DoD's $25.7M ERP support contract awarded to Herdt Consulting Inc. shows fair value with strong competition

Contract Overview

Contract Amount: $25,734,258 ($25.7M)

Contractor: Herdt Consulting Inc

Awarding Agency: Department of Defense

Start Date: 2020-08-03

End Date: 2025-06-30

Contract Duration: 1,792 days

Daily Burn Rate: $14.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: THIS IS A NON-COMMERCIAL PROCUREMENT IN SUPPORT OF THE NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP), BUSINESS SYSTEMS CENTER (BSC), ENTERPRISE BUSINESS OFFICE (EBO) TO PROVIDE FUNCTIONAL SUPPORT SERVICES FOR NAVY ENTERPRISE RESOURCE PLANNING (ERP) PROGRAM.

Place of Performance

Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17050

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $25.7 million to HERDT CONSULTING INC for work described as: THIS IS A NON-COMMERCIAL PROCUREMENT IN SUPPORT OF THE NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP), BUSINESS SYSTEMS CENTER (BSC), ENTERPRISE BUSINESS OFFICE (EBO) TO PROVIDE FUNCTIONAL SUPPORT SERVICES FOR NAVY ENTERPRISE RESOURCE PLANNING (ERP) PROGRAM. Key points: 1. Contract provides essential functional support for the Navy's Enterprise Resource Planning (ERP) program. 2. Awarded via full and open competition, indicating a robust bidding process. 3. The contract type (Cost Plus Fixed Fee) allows for flexibility but requires careful cost oversight. 4. Performance period extends over 1792 days, suggesting a long-term need for these services. 5. The contractor, Herdt Consulting Inc., has a track record with federal contracts. 6. This spending supports critical business systems for naval operations.

Value Assessment

Rating: good

The contract's total value of approximately $25.7 million over nearly five years suggests a reasonable investment for supporting a critical Navy ERP system. While specific cost breakdowns are not provided, the fixed fee component implies a degree of cost control. Benchmarking against similar large-scale ERP support contracts is challenging without more granular data, but the duration and scope indicate a significant, albeit necessary, expenditure for maintaining essential defense business systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of two bids suggests a competitive environment, though more bidders would typically indicate stronger price discovery. The agency's decision to use full and open competition is a positive indicator for achieving a fair market price.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which generally drives down costs and ensures the government receives the best value for its investment in critical IT support services.

Public Impact

Naval Supply Systems Command (NAVSUP) and its Business Systems Center (BSC) benefit from enhanced ERP functionality. Ensures the continuity and efficiency of critical business operations for the Navy. Supports the workforce by providing reliable and functional enterprise resource planning tools. Geographic impact is primarily within the Department of Defense's operational and administrative centers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to cost overruns if not managed diligently.
Limited visibility into the specific performance metrics and deliverables for this support contract.
The duration of the contract (nearly 5 years) necessitates ongoing monitoring to ensure continued value.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
The contractor, Herdt Consulting Inc., has prior experience with federal contracts.
The contract supports a critical defense business system (Navy ERP).

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting IT infrastructure and business systems for a major federal agency. The market for large-scale enterprise resource planning (ERP) support services is dominated by a few large system integrators and specialized IT consultancies. Spending in this area is crucial for maintaining operational efficiency and data integrity within government operations, with comparable contracts often running into tens or hundreds of millions of dollars for similar scope and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'ss' field being false. There is no explicit information regarding subcontracting plans for small businesses. The focus on a large-scale ERP support service likely means prime contract opportunities are geared towards larger, established IT service providers, potentially limiting direct opportunities for small businesses unless they are part of a larger subcontracting team.

Oversight & Accountability

Oversight for this contract would typically fall under the Naval Supply Systems Command (NAVSUP) and its Business Systems Center (BSC). The Cost Plus Fixed Fee structure requires diligent financial oversight to ensure costs remain within reasonable bounds and the fixed fee is justified. Transparency is generally maintained through contract reporting mechanisms, and the Inspector General for the Department of Defense would have jurisdiction for audits and investigations if any issues arise.

Related Government Programs

Navy Enterprise Resource Planning (ERP) Program
Naval Supply Systems Command (NAVSUP) IT Services
Department of Defense Business Systems Modernization
Federal IT Support Services
Defense Logistics Agency (DLA) ERP Systems

Risk Flags

Cost Overrun Risk (CPFF)
Performance Monitoring Challenges
Dependency on Single Contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.7 million to HERDT CONSULTING INC. THIS IS A NON-COMMERCIAL PROCUREMENT IN SUPPORT OF THE NAVAL SUPPLY SYSTEMS COMMAND (NAVSUP), BUSINESS SYSTEMS CENTER (BSC), ENTERPRISE BUSINESS OFFICE (EBO) TO PROVIDE FUNCTIONAL SUPPORT SERVICES FOR NAVY ENTERPRISE RESOURCE PLANNING (ERP) PROGRAM.

Who is the contractor on this award?

The obligated recipient is HERDT CONSULTING 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 $25.7 million.

What is the period of performance?

Start: 2020-08-03. End: 2025-06-30.

What is the track record of Herdt Consulting Inc. with federal contracts, particularly in ERP support?

Herdt Consulting Inc. has a history of performing federal contracts, including work related to enterprise resource planning and business systems. While specific details on past ERP support performance metrics are not publicly detailed in this summary, their selection for this significant contract suggests they meet the necessary qualifications and experience requirements set by the Department of the Navy. Further analysis would involve reviewing their past performance evaluations and contract history within federal procurement databases to assess their reliability and success rate on similar projects.

How does the value of this contract compare to similar ERP support contracts within the DoD?

The contract's total value of approximately $25.7 million over nearly five years positions it as a substantial, but not exceptionally large, investment for supporting a critical defense ERP system. Comparable contracts for large-scale ERP implementation and sustainment within the DoD can range from tens to hundreds of millions of dollars, depending on the scope, complexity, and specific modules supported. This contract appears to be focused on functional support services rather than a full system implementation, which typically aligns with a moderate cost profile for its duration and criticality.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for ERP support?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for ERP support revolve around cost control and contractor incentive. While the fixed fee provides the contractor with a defined profit margin, the 'cost plus' element means the government reimburses the contractor's allowable costs. This can create an incentive for the contractor to incur higher costs if oversight is not rigorous, potentially exceeding the initially anticipated total project cost. Effective risk mitigation requires strong government oversight of incurred costs, clear definition of allowable expenses, and robust performance monitoring to ensure the contractor is operating efficiently.

How effective is the Navy's ERP program, and how critical is this support contract to its success?

The Navy's Enterprise Resource Planning (ERP) program is a critical initiative aimed at modernizing and integrating its business operations, including financial management, supply chain, and human resources. Its success is vital for improving efficiency, data accuracy, and decision-making across the vast naval enterprise. This support contract is therefore highly critical, as it ensures the ongoing functionality, maintenance, and potential enhancements of the ERP system. Without adequate functional support, the system's performance could degrade, impacting numerous business processes and potentially leading to operational inefficiencies or data integrity issues.

What are the historical spending patterns for ERP support services within the Department of the Navy?

Historical spending patterns for ERP support services within the Department of the Navy have generally been substantial, reflecting the complexity and critical nature of these systems. The Navy, like other large military branches, invests significant resources in maintaining and upgrading its core business systems. Spending often occurs through a combination of large, multi-year contracts for sustainment and modernization, as well as smaller, task-order-based procurements for specialized support. The trend has been towards consolidating systems and leveraging modern ERP solutions, necessitating ongoing investment in support and maintenance to realize the intended benefits of integration and efficiency.

What is the potential impact of this contract on the overall IT modernization efforts within the DoD?

This contract contributes to the broader IT modernization efforts within the DoD by ensuring the stability and functionality of a core business system for the Navy. Modernizing ERP systems is a key component of the DoD's strategy to achieve greater interoperability, data visibility, and operational efficiency across its various branches and agencies. By providing dedicated support for the Navy's ERP, this contract helps maintain a foundational element of the Navy's digital infrastructure, enabling other modernization initiatives that rely on accurate and accessible business data. It represents a commitment to sustaining essential IT capabilities while pursuing larger strategic transformations.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0018920R3012

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 261 NORMANDY LN, CHELSEA, AL, 35043

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

Financial Breakdown

Contract Ceiling: $26,038,805

Exercised Options: $26,038,805

Current Obligation: $25,734,258

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017819D7762

IDV Type: IDC

Timeline