DoD's $61.7M IT services contract awarded to Peraton Enterprise Solutions shows potential value concerns

Contract Overview

Contract Amount: $61,696,654 ($61.7M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2011-12-31

End Date: 2012-09-30

Contract Duration: 274 days

Daily Burn Rate: $225.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OTHER ADP AND TELECOMMUNICATIONS SVS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $61.7 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: OTHER ADP AND TELECOMMUNICATIONS SVS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Duration of 274 days suggests a short-term need for services. 3. Fixed-price contract type can shift risk to the contractor. 4. Services fall under 'Other Computer Related Services,' a broad category. 5. Awarded by the Department of the Navy, a major defense spender. 6. Contract value of $61.7M is significant for this service category.

Value Assessment

Rating: questionable

The contract's value of $61.7 million for 274 days of 'Other Computer Related Services' warrants scrutiny. Without competitive bidding, it's difficult to benchmark against market rates or similar contracts. The fixed-price nature is positive for budget certainty, but the lack of competition raises questions about whether the government secured the best possible price. Further analysis would require comparing the scope of services to industry standards and typical pricing for similar engagements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Peraton Enterprise Solutions LLC, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently reduce transparency and the potential for cost savings.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most cost-effective solution, as the absence of competition limits price discovery and negotiation leverage.

Public Impact

The Department of the Navy benefits from IT services to support its operations. The contract likely supports critical defense infrastructure and administrative functions. Services are geographically focused within Virginia, where the contract was awarded. The contract supports IT professionals employed by Peraton Enterprise Solutions LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant dollar amount raises concerns about potential overpayment.
The broad 'Other Computer Related Services' category makes it difficult to assess the specific value delivered.
Sole-source awards can indicate a lack of market research or a reliance on a single vendor.

Positive Signals

Fixed-price contract shifts performance risk to the contractor.
Awarded to a known entity, Peraton Enterprise Solutions LLC, suggesting some level of pre-qualification or existing relationship.

Sector Analysis

The IT services sector is vast and highly competitive, encompassing a wide range of specialized services. This contract falls under 'Other Computer Related Services,' a broad NAICS code (541519) that includes IT consulting, systems integration, and custom software development. While specific market size data for this sub-segment is difficult to isolate, the overall IT services market is worth hundreds of billions annually. The Department of Defense is a major consumer of these services, often awarding large, complex contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses. The award to Peraton Enterprise Solutions LLC, a large entity, suggests that the primary focus was on securing the required services rather than promoting small business participation. This could mean missed opportunities for small businesses to contribute to defense IT needs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, there may be heightened scrutiny from oversight bodies like the Government Accountability Office (GAO) or the Inspector General if concerns arise regarding the justification for the sole-source award or the value received. Transparency is limited due to the lack of a competitive process.

Related Government Programs

Department of Defense IT Services
Navy IT Modernization Programs
Other Computer Related Services Contracts
Sole-Source IT Procurements

Risk Flags

Sole-source award lacks competitive pricing.
Broad service category makes value assessment difficult.
Significant contract value for a relatively short duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.7 million to PERATON ENTERPRISE SOLUTIONS LLC. OTHER ADP AND TELECOMMUNICATIONS SVS

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $61.7 million.

What is the period of performance?

Start: 2011-12-31. End: 2012-09-30.

What specific IT services were delivered under this contract?

The contract falls under the NAICS code 541519, 'Other Computer Related Services.' This is a broad category that can encompass a wide array of IT support, including but not limited to IT consulting, systems integration, custom software development, and IT project management. Without more specific details within the contract documentation, it is challenging to pinpoint the exact nature of the services rendered. However, given the awarding agency is the Department of the Navy, these services likely supported critical defense operations, administrative functions, or IT infrastructure maintenance and upgrades.

What is the typical cost for similar 'Other Computer Related Services' contracts within the DoD?

Benchmarking the cost of 'Other Computer Related Services' is complex due to the broad nature of the NAICS code and the varying scope of work. However, contracts of this magnitude ($61.7 million) typically involve extensive, long-term support or significant project-based work. For sole-source awards, the absence of competitive bids makes direct comparison difficult. Generally, competitive solicitations for similar services might yield a lower per-unit cost or a more defined scope for the price. The duration of 274 days for this contract suggests a substantial daily or monthly rate, which would need to be evaluated against industry standards for specialized IT support.

What are the risks associated with sole-source IT contracts for the government?

Sole-source IT contracts carry several risks for the government. The primary risk is the potential for overpayment, as the absence of competition removes the downward pressure on pricing that a bidding process provides. This can lead to taxpayers not receiving the best value for their money. Another risk is reduced innovation; contractors may have less incentive to offer cutting-edge solutions when they are the only option. Furthermore, sole-source awards can sometimes indicate a lack of adequate market research or an over-reliance on a single vendor, potentially creating vendor lock-in and limiting future flexibility. There's also a risk of complacency from the awarded contractor regarding performance and service quality.

How does the fixed-price contract type impact this award?

The 'FIRM FIXED PRICE' (FFP) contract type is generally favorable for the government as it shifts the majority of the performance risk to the contractor, Peraton Enterprise Solutions LLC. Under an FFP contract, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides budget certainty for the Department of the Navy. However, if the contractor significantly underestimates costs or encounters unforeseen issues, they bear the financial burden. Conversely, if the contractor manages costs efficiently, they realize a higher profit margin. The effectiveness of FFP relies heavily on a well-defined scope of work to prevent disputes and change orders.

What is Peraton Enterprise Solutions LLC's track record with the federal government?

Peraton Enterprise Solutions LLC is a significant federal contractor, particularly within the defense and intelligence sectors. They have a history of winning large, complex contracts, often in areas like IT modernization, cybersecurity, and mission support. While specific performance details for every contract are not publicly available, their continued success in securing substantial government awards suggests a generally positive track record and established capabilities. However, as with any large contractor, there may be specific contracts or periods where performance issues have arisen, which would require deeper investigation into individual contract histories and any associated performance reviews or disputes.

What is the historical spending trend for 'Other Computer Related Services' by the Department of the Navy?

Historical spending data for the specific NAICS code 541519 by the Department of the Navy shows a consistent and substantial investment in IT-related services. Over the years, the Navy, like other branches of the DoD, has increasingly relied on external contractors for specialized IT support, modernization efforts, and the maintenance of complex systems. While the total dollar amount fluctuates annually based on specific program needs, technological advancements, and budget allocations, spending in this category generally remains high. This particular $61.7 million award, while significant, is likely part of a larger, ongoing trend of outsourcing IT functions to leverage specialized expertise and manage evolving technological landscapes.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: HP, Inc.

Address: 13600 EDS DR, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $61,696,654

Exercised Options: $61,696,654

Current Obligation: $61,696,654

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003910D0010

IDV Type: IDC

Timeline