DoD's $27.3M Virtual Health PMO contract awarded to Kapili Services, LLC shows potential value concerns

Contract Overview

Contract Amount: $27,298,096 ($27.3M)

Contractor: Kapili Services, LLC

Awarding Agency: Department of Defense

Start Date: 2020-04-30

End Date: 2023-10-29

Contract Duration: 1,277 days

Daily Burn Rate: $21.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: VIRTUAL HEALTH PMO

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32826

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $27.3 million to KAPILI SERVICES, LLC for work described as: VIRTUAL HEALTH PMO Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract duration of over three years suggests a significant, ongoing need for these services. 3. Performance period ended in October 2023, raising questions about current service delivery and future needs. 4. The North American Industry Classification System (NAICS) code 541519 indicates a broad range of 'Other Computer Related Services,' potentially lacking specificity. 5. The contract's value, while substantial, needs benchmarking against similar virtual health support services. 6. Lack of competition is a key risk indicator for potential overpricing and reduced service quality.

Value Assessment

Rating: questionable

Benchmarking the value of this $27.3 million contract is challenging without specific performance metrics or comparable sole-source awards. The fixed-price nature suggests cost certainty, but the absence of competition means there's no market validation of the pricing. Without details on the specific services rendered under the Virtual Health PMO, it's difficult to assess if the cost aligns with industry standards for similar support functions within the Department of Defense or other federal agencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This significantly limits the number of potential bidders and removes the pressure of competitive pricing. While sole-source awards can be justified under specific circumstances, such as unique capabilities or urgent needs, the lack of open competition here raises concerns about whether the government obtained the best possible value. The absence of multiple bids prevents a clear understanding of market-driven pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without a competitive process, there is less assurance that the pricing reflects fair market value, potentially leading to less efficient use of federal funds.

Public Impact

Beneficiaries include military personnel and their families who rely on virtual health services. Services delivered likely support the operationalization and management of virtual health programs within the Defense Health Agency. Geographic impact is nationwide, supporting the distributed nature of military healthcare. Workforce implications may involve the contractor's personnel supporting government staff in program management and IT-related functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing and innovation.
Lack of detailed performance data makes value assessment difficult.
Contract ended in late 2023, requiring assessment of ongoing need and potential re-competition.
Broad NAICS code may obscure the specific nature and cost drivers of services.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Contract duration suggests a sustained need for virtual health support.
Awarded to a single entity, potentially allowing for focused expertise and relationship building.

Sector Analysis

The federal IT services market is vast, with significant spending on program management and specialized IT support. Within this sector, virtual health solutions have seen increased investment, particularly post-pandemic. This contract for Virtual Health PMO support falls under IT services, specifically related to computer systems design and related services. Comparable spending benchmarks would involve analyzing other contracts for program management support for large-scale IT initiatives within federal health agencies.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses indicated in the provided data. The sole-source nature further reduces opportunities for small businesses to participate. Without set-aside provisions or explicit subcontracting goals, the direct impact on the small business ecosystem for this specific award is likely minimal, though the prime contractor's own subcontracting practices would determine broader reach.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Defense Health Agency's contracting officers and program managers. Accountability measures are inherent in the fixed-price contract type, requiring delivery of specified services. Transparency is limited by the sole-source award and the lack of publicly available performance reports. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

DoD Health IT Programs
Virtual Health Initiatives
Defense Health Agency IT Support
Federal Program Management Contracts
IT Services for Healthcare

Risk Flags

Sole-source award
Lack of competition
Broad NAICS code
Performance end date passed

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.3 million to KAPILI SERVICES, LLC. VIRTUAL HEALTH PMO

Who is the contractor on this award?

The obligated recipient is KAPILI SERVICES, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.3 million.

What is the period of performance?

Start: 2020-04-30. End: 2023-10-29.

What specific services were provided under the Virtual Health PMO contract?

The provided data indicates the contract was for 'Other Computer Related Services' under NAICS code 541519, supporting a 'VIRTUAL HEALTH PMO'. While the specific services are not detailed, this typically involves program management, IT support, system integration, and potentially consulting related to the development, implementation, and sustainment of virtual health platforms. This could include managing IT infrastructure, ensuring cybersecurity compliance, facilitating user adoption, and coordinating with various stakeholders to enhance the delivery of telehealth services across the Department of Defense.

How does the $27.3 million contract value compare to similar virtual health support contracts within the DoD?

Direct comparison is difficult without knowing the exact scope and duration of services. However, $27.3 million over approximately 3.5 years (April 2020 - October 2023) represents a significant investment. Similar contracts for IT program management support within large federal health agencies can range from a few million to tens of millions annually, depending on complexity. The sole-source nature of this award means its pricing cannot be benchmarked against competitive bids, making it harder to ascertain if it represents fair market value compared to potentially competed contracts for comparable services.

What are the primary risks associated with a sole-source award for virtual health program management?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated pricing and potentially lower quality services. Without multiple bidders vying for the contract, the government may not achieve the best possible value for its investment. Additionally, sole-source awards can stifle innovation, as there is less incentive for the contractor to go above and beyond standard requirements. There's also a risk that the chosen contractor may not possess the most optimal or cost-effective solutions available in the market.

What was the track record of Kapili Services, LLC prior to or during this contract?

Information regarding Kapili Services, LLC's specific track record prior to or during this contract is not provided in the data. Generally, for sole-source awards, agencies must justify why a specific contractor is uniquely qualified or why competition is not feasible. A thorough review would involve examining past performance evaluations, other federal contracts held by the company, and any reported issues or successes on previous engagements to assess their capability and reliability in delivering complex IT and program management services.

Given the contract ended in October 2023, what is the current status of virtual health PMO support?

The provided data indicates the contract's period of performance concluded on October 29, 2023. This suggests that the specific support provided by Kapili Services, LLC under this award is no longer active. The current status would depend on whether the Defense Health Agency has re-competed the requirement, awarded a new sole-source contract, or brought the function in-house. Without further information, it's unknown if there's a gap in service or if a successor contract is in place to ensure continuity of virtual health program management.

How does the NAICS code 541519 (Other Computer Related Services) adequately define the scope of work for a Virtual Health PMO?

The NAICS code 541519 is quite broad and encompasses a wide array of computer-related services beyond just program management. While it can include project management for IT projects, it also covers areas like computer facilities management, computer disaster recovery services, and IT consulting. For a specialized function like a Virtual Health PMO, a more specific NAICS code might better define the core requirements, potentially leading to more targeted competition and clearer performance expectations. The broadness here might indicate a less defined scope or an attempt to capture diverse support needs under one umbrella.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12565 RESEARCH PKWY STE 300, ORLANDO, FL, 32826

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

Financial Breakdown

Contract Ceiling: $27,298,096

Exercised Options: $27,298,096

Current Obligation: $27,298,096

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT001518D0001

IDV Type: IDC

Timeline