DoD's $18.6M performance incentives contract for IT services saw limited competition, raising value concerns

Contract Overview

Contract Amount: $18,617,316 ($18.6M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2007-12-29

End Date: 2007-12-31

Contract Duration: 2 days

Daily Burn Rate: $9.3M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE

Sector: IT

Official Description: 1 JUNE - 30 SEPTEMBER 2007 ENTERPRISE LEVEL PERFORMANCE INCENTIVES

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $18.6 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: 1 JUNE - 30 SEPTEMBER 2007 ENTERPRISE LEVEL PERFORMANCE INCENTIVES Key points: 1. The contract's value proposition is unclear due to a lack of detailed performance metrics and benchmarking. 2. Competition was limited, with only four bidders, potentially impacting price discovery and overall value. 3. The fixed-price contract type suggests a defined scope, but performance incentives add complexity. 4. The short duration of the contract (2 months) makes long-term performance assessment difficult. 5. The contractor, Peraton Enterprise Solutions LLC, has a track record with the Department of Defense. 6. The contract falls under 'Other Computer Related Services,' a broad category that may obscure specific service value.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging due to the limited public data on specific performance metrics and the relatively small award amount for enterprise-level incentives. The fixed-price nature with performance incentives suggests a defined scope, but the actual value delivered is not readily apparent without more granular performance data. Compared to other IT service contracts, the pricing appears within a typical range for specialized services, but the effectiveness of the incentives in driving desired outcomes is not quantifiable from the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive indicator for market-driven pricing. However, only four bidders participated, suggesting that the market for this specific type of enterprise-level performance incentive service may be concentrated or that the solicitation's requirements were highly specialized. While full and open competition is ideal, a lower number of bidders can sometimes limit the full benefits of price discovery.

Taxpayer Impact: A competitive award process generally benefits taxpayers by encouraging lower prices and better service quality. However, with only four bidders, the potential for significant cost savings might have been constrained compared to a scenario with a larger pool of interested and capable vendors.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Navy, through improved enterprise-level performance. The services delivered are related to IT performance incentives, aiming to enhance operational efficiency and effectiveness. The geographic impact is likely concentrated within the Department of the Navy's operational areas, primarily in Virginia. Workforce implications are indirect, potentially affecting IT support staff and performance management teams within the Navy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess the true value for money.
Limited number of bidders (4) may indicate a concentrated market or specialized requirements, potentially impacting price competition.
Short contract duration (2 months) limits the ability to evaluate sustained performance improvements.
The 'Other Computer Related Services' NAICS code is very broad, making it hard to pinpoint the exact nature and value of services.

Positive Signals

Awarded under full and open competition, adhering to best practices for government contracting.
Inclusion of performance incentives suggests a focus on measurable outcomes and contractor accountability.
The contractor, Peraton Enterprise Solutions LLC, has existing experience with the Department of Defense.

Sector Analysis

This contract falls within the broader Information Technology (IT) sector, specifically focusing on IT services and consulting. The market for enterprise-level performance incentives within government IT is specialized, often involving complex system integration, data analytics, and performance management frameworks. Comparable spending benchmarks are difficult to establish without more specific details on the performance metrics and the scope of services. However, IT services represent a significant portion of federal spending, with a substantial portion allocated to 'Other Computer Related Services' (NAICS 541519).

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting requirements. The award amount and the nature of enterprise-level IT performance incentives suggest that the primary contractor is likely a large business. The absence of specific small business provisions means there is no direct positive impact on the small business ecosystem through this particular contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the performance incentive structure, linking payment to achieved outcomes. Transparency is moderate; while the award is public, the detailed performance metrics and evaluation criteria are not readily accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Services
Navy IT Modernization Programs
Enterprise Resource Planning (ERP) Systems Support
IT Performance Management Contracts
Fixed-Price IT Contracts with Incentives

Risk Flags

Limited Competition
Lack of Performance Data
Broad NAICS Code

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.6 million to PERATON ENTERPRISE SOLUTIONS LLC. 1 JUNE - 30 SEPTEMBER 2007 ENTERPRISE LEVEL PERFORMANCE INCENTIVES

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $18.6 million.

What is the period of performance?

Start: 2007-12-29. End: 2007-12-31.

What specific performance metrics were used to evaluate contractor success under this contract?

The provided data does not specify the exact performance metrics used for this contract. However, typical enterprise-level performance incentives in IT contracts might include metrics related to system uptime, response times, data accuracy, user satisfaction, security compliance, or the successful implementation of new functionalities. The effectiveness of the 'performance incentives' hinges entirely on the clarity, measurability, and relevance of these underlying metrics to the Department of the Navy's strategic IT goals. Without this detail, assessing the value delivered is speculative.

How does the $18.6 million award compare to similar IT performance incentive contracts within the DoD?

Direct comparison of the $18.6 million award for this specific contract is challenging without more granular data on the scope and duration of similar DoD IT performance incentive contracts. The award amount is moderate for enterprise-level IT services, especially considering it covers a short period (June-September 2007). Larger, multi-year contracts for comprehensive IT modernization or sustainment often run into hundreds of millions or billions of dollars. This contract appears to be a focused effort, possibly addressing a specific performance improvement initiative rather than a broad IT overhaul. Benchmarking would require identifying contracts with similar objectives and service levels.

What are the primary risks associated with a fixed-price contract that includes performance incentives?

A primary risk with fixed-price contracts, even with incentives, is the potential for scope creep if not managed tightly, leading to cost overruns if the base price is insufficient. For the government, the risk lies in the contractor potentially cutting corners on quality to meet performance targets within the fixed price, or conversely, the incentives not being sufficiently motivating if poorly designed. If the performance metrics are not well-defined or achievable, the incentives may fail to drive the desired outcomes, rendering the incentive portion ineffective. Conversely, if the metrics are too easily met, the government may overpay for marginal improvements. Contractor risk includes not achieving targets and thus not earning incentive fees.

What was the contractor's track record with the Department of Defense prior to this award?

Peraton Enterprise Solutions LLC, the contractor for this award, has a history of working with the Department of Defense. While the specific details of their prior contracts are not provided in this data snippet, Peraton (and its predecessor companies) has been a significant government contractor, particularly in areas of IT, communications, and mission support for defense agencies. Their experience suggests familiarity with DoD procurement processes, security requirements, and operational environments. A deeper dive into their contract history would reveal the types and scale of previous engagements, which could inform an assessment of their capability and reliability for this specific performance incentive contract.

How effective were the 'performance incentives' in driving actual improvements in IT services for the Navy?

The provided data does not contain information to assess the effectiveness of the performance incentives. Effectiveness would be measured by comparing the achieved performance levels against the baseline and target metrics defined in the contract, and evaluating whether the incentive payments accurately reflected the value of the improvements delivered. Without access to the contract's specific performance work statement (PWS), the defined metrics, the achieved results, and the final incentive payouts, it is impossible to determine if the incentives successfully drove desired outcomes or represented good value for taxpayer money.

What is the significance of the NAICS code 541519 (Other Computer Related Services) in understanding this contract's value?

The NAICS code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide range of IT services not classified elsewhere. This includes services like computer facilities management, computer disaster recovery services, and IT support services. Its broadness means this contract could cover various activities, making it difficult to pinpoint the exact nature of the 'enterprise level performance incentives' without further detail. While it indicates the general domain (IT services), it doesn't provide specificity on whether the incentives were tied to software development, network operations, cybersecurity, or other specialized IT functions, thus limiting a precise value assessment.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 4

Pricing Type: FIXED PRICE (J)

Contractor Details

Parent Company: HP, Inc.

Address: 13600 EDS DRIVE, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,617,316

Exercised Options: $18,617,316

Current Obligation: $18,617,316

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002400D6000

IDV Type: IDC

Timeline