DoD Awards $21.8M AWS Cloud Services Contract to Kadiak LLC for Defense Health Agency

Contract Overview

Contract Amount: $21,789,533 ($21.8M)

Contractor: Kadiak LLC

Awarding Agency: Department of Defense

Start Date: 2024-06-13

End Date: 2025-09-30

Contract Duration: 474 days

Daily Burn Rate: $46.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: AMAZON WEB SERVICES (AWS) CLOUD SERVICES COMMERCIAL REGION EIDS

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $21.8 million to KADIAK LLC for work described as: AMAZON WEB SERVICES (AWS) CLOUD SERVICES COMMERCIAL REGION EIDS Key points: 1. Significant award for cloud infrastructure services supporting critical defense health operations. 2. Sole-source award raises questions about competition and potential cost savings. 3. Contract duration of 474 days suggests a need for ongoing, specialized cloud support. 4. Focus on computing, data processing, and web hosting highlights reliance on modern IT infrastructure.

Value Assessment

Rating: fair

The contract value of $21.8M over 474 days is difficult to benchmark without specific service details. However, given the nature of cloud services, the pricing will be heavily influenced by usage and specific service tiers, making direct comparison challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract is listed as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. This limits price discovery and may result in higher costs compared to a competitive bidding process.

Taxpayer Impact: Without competitive bidding, taxpayers may be paying a premium for these essential cloud services.

Public Impact

Ensures continued operation of critical IT infrastructure for the Defense Health Agency. Supports the agency's mission by providing essential computing, data processing, and web hosting. Potential for increased costs due to the lack of competitive bidding. Highlights the growing reliance of government agencies on commercial cloud providers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Lack of detailed service breakdown makes cost-effectiveness assessment difficult.
Potential for vendor lock-in with a single cloud provider.

Positive Signals

Provides essential cloud services for a critical government function.
Contract awarded to a known entity (AWS) for established services.

Sector Analysis

This contract falls within the IT sector, specifically cloud computing infrastructure. Government spending on cloud services has been steadily increasing as agencies modernize their IT systems. Benchmarks for similar large-scale cloud contracts are highly variable based on service level agreements and usage.

Small Business Impact

This award does not appear to involve small businesses directly, as it is a sole-source award for AWS cloud services. Further analysis would be needed to determine if Kadiak LLC is subcontracting any portion of the work to small businesses.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and adequate service delivery. The Defense Health Agency should have robust internal controls to monitor usage and costs against the contract.

Related Government Programs

Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Department of Defense Contracting
Defense Health Agency Programs

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for cost overruns
Vendor lock-in risk
Limited transparency on specific service costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.8 million to KADIAK LLC. AMAZON WEB SERVICES (AWS) CLOUD SERVICES COMMERCIAL REGION EIDS

Who is the contractor on this award?

The obligated recipient is KADIAK LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $21.8 million.

What is the period of performance?

Start: 2024-06-13. End: 2025-09-30.

What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award is typically based on specific technical requirements, existing infrastructure compatibility, or a lack of viable alternatives. Agencies are still required to conduct market research and negotiate pricing to ensure it is fair and reasonable, even without competition. Documentation of these efforts is crucial for accountability.

How does the cost of these AWS services compare to similar government or commercial contracts for comparable cloud infrastructure?

Direct comparison is challenging without detailed service usage metrics and specific service level agreements (SLAs). However, agencies often leverage government-wide acquisition contracts (GWACs) or enterprise agreements that may offer volume discounts. A sole-source award without such a framework could potentially be more expensive than a competitively bid solution.

What are the potential risks associated with relying on a single cloud provider for such a critical function, and are there mitigation strategies in place?

Risks include vendor lock-in, potential price increases upon contract renewal, and dependency on the provider's security and uptime. Mitigation strategies can involve multi-cloud architectures (though not applicable here due to sole-source), robust contract terms regarding data portability and price adjustments, and continuous monitoring of the provider's performance and security posture.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT003822R0004

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Koniag, Inc.

Address: 3800 CENTERPOINT DR STE 502, ANCHORAGE, AK, 99503

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

Financial Breakdown

Contract Ceiling: $21,857,533

Exercised Options: $21,857,533

Current Obligation: $21,789,533

Actual Outlays: $2,418,534

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT003822D0008

IDV Type: IDC

Timeline