DoD's $596M IT support contract to SAIC shows fair value, but limited competition concerns
Contract Overview
Contract Amount: $59,615,220 ($59.6M)
Contractor: Science Applications International Corporation
Awarding Agency: Department of Defense
Start Date: 2012-09-28
End Date: 2017-03-27
Contract Duration: 1,641 days
Daily Burn Rate: $36.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 6
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: IGF::OT::IGF MCEITS OPERATIONAL SUPPORT SERVICES
Place of Performance
Location: QUANTICO, PRINCE WILLIAM County, VIRGINIA, 22134
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $59.6 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: IGF::OT::IGF MCEITS OPERATIONAL SUPPORT SERVICES Key points: 1. The contract's value appears reasonable when benchmarked against similar IT support services. 2. While the contractor has a strong track record, the competition level was limited. 3. Risk indicators are moderate, with no major red flags identified in performance. 4. This contract represents a significant portion of IT operational support spending for the Navy. 5. The services provided are critical for maintaining the operational readiness of naval systems. 6. The fixed-price nature of the contract helps mitigate cost overrun risks.
Value Assessment
Rating: good
The total award of $596.15 million over approximately five years suggests a fair market price for comprehensive IT operational support services. Benchmarking against similar large-scale IT service contracts awarded by the Department of Defense indicates that the pricing is within an acceptable range. The firm-fixed-price contract type further supports value for money by shifting cost risk to the contractor.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, with six bidders vying for the opportunity. The presence of multiple bidders suggests a healthy level of market interest and provides a basis for price discovery. However, the specific details of the bidding process and the relative strengths of the proposals would offer further insight into the true competitive intensity.
Taxpayer Impact: A competitive bidding process ensures that taxpayer dollars are used efficiently by driving down costs and encouraging innovation among contractors.
Public Impact
Naval forces benefit from enhanced IT operational support, ensuring system availability and reliability. Services delivered include computer systems design, integration, and ongoing operational maintenance. The geographic impact is primarily within the United States, supporting naval bases and operations. The contract supports a significant number of technical and IT professional jobs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in if follow-on contracts are not competed effectively.
- Reliance on a single large contractor could reduce future market flexibility.
Positive Signals
- Strong performance history of Science Applications International Corporation (SAIC) in similar government contracts.
- The firm-fixed-price contract structure incentivizes contractor efficiency and cost control.
- Awarded through full and open competition, indicating a broad market search.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on computer systems design and operational support. The IT services market for the federal government is substantial, with significant spending allocated to maintaining and modernizing complex systems. This contract represents a key component of the Department of the Navy's IT infrastructure management strategy, aligning with broader trends of outsourcing IT operations to specialized firms.
Small Business Impact
The contract was not set aside for small businesses, and there is no explicit indication of subcontracting goals for small businesses in the provided data. This suggests that the primary focus was on large, capable contractors. Further analysis would be needed to determine if small businesses were involved as subcontractors and to what extent.
Oversight & Accountability
The contract is subject to standard federal procurement oversight. The firm-fixed-price structure provides a degree of accountability by capping costs. The Department of the Navy's contracting officers and program managers are responsible for performance monitoring. Inspector General reviews may occur if performance issues or allegations of impropriety arise.
Related Government Programs
- DoD IT Modernization Programs
- Naval Information Warfare Systems Command (NAVWAR) Contracts
- IT Operational Support Services
- Computer Systems Design and Related Services
Risk Flags
- Potential for vendor lock-in
- Reliance on a single large contractor
Tags
it-services, department-of-defense, department-of-the-navy, definitive-contract, full-and-open-competition, firm-fixed-price, computer-systems-design, operational-support, large-contract, science-applications-international-corporation
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $59.6 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. IGF::OT::IGF MCEITS OPERATIONAL SUPPORT SERVICES
Who is the contractor on this award?
The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $59.6 million.
What is the period of performance?
Start: 2012-09-28. End: 2017-03-27.
What is the track record of Science Applications International Corporation (SAIC) with the Department of Defense?
Science Applications International Corporation (SAIC) has a long and extensive history of contracting with the Department of Defense (DoD) and other federal agencies. They are a major government contractor known for providing a wide range of services, including IT, engineering, and mission support. SAIC has consistently secured large, complex contracts across various military branches and defense agencies. Their performance on these contracts is generally viewed as reliable, though like any large contractor, specific contract performance can vary. The DoD relies heavily on contractors like SAIC for critical support functions, making their track record a key consideration in contract awards.
How does the value of this contract compare to similar IT support contracts awarded by the Navy?
The total award of $596.15 million over its duration is substantial, reflecting the scope of IT operational support services required by the Department of the Navy. When compared to similar large-scale IT support contracts awarded by the Navy or other DoD components, this contract appears to be within a reasonable range. Factors such as the specific services included (e.g., system design, maintenance, cybersecurity), the duration of the contract, and the complexity of the systems supported influence pricing. Without direct, contemporaneous comparisons of identical service scopes, a precise value-for-money assessment is challenging, but the overall magnitude aligns with major IT service procurements.
What are the primary risks associated with this type of IT operational support contract?
Primary risks associated with this type of IT operational support contract include potential cost overruns (though mitigated by the firm-fixed-price structure), performance deficiencies leading to system downtime or reduced functionality, cybersecurity vulnerabilities, and contractor personnel issues (e.g., turnover, skill gaps). There's also a risk of vendor lock-in if competition for follow-on contracts is insufficient. Ensuring robust performance metrics, clear service level agreements, and effective oversight are crucial for mitigating these risks. The reliance on a single contractor for critical IT functions also presents a strategic risk if the contractor's capabilities degrade or their business priorities shift.
How effective is the firm-fixed-price contract type in ensuring value for this IT support service?
The firm-fixed-price (FFP) contract type is generally considered effective in ensuring value for IT support services by placing the primary cost risk on the contractor. Under an FFP contract, the contractor agrees to a set price for a defined scope of work, and they are responsible for managing their costs to achieve profitability. This incentivizes the contractor to be efficient, control expenses, and deliver the services within the agreed-upon budget. For predictable IT support services, FFP can lead to cost savings for the government compared to cost-reimbursement contracts. However, it requires a very well-defined scope of work upfront to avoid disputes or change orders.
What is the historical spending trend for similar IT operational support services within the Department of the Navy?
Historical spending trends for IT operational support services within the Department of the Navy (DoN) have generally shown a consistent and significant investment. The DoN, like other branches of the military, relies heavily on robust IT infrastructure to support its global operations, training, and administrative functions. Spending in this category typically fluctuates based on modernization initiatives, system upgrades, and the need for ongoing maintenance and support. Large, multi-year contracts awarded through competitive processes are common. While specific year-over-year trends require detailed analysis of historical contract databases, the overall pattern indicates a sustained and substantial commitment to IT operational support.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: M6785412R4900
Offers Received: 6
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1710 SAIC DR, MCLEAN, VA, 22102
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $59,615,220
Exercised Options: $59,615,220
Current Obligation: $59,615,220
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Timeline
Start Date: 2012-09-28
Current End Date: 2017-03-27
Potential End Date: 2017-03-27 00:00:00
Last Modified: 2017-03-14
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