DoD's $17.8M contract for software publishers shows limited competition and potential value concerns

Contract Overview

Contract Amount: $17,831,200 ($17.8M)

Contractor: Problem-Knowledge Coupler Corporation

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2012-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $16.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PROGRAM-KNOWLEDGE COUPLERS (PKC)

Place of Performance

Location: BURLINGTON, CHITTENDEN County, VERMONT, 05401

State: Vermont Government Spending

Plain-Language Summary

Department of Defense obligated $17.8 million to PROBLEM-KNOWLEDGE COUPLER CORPORATION for work described as: PROGRAM-KNOWLEDGE COUPLERS (PKC) Key points: 1. The contract's value appears high relative to its duration and the limited competition. 2. Lack of competition raises questions about price discovery and potential overpayment. 3. The firm fixed-price contract type offers some cost certainty but may not reflect market value. 4. The contractor has a sole-source relationship for this specific product. 5. The contract duration of three years is standard for software licensing. 6. The contract falls within the broader IT and defense sectors.

Value Assessment

Rating: questionable

Benchmarking this contract is challenging due to its sole-source nature and the specific software product. However, the total value of $17.8 million over three years for software licensing, especially without competitive pressure, suggests a potentially high per-unit cost or an inflated overall price. Without comparable bids or market analysis, it's difficult to definitively assess value for money, but the lack of competition is a significant red flag.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was considered. This typically occurs when a specific product or service is uniquely available from a single provider, or in cases of urgent need where competition is impractical. The lack of a competitive bidding process means the government did not explore alternative solutions or negotiate based on multiple offers, potentially leading to higher costs.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competition, potentially resulting in taxpayer funds being used less efficiently.

Public Impact

The primary beneficiary is the contractor, PROBLEM-KNOWLEDGE COUPLER CORPORATION, for providing specialized software. The Department of Defense receives essential software for its operations. The geographic impact is primarily within the Department of Defense's operational footprint. Workforce implications are minimal, as this is a software procurement rather than a service contract requiring significant labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and value assessment.
Potential for overpayment due to lack of competitive bidding.
Lack of transparency in the procurement process.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Contract duration aligns with typical software licensing periods.
Contract supports critical defense operations.

Sector Analysis

This contract falls within the Software Publishers industry (NAICS 511210), a segment of the broader Information Technology sector. The market for specialized software, particularly for defense applications, can be niche. While the overall IT market is vast, contracts for specific, proprietary software solutions often face limited competition. Comparable spending benchmarks are difficult to establish without knowing the exact nature of the software, but large sole-source software licenses can represent significant investments.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a single, likely established, software provider suggests that small businesses were not actively solicited or considered for this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Defense Contract Management Agency (DCMA) may have oversight responsibilities. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Procurement
Software Licensing Agreements
Sole-Source IT Contracts
Defense Software Solutions

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.8 million to PROBLEM-KNOWLEDGE COUPLER CORPORATION. PROGRAM-KNOWLEDGE COUPLERS (PKC)

Who is the contractor on this award?

The obligated recipient is PROBLEM-KNOWLEDGE COUPLER CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $17.8 million.

What is the period of performance?

Start: 2009-10-01. End: 2012-09-30.

What is the specific function and criticality of the 'PROGRAM-KNOWLEDGE COUPLERS (PKC)' software to the Department of Defense?

The provided data does not specify the exact function or criticality of the 'PROGRAM-KNOWLEDGE COUPLERS (PKC)' software. However, given its procurement by the Department of Defense (DoD) and the substantial value of the contract ($17.8 million), it can be inferred that the software serves an important operational or administrative purpose. Software in defense contexts often relates to data management, intelligence analysis, logistics, command and control, or simulation and training. The sole-source nature suggests it might be a highly specialized tool, possibly proprietary, that integrates with existing DoD systems or addresses a unique requirement not met by commercially available off-the-shelf (COTS) software. Further investigation into the specific program office that awarded this contract and the software's intended use would be necessary to determine its precise function and criticality.

How does the $17.8 million contract value compare to similar software licensing agreements within the DoD or other federal agencies?

Direct comparison of the $17.8 million contract value is difficult without knowing the specific software product and its capabilities. However, for a three-year firm fixed-price contract, this amount is substantial. Federal agencies, particularly the DoD, often procure software licenses ranging from thousands to millions of dollars, depending on the complexity, user base, and vendor. Sole-source awards, like this one, tend to be more expensive than competitively procured software due to the absence of price negotiation leverage. To benchmark effectively, one would need to identify comparable software solutions (e.g., data analytics platforms, specialized simulation tools, enterprise resource planning modules) procured competitively or through other sole-source agreements within the DoD or similar agencies, considering factors like the number of users, support levels, and contract duration.

What are the potential risks associated with a sole-source procurement of this magnitude for software?

The primary risk associated with a sole-source procurement of this magnitude is the potential for inflated pricing and reduced value for money. Without competitive bidding, the government lacks the leverage to negotiate the lowest possible price, potentially leading to overpayment. There's also a risk of vendor lock-in, where the agency becomes dependent on a single provider, making future transitions or upgrades more costly and complex. Furthermore, sole-source awards can sometimes indicate a lack of market research or an inability to identify suitable alternative solutions, which could point to inefficiencies in the procurement process. Finally, the lack of transparency inherent in sole-source deals can raise concerns about fairness and the best use of taxpayer funds.

What is the track record of PROBLEM-KNOWLEDGE COUPLER CORPORATION in securing federal contracts, particularly sole-source awards?

The provided data indicates that PROBLEM-KNOWLEDGE COUPLER CORPORATION was awarded this specific $17.8 million contract. To assess their track record, a broader search of federal procurement databases (like USASpending.gov or FPDS) would be necessary. This would reveal the total value and number of contracts awarded to the company, the agencies they've contracted with, and the types of awards (competitive vs. sole-source). If the company has a history of securing numerous sole-source contracts, it might suggest they specialize in niche products or have established long-term relationships with agencies. Conversely, a pattern of sole-source awards without clear justification could raise questions about their market competitiveness. Understanding their past performance, including any past performance evaluations or disputes, would also be crucial.

Given the contract's duration (1095 days) and value, what is the implied annual spending rate, and how does this compare to typical IT software budgets?

The contract has a duration of 1095 days, which is exactly three years. The total value is $17,831,200. Therefore, the implied annual spending rate is approximately $17,831,200 / 3 years = $5,943,733 per year. This annual spending rate is significant for software licensing. Typical IT software budgets within federal agencies vary widely based on agency size, mission, and technological needs. However, an annual expenditure of nearly $6 million for a single software product, especially one procured sole-source, would represent a substantial portion of an agency's software budget. It suggests either a widely deployed, critical application or a very high-cost, specialized solution. Benchmarking this against other large-scale software procurements (e.g., enterprise resource planning systems, major cybersecurity suites) would provide better context, but it is undoubtedly a high-value contract.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

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: Sharecare Operating Company, Inc. (UEI: 962522582)

Address: 1 MILL ST BOX C13 STE 355, BURLINGTON, VT, 00

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

Financial Breakdown

Contract Ceiling: $29,137,761

Exercised Options: $29,137,761

Current Obligation: $17,831,200

Contract Characteristics

Cost or Pricing Data: NO

Timeline