DoD awards $35M for IT support to Military Health System, raising value-for-money questions

Contract Overview

Contract Amount: $35,030,296 ($35.0M)

Contractor: Sunitna River LLC

Awarding Agency: Department of Defense

Start Date: 2023-12-05

End Date: 2026-04-11

Contract Duration: 858 days

Daily Burn Rate: $40.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MILITARY HEALTH SYSTEM GENESIS ISSUE RESOLUTION MANAGEMENT SUPPORT- EASTERN REGIONAL MARKET

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $35.0 million to SUNITNA RIVER LLC for work described as: MILITARY HEALTH SYSTEM GENESIS ISSUE RESOLUTION MANAGEMENT SUPPORT- EASTERN REGIONAL MARKET Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract's duration of nearly three years suggests a need for sustained IT support. 3. IT services are critical for the functioning of the Military Health System, impacting service delivery. 4. The chosen contractor, Sunitna River LLC, has a limited public track record for this scale of work. 5. The contract's value of $35M warrants scrutiny regarding its alignment with market rates for similar services. 6. The lack of a small business set-aside may limit opportunities for smaller IT firms in this sector.

Value Assessment

Rating: questionable

The contract value of $35,030,295.63 for IT management support appears high given the limited competition. Benchmarking against similar IT support contracts within the federal government or private sector for comparable services is crucial to assess if this represents a fair price. Without competitive bidding, it is difficult to ascertain if the government is receiving optimal value for its investment. The fixed-price nature of the contract provides some cost certainty, but the initial pricing could be inflated due to the sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when only one vendor is deemed capable of meeting the requirement, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means there were no other bidders to drive down prices through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing, potentially resulting in taxpayer funds being used less efficiently.

Public Impact

Beneficiaries include military personnel and their families who rely on the Military Health System for healthcare services. The contract delivers essential IT management and issue resolution support, ensuring the smooth operation of health IT systems. The geographic impact is primarily within the Eastern Regional Market of the Military Health System. Workforce implications include the potential for Sunitna River LLC to employ IT professionals to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
Limited public information on contractor's past performance at this scale.
High contract value without competitive bidding raises value-for-money concerns.
Potential for vendor lock-in due to specialized IT support needs.

Positive Signals

Contract addresses critical IT infrastructure for military healthcare.
Fixed-price contract provides some cost predictability.
Long-term contract (nearly 3 years) indicates a stable need for services.

Sector Analysis

The IT services sector is a significant area of federal spending, with agencies increasingly relying on technology for operations. This contract falls within the 'Other Computer Related Services' category, which encompasses a broad range of IT support functions. The federal IT market is highly competitive, but sole-source awards can bypass this competition. Comparable spending benchmarks for IT management support can vary widely based on scope, complexity, and security requirements.

Small Business Impact

The contract was not set aside for small businesses, nor is there an indication of significant subcontracting opportunities for small businesses. This means that larger, established firms are more likely to be the primary contractors. The absence of a small business set-aside in this sole-source award limits the direct participation of small businesses in fulfilling this specific IT support requirement, potentially impacting the small business ecosystem's access to federal contracts of this magnitude.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Health Agency (DHA) and the Department of Defense. Accountability measures would be defined by the contract terms and performance metrics. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Military Health System IT Modernization Programs
Defense Health Agency IT Services Contracts
Federal IT Management Support Services
Healthcare Information Technology Services

Risk Flags

Sole-source award
Limited contractor performance data publicly available
High contract value without demonstrated competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.0 million to SUNITNA RIVER LLC. MILITARY HEALTH SYSTEM GENESIS ISSUE RESOLUTION MANAGEMENT SUPPORT- EASTERN REGIONAL MARKET

Who is the contractor on this award?

The obligated recipient is SUNITNA RIVER LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $35.0 million.

What is the period of performance?

Start: 2023-12-05. End: 2026-04-11.

What is Sunitna River LLC's track record with similar IT support contracts, particularly for large federal health systems?

Information regarding Sunitna River LLC's specific track record with large federal health systems for IT management and issue resolution support is not readily available in the public domain. As this contract was awarded sole-source, detailed performance history or past contract awards of comparable size and scope are not easily accessible for comparison. Further investigation into federal contract databases and contractor performance assessment reporting (CPARS) would be necessary to fully assess their capabilities and past performance. The limited public information raises a flag regarding the due diligence performed prior to the sole-source award, especially given the significant value of this contract.

How does the awarded price compare to market rates for similar IT management support services, considering the sole-source nature?

Directly comparing the awarded price of $35,030,295.63 to market rates is challenging due to the sole-source nature of this contract, which bypasses competitive bidding processes that typically drive prices towards market equilibrium. Without multiple bids, it's difficult to establish a precise benchmark. However, industry averages for IT management and support services can range significantly based on the complexity of systems, security requirements, and service level agreements. Given the lack of competition, there is a heightened risk that the price may be above what would be achieved in a fully competitive environment. A detailed cost analysis by the contracting agency would be essential to justify the price reasonableness.

What are the specific risks associated with awarding a large IT support contract on a sole-source basis to Sunitna River LLC?

The primary risk associated with this sole-source award is the potential for inflated costs due to the absence of competitive pressure. Without competing bids, the government may not be securing the most cost-effective solution. Another risk is vendor lock-in, where the government becomes heavily reliant on Sunitna River LLC's specific expertise or proprietary systems, making it difficult and costly to switch providers in the future. Furthermore, limited public information on the contractor's past performance at this scale introduces performance risk; if the contractor underperforms, the critical IT functions of the Military Health System could be jeopardized. Ensuring robust contract oversight and clear performance metrics is crucial to mitigate these risks.

What is the expected effectiveness of the IT management support provided by Sunitna River LLC in improving the Military Health System's operational efficiency?

The expected effectiveness of the IT management support hinges on the contractor's ability to deliver on the contract's objectives, which likely include ensuring system uptime, resolving technical issues promptly, and maintaining the security and integrity of sensitive health data. The contract's duration of nearly three years suggests an expectation of sustained, effective support. However, the effectiveness will ultimately depend on the contractor's technical expertise, resource allocation, and adherence to service level agreements. Without a competitive baseline, measuring the 'improvement' in operational efficiency attributable to this specific contract is difficult. The Defense Health Agency will need to actively monitor performance metrics to ensure the contract is delivering the intended value.

How does this contract's value and scope compare to historical federal spending on similar IT support services for military healthcare systems?

Comparing this $35 million contract to historical spending requires a detailed analysis of past contracts for IT management and issue resolution within the Military Health System or similar large federal healthcare organizations. While specific historical data for this exact service category and agency is not provided, federal IT spending is substantial and growing. Contracts for enterprise-level IT support can easily reach tens of millions of dollars. The key differentiator here is the sole-source award, which is less common for large, ongoing IT support needs that could potentially be competed. Understanding the historical competition levels and pricing for similar services would provide a better context for assessing the value and necessity of this sole-source award.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001124R0059

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4300 B ST, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, American Indian Owned Business, Category Business, Corporate Entity Not Tax Exempt, Government, Native American Tribal Government, Limited Liability Corporation, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $74,852,831

Exercised Options: $35,035,110

Current Obligation: $35,030,296

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline