Navy ERP Transition Contract Awarded to SAP for $10.96M

Contract Overview

Contract Amount: $10,960,554 ($11.0M)

Contractor: SAP Public Services Inc

Awarding Agency: Department of Defense

Start Date: 2007-11-17

End Date: 2012-11-16

Contract Duration: 1,826 days

Daily Burn Rate: $6.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: ASSIST THE NAVY IN A COMPLETE TRANSITION FROM ERP BLUEPRINTING, AND INACHIEVING FULL REALIZATION, DEPLOYMENT, AND SUSTAINMENT OF THE THREE NAVY ERP RELEASES.

Place of Performance

Location: ANNAPOLIS, ANNE ARUNDEL County, MARYLAND, 21401

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $11.0 million to SAP PUBLIC SERVICES INC for work described as: ASSIST THE NAVY IN A COMPLETE TRANSITION FROM ERP BLUEPRINTING, AND INACHIEVING FULL REALIZATION, DEPLOYMENT, AND SUSTAINMENT OF THE THREE NAVY ERP RELEASES. Key points: 1. The contract focuses on the Navy's Enterprise Resource Planning (ERP) system transition, a critical but complex IT undertaking. 2. SAP Public Services Inc. is the sole contractor, raising questions about competition and potential price discovery. 3. The contract duration of 1826 days (5 years) suggests a significant, long-term project with inherent risks. 4. The award falls under the 'Computer and Software Stores' NAICS code, indicating a focus on software and related services.

Value Assessment

Rating: questionable

The contract value of $10.96M over five years is difficult to benchmark without specific details on the scope of ERP releases and sustainment. Given the complexity of ERP systems, the pricing could be reasonable if it reflects comprehensive support, but the lack of competitive bidding makes a definitive assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Although listed as 'full-and-open', the data indicates only one awardee, SAP Public Services Inc. This suggests either a highly specialized requirement or a potential lack of robust outreach to other qualified vendors. The absence of multiple bids limits price discovery and competitive pressure.

Taxpayer Impact: The impact on taxpayers is uncertain. While a full and open competition theoretically drives better prices, the single awardee scenario may have resulted in a higher cost than if multiple vendors had competed.

Public Impact

Impacts the Navy's core financial and operational systems, affecting efficiency and data management. Potential for disruption during the transition phase if not managed effectively. Long-term reliance on SAP for critical infrastructure could create vendor lock-in.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of demonstrated competition despite 'full-and-open' designation
Potential for cost overruns in complex ERP implementations
Long contract duration increases risk exposure

Positive Signals

Focus on a critical modernization effort for the Navy
Clear objective for system transition and realization

Sector Analysis

This contract falls within the IT sector, specifically focusing on enterprise resource planning software and implementation services. Spending benchmarks for large-scale ERP projects vary widely based on scope, complexity, and the specific software suite. However, multi-million dollar contracts for such systems are common within large government agencies.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses. Large-scale IT system implementations like ERP transitions often involve prime contractors who may then subcontract, but the primary awardee here is a large corporation.

Oversight & Accountability

The contract was awarded by the Department of Defense to the Department of the Navy. Oversight would typically involve program management reviews, performance metrics tracking, and financial audits to ensure the successful transition and sustainment of the ERP system.

Related Government Programs

Computer and Software Stores
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for vendor lock-in
Complexity of ERP system implementation
Lack of clear competitive landscape despite 'full-and-open' designation
Long-term reliance on a single vendor for critical infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.0 million to SAP PUBLIC SERVICES INC. ASSIST THE NAVY IN A COMPLETE TRANSITION FROM ERP BLUEPRINTING, AND INACHIEVING FULL REALIZATION, DEPLOYMENT, AND SUSTAINMENT OF THE THREE NAVY ERP RELEASES.

Who is the contractor on this award?

The obligated recipient is SAP PUBLIC SERVICES 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 $11.0 million.

What is the period of performance?

Start: 2007-11-17. End: 2012-11-16.

What specific metrics were used to evaluate SAP's proposal and ensure value for money in this full and open competition, given only one award was made?

Without access to the source selection documentation, it's impossible to know the specific metrics. However, typical evaluation criteria for such contracts include technical approach, past performance, management plan, and price. For a full and open competition resulting in a single award, the government would need to demonstrate that only one offeror met the minimum requirements or that the single offeror provided the best value based on the stated evaluation factors.

What are the primary risks associated with a five-year ERP transition and sustainment contract, and how are they being mitigated?

Key risks include scope creep, integration challenges with existing systems, data migration errors, user adoption issues, and potential cost overruns. Mitigation strategies typically involve robust project management, phased rollouts, comprehensive testing, strong change management processes, and clear communication channels between the government and the contractor.

How will the success of the Navy's full realization, deployment, and sustainment of the three ERP releases be measured and verified?

Success will likely be measured through key performance indicators (KPIs) related to system uptime, data accuracy, transaction processing times, user satisfaction, and achievement of specific business process improvements. Verification would involve regular performance reviews, independent audits, and user acceptance testing throughout the deployment and sustainment phases.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: SAP AG (UEI: 316268655)

Address: 1300 PENN AVE NW STE 500, WASHINGTON, DC, 98

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $31,159,637

Exercised Options: $21,493,903

Current Obligation: $10,960,554

Parent Contract

Parent Award PIID: GS35F5891H

IDV Type: FSS

Timeline