DoD awards $14.5M for IT support, but value and competition raise questions

Contract Overview

Contract Amount: $14,460,545 ($14.5M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2024-03-29

End Date: 2026-03-28

Contract Duration: 729 days

Daily Burn Rate: $19.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MARKET TECHNOLOGY INTEGRATION OFFICE SUPPORT SERVICES

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.5 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: MARKET TECHNOLOGY INTEGRATION OFFICE SUPPORT SERVICES Key points: 1. Contract value appears reasonable for IT support services, but detailed benchmarking is needed. 2. Full and open competition was used, suggesting a potentially competitive bidding process. 3. The contract's duration of 729 days presents a moderate risk for long-term IT needs. 4. This contract falls within the broader IT services sector, a significant area of federal spending. 5. The award to Peraton Enterprise Solutions LLC requires scrutiny of their past performance and pricing. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

The contract value of $14.5 million for 729 days of IT support services needs further benchmarking against similar contracts. While the firm-fixed-price structure provides cost certainty, the absence of detailed performance metrics and unit cost data makes a definitive value assessment challenging. Comparisons with other IT support contracts awarded by the Defense Health Agency or similar entities would be necessary to determine if this represents a good use of taxpayer funds. The pricing structure should be analyzed to ensure it aligns with market rates for comparable services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This method generally promotes a wider range of offers and can lead to more competitive pricing. However, the number of bids received and the specific evaluation criteria are not detailed here, which are crucial for understanding the true level of competition. A robust competition typically involves multiple bidders vying for the contract, driving down costs and improving service quality.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a broad bidding process. This approach increases the likelihood of obtaining competitive pricing and innovative solutions, ultimately stretching taxpayer dollars further.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who will receive enhanced IT support. Services delivered include computer systems design and integration, crucial for maintaining operational readiness. The geographic impact is likely concentrated within the Defense Health Agency's operational areas, primarily in Virginia. Workforce implications may include the need for specialized IT personnel to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess service quality and contractor accountability.
The duration of the contract (729 days) could lead to vendor lock-in or require costly re-competition.
Limited transparency on the specific IT systems and technologies supported by this contract.
Absence of small business subcontracting goals may limit opportunities for smaller, specialized IT firms.

Positive Signals

Awarded under full and open competition, suggesting a potentially competitive pricing environment.
Firm-fixed-price contract type provides cost certainty for the government.
The contract supports critical IT infrastructure for the Defense Health Agency, ensuring operational continuity.
Contractor is Peraton Enterprise Solutions LLC, a known entity in the federal contracting space.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, which is a substantial component of federal spending. The market for IT support and systems design services is highly competitive, with numerous large and small businesses offering specialized capabilities. Federal agencies, particularly in defense and healthcare, rely heavily on such services to maintain complex technological infrastructures. Comparable spending benchmarks for IT support services can vary widely based on the scope, duration, and specific technologies involved, but this contract's value places it in the mid-range for specialized IT support.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific small business subcontracting goals indicated. This means that opportunities for small businesses to directly participate in this contract are limited. While Peraton Enterprise Solutions LLC may engage small businesses as subcontractors, the absence of explicit set-aside or subcontracting requirements suggests that the primary focus was on larger, established providers. This could potentially limit the infusion of innovation and specialized services that small businesses often bring to the federal IT landscape.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Health Agency's contracting and program management offices. Accountability measures are typically embedded within the contract's performance work statement and reporting requirements. Transparency could be enhanced by making detailed performance reports and cost breakdowns publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Health Agency IT Modernization Programs
Department of Defense Information Technology Services Contracts
Federal Civilian Health IT Support Services
IT Systems Integration and Design Services

Risk Flags

Potential for cost overruns if scope is not tightly managed.
Risk of contractor underperformance due to fixed-price nature.
Dependency on a single contractor for critical IT support.
Lack of transparency regarding specific performance metrics and deliverables.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.5 million to PERATON ENTERPRISE SOLUTIONS LLC. MARKET TECHNOLOGY INTEGRATION OFFICE SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.5 million.

What is the period of performance?

Start: 2024-03-29. End: 2026-03-28.

What is Peraton Enterprise Solutions LLC's track record with similar IT support contracts for the Department of Defense or other federal agencies?

Peraton Enterprise Solutions LLC has a significant history of contracting with the U.S. federal government, including substantial work within the Department of Defense and intelligence communities. They have been awarded numerous contracts for a wide range of services, including IT modernization, cybersecurity, enterprise IT, and mission support. Their track record includes managing large-scale IT infrastructure projects and providing specialized technical support. However, like many large federal contractors, they have also faced scrutiny regarding contract performance and pricing on specific awards. A detailed review of their past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) for similar IT support services would be crucial to assess their reliability and effectiveness for this specific contract. Understanding their success rates, any past performance issues, and client satisfaction levels is key to evaluating their suitability.

How does the awarded value of $14.5 million compare to market rates for similar IT support services over a 729-day period?

Benchmarking the $14.5 million contract value against market rates requires a detailed understanding of the specific services provided, the required skill sets, and the geographic location. For a 729-day (approximately 2-year) contract involving computer systems design and IT support, this value translates to roughly $19.8 million annually if annualized, or approximately $6,700 per day. Market rates for IT support can vary significantly based on complexity, security requirements, and the level of expertise needed. For instance, specialized cybersecurity support or complex systems integration would command higher rates than general IT help desk services. Without a precise breakdown of labor categories, hours, and specific deliverables, a direct comparison is difficult. However, industry reports and government databases (like FPDS or GSA schedules) can provide benchmarks for similar IT support contracts. If the services involve high-level system architecture, integration of advanced technologies, or support for mission-critical systems, the price might be within a reasonable range. Conversely, if it's primarily for standard IT maintenance and help desk functions, it could be on the higher side, warranting further investigation into cost efficiencies.

What are the primary risks associated with a firm-fixed-price contract of this duration for IT support services?

A firm-fixed-price (FFP) contract for IT support services over 729 days presents several potential risks. For the government, the primary risk is that the contractor may not deliver the highest quality service if costs are tightly controlled, or that scope creep could lead to disputes if not managed meticulously. If the contractor underestimates the effort or encounters unforeseen technical challenges, they bear the financial loss, which could incentivize cutting corners on quality or support. Conversely, if the contractor significantly overestimates costs, the government pays a premium. For the contractor, the risk lies in accurately estimating all costs and potential challenges over the contract's life. Unforeseen technological changes, increased labor costs, or unexpected complexities in the IT environment could erode profit margins. The duration of 729 days (nearly two years) increases the likelihood of such unforeseen events occurring, potentially leading to contract modifications, performance issues, or disputes if not proactively managed through robust contract administration and clear communication channels.

What specific IT systems or technologies will be supported under this contract, and how critical are they to the Defense Health Agency's mission?

The provided data indicates the contract is for 'MARKET TECHNOLOGY INTEGRATION OFFICE SUPPORT SERVICES' under NAICS code 541512 (Computer Systems Design Services). However, it does not specify the exact IT systems or technologies that will be supported. These could range from electronic health record systems (like AHLTA or MHS GENESIS), network infrastructure, data management platforms, cybersecurity tools, to administrative and operational software used by the Market Technology Integration Office. Given that this is for the Defense Health Agency (DHA), it is highly probable that the supported systems are critical to military healthcare delivery, patient data management, medical readiness, and operational efficiency. Any disruption or degradation in these IT systems could have significant implications for healthcare providers, service members, and their families. Therefore, understanding the criticality of the supported systems is paramount to assessing the contract's importance and the potential impact of performance failures.

What is the historical spending pattern for 'MARKET TECHNOLOGY INTEGRATION OFFICE SUPPORT SERVICES' or similar IT support contracts within the Defense Health Agency?

Historical spending data for 'MARKET TECHNOLOGY INTEGRATION OFFICE SUPPORT SERVICES' specifically is not readily available without deeper database access. However, the Defense Health Agency (DHA) consistently spends billions of dollars annually on IT services, including system design, integration, maintenance, and support. This category of spending is crucial for maintaining the vast and complex healthcare IT infrastructure supporting the Military Health System. Trends in DHA IT spending often reflect broader federal initiatives such as digital transformation, cybersecurity enhancements, cloud migration, and the implementation of new electronic health record systems. Analyzing past contracts awarded by the DHA for similar computer systems design and IT support services (NAICS 541512) would reveal spending levels, common contract types (FFP, T&M), typical durations, and the primary contractors involved. This context helps determine if the current $14.5 million award is consistent with historical investment in this area or represents a significant shift in spending.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 15050 CONFERENCE CENTER DR, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $22,074,617

Exercised Options: $14,460,545

Current Obligation: $14,460,545

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $9,641,126

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT001523A0002

IDV Type: BPA

Timeline