Leidos awarded $84M for MHS Genesis deployment, facing scrutiny over value and competition
Contract Overview
Contract Amount: $84,050,233 ($84.1M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2022-06-20
End Date: 2024-06-30
Contract Duration: 741 days
Daily Burn Rate: $113.4K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE INCENTIVE
Sector: IT
Official Description: DEPLOYMENT SERVICES, INCLUDING SITE PREPARATION, DEPLOYMENT, TRAINING, CHANGE MANAGEMENT, AND POST-INSTALLATION SUPPORT FOR MHS GENESIS.
Place of Performance
Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $84.1 million to LEIDOS, INC. for work described as: DEPLOYMENT SERVICES, INCLUDING SITE PREPARATION, DEPLOYMENT, TRAINING, CHANGE MANAGEMENT, AND POST-INSTALLATION SUPPORT FOR MHS GENESIS. Key points: 1. Contract value appears high relative to duration, prompting questions about cost-effectiveness. 2. Full and open competition was utilized, but the number of bidders is not specified. 3. Potential risks include performance issues and cost overruns given the complexity of MHS Genesis. 4. This contract supports a critical healthcare IT modernization effort for the Department of Defense. 5. The IT services sector sees significant investment, with this contract representing a portion of that spending.
Value Assessment
Rating: fair
The contract's total value of $84 million over approximately two years suggests a significant investment per year. Benchmarking against similar large-scale IT deployment contracts, especially those involving complex system integrations like MHS Genesis, is crucial. Without more specific details on the scope of services and deliverables, it's difficult to definitively assess value for money. However, the fixed-price incentive structure aims to control costs, but the initial award amount warrants careful monitoring for potential overruns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is generally positive for price discovery and ensuring a broad range of potential contractors can bid. However, the specific number of bids received is not detailed, which would provide a clearer picture of the actual competitive landscape. A robust competition typically leads to more favorable pricing for the government.
Taxpayer Impact: Full and open competition suggests that taxpayers benefit from a potentially more competitive pricing environment, as multiple companies vied for the contract. This process aims to prevent inflated costs that might arise from less competitive solicitations.
Public Impact
The primary beneficiaries are the Department of Defense and its healthcare providers, who will utilize the modernized MHS Genesis system. Services include site preparation, deployment, training, change management, and post-installation support for a critical electronic health record system. The geographic impact is nationwide, affecting military treatment facilities and personnel across various locations. Workforce implications include the need for trained IT professionals to manage and support the new system, as well as training for end-users within the military healthcare system.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for scope creep given the complexity of a system-wide EHR deployment.
- Risk of schedule delays impacting the MHS Genesis rollout timeline.
- Challenges in user adoption and training effectiveness for a large, diverse user base.
Positive Signals
- Fixed-price incentive contract type can incentivize contractor performance and cost control.
- Full and open competition suggests a potentially competitive pricing environment.
- Support for a critical modernization effort that aims to improve healthcare delivery for service members.
Sector Analysis
This contract falls within the Information Technology (IT) services sector, specifically focusing on computer systems design and integration. The market for healthcare IT, particularly electronic health records (EHR) systems for large organizations, is substantial. This contract represents a significant investment in modernizing a critical defense healthcare infrastructure, aligning with broader trends of digital transformation in healthcare.
Small Business Impact
The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary awardee, Leidos, Inc., is a large business. The impact on the small business ecosystem would depend on whether Leidos engages small businesses as subcontractors for specialized services, which is not detailed in the provided information.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Health Agency's program management offices. Accountability measures are embedded in the fixed-price incentive contract structure, which links contractor profit to performance and cost targets. Transparency is generally facilitated through contract award databases, though detailed performance metrics may not always be publicly available.
Related Government Programs
- MHS Genesis EHR System
- Department of Defense IT Modernization Programs
- Healthcare IT Services Contracts
- Large-Scale System Integration Projects
Risk Flags
- Potential for cost overruns
- Risk of schedule delays
- Complexity of system integration
- User adoption challenges
Tags
it-services, defense, defense-health-agency, full-and-open-competition, large-contract, fixed-price-incentive, deployment-services, computer-systems-design, leidos-inc, mhs-genesis, virginia
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $84.1 million to LEIDOS, INC.. DEPLOYMENT SERVICES, INCLUDING SITE PREPARATION, DEPLOYMENT, TRAINING, CHANGE MANAGEMENT, AND POST-INSTALLATION SUPPORT FOR MHS GENESIS.
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $84.1 million.
What is the period of performance?
Start: 2022-06-20. End: 2024-06-30.
What is the historical spending trend for MHS Genesis deployment and support services?
Analyzing historical spending on the MHS Genesis program is crucial for context. While this specific award is for $84 million, understanding the total lifecycle cost of MHS Genesis, including previous contracts for development, deployment, and sustainment, provides a clearer picture of the overall investment. Trends in spending can reveal whether costs are escalating, stable, or decreasing over time. Without access to comprehensive historical data for the entire MHS Genesis program, it's difficult to ascertain if this $84 million award represents a typical expenditure or an anomaly. However, large-scale IT modernization projects often involve significant, multi-year investments that can fluctuate based on program phase and evolving requirements.
How does the cost per user or per facility compare to similar EHR deployments in other large federal agencies or the private sector?
Benchmarking the cost per user or per facility against comparable EHR deployments is essential for assessing value. For MHS Genesis, which aims to serve a vast population within the Department of Defense, a detailed cost-per-user analysis would be highly informative. If this figure significantly exceeds benchmarks from agencies like the Department of Veterans Affairs (VA) or large private healthcare systems, it could indicate potential inefficiencies or higher-than-market costs. Conversely, if it aligns with or is lower than comparable contracts, it might suggest effective cost management. The complexity of integrating with existing military systems and the specific requirements of a federal agency can influence these costs, making direct comparisons challenging but still valuable for identifying potential outliers.
What are the key performance indicators (KPIs) tied to this contract, and how is Leidos's performance being measured?
The key performance indicators (KPIs) for this contract are critical for understanding how Leidos's performance is being measured and ensuring the successful deployment of MHS Genesis. As a Fixed Price Incentive (FPI) contract, performance is likely tied to achieving specific milestones related to site preparation, system deployment, user training completion, and post-installation support effectiveness within agreed-upon timelines and cost parameters. The 'incentive' aspect suggests that bonuses may be awarded for exceeding targets, while penalties or reduced profit could apply for failing to meet them. Specific KPIs might include system uptime post-deployment, user satisfaction rates, reduction in support ticket resolution times, and successful data migration. The Defense Contract Management Agency (DCMA) or the Defense Health Agency would be responsible for monitoring these KPIs and ensuring contractor accountability.
What is Leidos's track record with large-scale federal IT deployment contracts, particularly in the healthcare sector?
Leidos, Inc. has a substantial track record with large-scale federal IT contracts, including significant work within the healthcare sector and for the Department of Defense. They have been involved in various aspects of IT modernization, system integration, and support services for government agencies. Their experience with complex projects, such as the development and sustainment of IT infrastructure and software solutions, positions them as a capable contractor for initiatives like MHS Genesis. However, the scale and criticality of MHS Genesis mean that past performance on similar, albeit potentially smaller or less complex, projects will be a key indicator of their ability to execute successfully. Evaluating specific past projects, their outcomes, and any challenges encountered is crucial for a comprehensive risk assessment.
Are there any known risks or challenges associated with the MHS Genesis system itself that could impact this deployment contract?
Yes, the MHS Genesis system, like any large-scale Electronic Health Record (EHR) implementation, carries inherent risks and challenges that can directly impact this deployment contract. Historically, EHR implementations have faced issues such as user resistance, inadequate training, interoperability problems with legacy systems, data migration complexities, and unexpected technical glitches. The MHS Genesis program itself has experienced delays and cost overruns in the past, indicating the complexity of the undertaking. These system-specific challenges can lead to scope creep, schedule delays, and increased costs for the deployment services provided by Leidos. Effective change management, robust training programs, and strong technical support, as outlined in the contract's scope, are crucial mitigation strategies.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - APLLICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 1750 PRESIDENTS ST, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $87,213,340
Exercised Options: $87,213,340
Current Obligation: $84,050,233
Subaward Activity
Number of Subawards: 30
Total Subaward Amount: $252,490,697
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0003915D0044
IDV Type: IDC
Timeline
Start Date: 2022-06-20
Current End Date: 2024-06-30
Potential End Date: 2024-06-30 00:00:00
Last Modified: 2025-04-09
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