIRM-FIXED-PRICE(FFP)/COST-PLUS-AWARD-FEE(CPAF)AND COST REIMBURSEMENT(CR)TASK ORDER FOR PTS.

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $101.6 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IGF::OT::IGF THIS IS A HYBRID FIRM-FIXED-PRICE(FFP)/COST-PLUS-AWARD-FEE(CPAF)AND COST REIMBURSEMENT(CR)TASK ORDER FOR PTS. Key points: 1. Contract structure includes firm-fixed-price, cost-plus-award-fee, and cost reimbursement elements, indicating complexity. 2. The award fee component suggests performance incentives are tied to contractor achievement. 3. Full and open competition was utilized, implying a broad market search. 4. The contract duration of over 3 years suggests a substantial, ongoing need for services. 5. The primary service category is computer systems design, a critical area for agency operations. 6. The contractor, General Dynamics Information Technology, Inc., is a major player in the federal IT space.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics tied to the award fee. The hybrid pricing structure (FFP/CPAF/CR) can sometimes lead to higher overall costs if not managed tightly, especially the cost reimbursement portion. Comparing it to similar large-scale IT services contracts for DHS, the price per year ($~27M) appears within a reasonable range for complex system design and integration services, but the effectiveness of the award fee in driving value for money is a key unknown.

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 offers. The specific number of bidders is not provided, but this approach generally fosters a competitive environment, which can lead to better pricing and innovation. The agency's decision to use full and open competition suggests confidence in the market's ability to meet its requirements.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it maximizes the potential for competitive pricing and ensures the government receives offers from a wide range of qualified vendors.

Public Impact

The Department of Homeland Security (DHS) benefits from enhanced computer systems design and support. Services delivered likely include system development, integration, and maintenance to support DHS's mission. The geographic impact is primarily within Virginia, where the contractor is located and likely performs services. Workforce implications include employment opportunities for IT professionals within General Dynamics Information Technology, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in the cost reimbursement portion if not rigorously monitored.
Effectiveness of the award fee structure in truly incentivizing superior performance needs verification.
Reliance on a single large contractor for critical IT systems design services.

Positive Signals

Full and open competition suggests a robust selection process.
The hybrid contract type allows for flexibility in managing different cost aspects.
Inclusion of an award fee component encourages contractor performance.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a significant segment of the federal IT market. This sector encompasses a wide range of services from custom software development to IT infrastructure management. Spending in this area is consistently high across federal agencies as they modernize systems and enhance cybersecurity. Comparable spending benchmarks for large IT services contracts with agencies like DHS often run into tens or hundreds of millions of dollars annually, depending on the scope and complexity.

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 prime contractor, it may present opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed here and would require further investigation into the contractor's subcontracting plan.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of Homeland Security's Office of Procurement Operations. The hybrid nature of the contract, including cost reimbursement and award fee components, necessitates detailed financial and performance monitoring. Transparency is facilitated through contract award databases, but specific performance reviews and IG oversight details would require deeper access.

Related Government Programs

DHS IT Modernization Programs
Federal Civilian IT Services
Custom Computer Programming Services
IT Management Consulting Services

Risk Flags

Potential for cost growth in CR/CPAF portions
Performance metric clarity for award fee
Subcontracting plan adherence

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $101.6 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IGF::OT::IGF THIS IS A HYBRID FIRM-FIXED-PRICE(FFP)/COST-PLUS-AWARD-FEE(CPAF)AND COST REIMBURSEMENT(CR)TASK ORDER FOR PTS.

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 Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $101.6 million.

What is the period of performance?

Start: 2015-09-24. End: 2019-12-31.

What specific computer systems design services were procured under this contract?

The contract, identified by NAICS code 541512, specifies 'Computer Systems Design Services.' While the exact deliverables are not detailed in the provided data, this typically encompasses a broad range of activities including designing and developing, or modifying, computer systems. This can include hardware, software, and network integration. Services may involve requirements analysis, system architecture, software development, testing, implementation, and ongoing maintenance and support for complex IT systems critical to the Department of Homeland Security's operations.

How does the award fee structure incentivize performance for General Dynamics Information Technology, Inc.?

The contract includes a Cost-Plus-Award-Fee (CPAF) component, meaning that beyond the base cost reimbursement, General Dynamics Information Technology, Inc. can earn an additional fee based on achieving specific performance objectives. These objectives are typically defined in the contract's Performance Work Statement (PWS) and can relate to factors like timeliness, quality of deliverables, cost savings, customer satisfaction, or technical innovation. The agency evaluates the contractor's performance against these criteria and determines the award fee amount, providing a direct financial incentive for the contractor to exceed minimum requirements and deliver exceptional value.

What is the historical spending pattern for computer systems design services at DHS?

Historical spending on computer systems design services at DHS is substantial, reflecting the agency's reliance on complex IT infrastructure. While specific year-over-year data for this exact contract isn't provided, DHS consistently awards significant contracts in the IT services category, often in the hundreds of millions of dollars annually, to support its diverse missions. This $101.6 million contract over approximately four years represents a significant investment within that broader trend, indicating a sustained need for advanced IT design and support capabilities within the department.

What are the potential risks associated with the hybrid FFP/CPAF/CR contract structure?

The hybrid structure presents several potential risks. The Firm-Fixed-Price (FFP) portion provides cost certainty for defined tasks. However, the Cost-Plus-Award-Fee (CPAF) and Cost Reimbursement (CR) components introduce variability. CR contracts carry the risk of cost overruns if the contractor's actual costs exceed estimates, requiring diligent oversight from the government to ensure costs are reasonable and allocable. The CPAF element, while incentivizing performance, can also lead to disputes over fee determination if performance metrics are unclear or contested. Managing these different pricing structures effectively requires robust government oversight and clear communication.

How does this contract compare to other large IT services contracts awarded by federal agencies?

This $101.6 million contract for computer systems design services at DHS is substantial but falls within the typical range for large-scale IT support contracts awarded by major federal agencies. Agencies like the Department of Defense, NASA, and other cabinet-level departments frequently award contracts of similar or larger magnitudes for IT modernization, system integration, and cybersecurity services. The hybrid pricing structure (FFP/CPAF/CR) is also common for complex IT projects where scope may evolve. The key differentiator often lies in the specific services, performance metrics, and the competitive landscape for each award.

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

Solicitation ID: HSHQDC-15-Q-00130

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3150 FAIRVIEW PARK DR STE 100, FALLS CHURCH, VA, 22042

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

Financial Breakdown

Contract Ceiling: $113,383,459

Exercised Options: $101,916,270

Current Obligation: $101,623,947

Actual Outlays: $-38,090

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00Q09BGD0025

IDV Type: GWAC

Timeline