DoD's $60.7M IT services contract to General Dynamics Information Technology raises value and competition concerns

Contract Overview

Contract Amount: $60,667,220 ($60.7M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-12-29

End Date: 2014-09-29

Contract Duration: 639 days

Daily Burn Rate: $94.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IT SERVICES FOR TECHNOLOGY SERVICES ORGANIZATION, USMC

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64131

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $60.7 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IT SERVICES FOR TECHNOLOGY SERVICES ORGANIZATION, USMC Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending without guaranteed efficiency. 2. Lack of competition suggests potential for inflated pricing and reduced innovation. 3. The contract's duration and cost warrant scrutiny for long-term value. 4. Performance context is limited due to the 'not competed' status. 5. This contract falls within the IT services sector, a common area for significant federal spending.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without competitive benchmarks. The cost-plus-fixed-fee (CPFF) pricing structure, while offering flexibility, can lead to cost overruns if not tightly managed. The award amount of $60.7 million over approximately two years suggests a significant investment. Benchmarking against similar custom computer programming services contracts would be necessary to determine if the pricing is fair and reasonable. The absence of competition further complicates a robust value assessment.

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 among multiple vendors. This approach limits the government's ability to solicit the best possible pricing and technical solutions from the market. Without a competitive bidding process, it is challenging to ascertain if the selected contractor, General Dynamics Information Technology, Inc., offered the most advantageous terms.

Taxpayer Impact: Sole-source awards can result in taxpayers paying higher prices than they would in a competitive environment, as the potential for price discovery through bidding is eliminated.

Public Impact

The U.S. Marine Corps (USMC) is the primary beneficiary of these IT services. Services delivered likely include custom software development, system integration, and IT support for the USMC. The geographic impact is primarily within the USMC's operational areas, likely supporting military bases and personnel. Workforce implications may include the employment of IT professionals by General Dynamics Information Technology, Inc. to fulfill the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize spending over efficiency.
Limited transparency due to sole-source award and lack of detailed performance metrics in the provided data.

Positive Signals

General Dynamics Information Technology, Inc. is a large, established contractor with experience in government IT services.
The contract addresses specific IT needs for a major military branch (USMC).

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically custom computer programming services. The federal IT services market is substantial, with agencies constantly seeking to modernize systems and enhance cybersecurity. Contracts like this are crucial for maintaining and upgrading the technological infrastructure that supports military operations. Comparable spending benchmarks would involve analyzing other large IT service contracts awarded to prime contractors for defense agencies.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. The prime contractor, General Dynamics Information Technology, Inc., is a large business, and any subcontracting would be at their discretion, not mandated by a set-aside program.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Department of the Navy's contracting officers and program managers. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring the contractor to adhere to agreed-upon costs and performance standards. Transparency is limited by the sole-source nature of the award and the lack of publicly available detailed performance reports. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Information Technology Contracting Office
Marine Corps Systems Command IT Support
Department of Defense IT Modernization Programs
Custom Software Development Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.7 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IT SERVICES FOR TECHNOLOGY SERVICES ORGANIZATION, USMC

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $60.7 million.

What is the period of performance?

Start: 2012-12-29. End: 2014-09-29.

What is the track record of General Dynamics Information Technology, Inc. with the Department of Defense?

General Dynamics Information Technology, Inc. (GDIT) has a long and extensive history of contracting with the Department of Defense (DoD) and other federal agencies. They are a major provider of IT services, including systems integration, software development, cybersecurity, and cloud solutions. GDIT has held numerous large-scale contracts across various military branches and defense agencies, supporting critical missions. Their track record generally indicates significant experience and capability in delivering complex IT solutions for government clients. However, like any large contractor, they have also faced scrutiny and reviews on specific contracts regarding performance, cost, and compliance. A detailed review of their past performance on similar CPFF contracts with the Navy or USMC would provide further insight into their reliability and efficiency in managing such agreements.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for IT services?

The Cost Plus Fixed Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or when there is significant uncertainty in the cost of performance, such as in research and development or complex IT projects with evolving requirements. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the contractor to adapt to changing needs but shifts more cost risk to the government. It can be less cost-effective for the government than FFP if costs escalate significantly. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives to better align contractor and government interests, potentially mitigating some of the cost risks associated with pure CPFF.

What are the potential risks associated with a sole-source IT services contract of this magnitude?

Sole-source IT services contracts of this magnitude carry several significant risks. Firstly, the lack of competition means the government may not achieve the best possible price, potentially leading to overpayment. Secondly, without competing proposals, the government might miss out on innovative solutions or superior technical approaches offered by other vendors. Thirdly, the incumbent contractor may have less incentive to control costs or improve efficiency, knowing they are the only option. This can also lead to vendor lock-in, making it difficult and costly to switch providers in the future. Finally, the absence of a competitive process can reduce transparency and make it harder to justify the contract's value to taxpayers and oversight bodies.

What does the 'Custom Computer Programming Services' (NAICS 541511) designation imply about the services rendered?

The NAICS code 541511, 'Custom Computer Programming Services,' indicates that the contract's primary focus is on designing, developing, and implementing custom software solutions tailored to the specific needs of the U.S. Marine Corps. This typically involves activities such as writing, modifying, testing, and supporting software code. It can encompass a wide range of services, including application development, database programming, system integration, and the creation of specialized software for command and control, logistics, intelligence, or operational planning. This designation suggests that the contract is not for off-the-shelf software or general IT support, but rather for bespoke development work requiring specialized programming expertise to meet unique military requirements.

How does the contract duration (639 days) and award amount ($60.7M) translate to a daily or monthly cost?

The contract duration is approximately 639 days, which is about 21 months (639 days / ~30.4 days/month). The total award amount is $60,667,220.40. To estimate a daily cost, we divide the total award by the duration: $60,667,220.40 / 639 days ≈ $94,941 per day. On a monthly basis, this would be approximately $94,941/day * ~30.4 days/month ≈ $2,886,200 per month. This figure represents the average daily or monthly expenditure rate for the IT services provided under this contract. It's important to note that this is an average, and actual spending could fluctuate based on the phases of the project and the specific tasks being performed.

Industry Classification

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

Solicitation ID: M0026413R0017

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: 4045 HANCOCK ST, SAN DIEGO, CA, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $61,492,037

Exercised Options: $61,492,037

Current Obligation: $60,667,220

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $97,783,260

Contract Characteristics

Cost or Pricing Data: NO

Timeline