DoD's $14M IT contract for enterprise performance incentives shows fair value with a slight per-unit cost premium

Contract Overview

Contract Amount: $14,014,127 ($14.0M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2008-03-27

End Date: 2008-09-30

Contract Duration: 187 days

Daily Burn Rate: $74.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ENTERPRISE LEVEL PERFORMANCE INCENTIVE - FY08, PERIOD 1

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.0 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: ENTERPRISE LEVEL PERFORMANCE INCENTIVE - FY08, PERIOD 1 Key points: 1. The contract's value appears reasonable given the scope of enterprise-level performance incentives. 2. Competition was robust, suggesting a competitive pricing environment. 3. The fixed-price contract structure mitigates cost overrun risks for the government. 4. Performance incentives are a positive indicator of desired outcomes. 5. This contract falls within the broader IT services sector for the Department of Defense. 6. The relatively short duration may indicate a specific project phase or a pilot program.

Value Assessment

Rating: good

The $14 million award for enterprise-level performance incentives appears to be a fair investment for the Department of the Navy. While specific benchmarks for 'enterprise performance incentives' are difficult to ascertain without more granular data on the services rendered, the price seems aligned with the complexity of managing and incentivizing performance across an enterprise. The contract was awarded under full and open competition, which typically drives competitive pricing. The benchmarked value of $7,494,200 (br) suggests the awarded amount was significantly higher, but this could be due to the specific nature of the performance metrics and the enterprise-wide scope.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 4 bidders (no) suggests a healthy level of competition for this IT services contract. This competitive environment is generally favorable for the government, as it encourages contractors to offer their best pricing and technical solutions to win the award.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by fostering a market where multiple companies vie for the contract, driving down costs.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units, through improved enterprise performance. The contract aims to incentivize and enhance overall performance across various enterprise functions. The geographic impact is likely within the operational areas of the Department of the Navy, primarily in Virginia (sn). Workforce implications are indirect, focusing on performance management and potentially requiring specialized IT skills for implementation and monitoring.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The contract's fixed-price nature, while mitigating cost risk, could disincentivize exceeding performance targets if not structured with appropriate award fees.
The specific performance metrics and incentive structure are not detailed, raising questions about the clarity and measurability of 'enterprise performance'.

Positive Signals

The use of performance incentives directly aligns government spending with desired outcomes.
Awarding under full and open competition suggests a commitment to achieving best value.
The contract is managed by the Department of the Navy, a major defense agency with established oversight processes.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically focusing on 'Other Computer Related Services' (na: 541519). The IT services market within the federal government is substantial, with significant spending allocated to software, hardware, and related services. Contracts like this, which focus on performance incentives, are crucial for ensuring that IT investments translate into tangible operational improvements and efficiencies for agencies like the Department of the Navy. Comparable spending benchmarks would typically involve analyzing other contracts for enterprise IT management, performance monitoring, and incentive programs within the defense sector.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). As such, the primary impact on small businesses would be through potential subcontracting opportunities, which are not detailed in this award notice. Without specific subcontracting plans or goals, it's difficult to assess the direct impact on the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract, it is subject to standard federal procurement regulations and oversight mechanisms. Transparency is generally maintained through contract award databases like FPDS. Specific accountability measures would be tied to the performance metrics defined within the contract's Statement of Work and the incentive structure.

Related Government Programs

Department of Defense IT Services Contracts
Navy Enterprise IT Management
Performance-Based Contracts
IT Consulting Services
Software and Information Systems

Risk Flags

Short contract duration may limit measurable enterprise-level impact.
Lack of specific performance metrics in award data hinders detailed assessment.
Potential for 'minimum effort' to achieve incentives in fixed-price structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.0 million to PERATON ENTERPRISE SOLUTIONS LLC. ENTERPRISE LEVEL PERFORMANCE INCENTIVE - FY08, PERIOD 1

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 $14.0 million.

What is the period of performance?

Start: 2008-03-27. End: 2008-09-30.

What specific enterprise performance metrics were targeted by this contract, and how were they measured?

The provided data does not specify the exact enterprise performance metrics targeted by this contract. Typically, such contracts would outline key performance indicators (KPIs) related to operational efficiency, system uptime, user satisfaction, cost savings, or mission accomplishment. The 'ENTERPRISE LEVEL PERFORMANCE INCENTIVE' designation suggests a focus on broad, systemic improvements rather than isolated task performance. Measurement would likely involve data collection from various IT systems and operational reports, with incentives tied to achieving pre-defined thresholds or improvements in these KPIs. Without the contract's Statement of Work, a detailed analysis of the metrics and measurement methods is not possible.

How does the awarded amount of $14,014,126.64 compare to similar enterprise-level performance incentive contracts within the DoD?

Direct comparison of this $14 million award to similar 'enterprise-level performance incentive' contracts within the DoD is challenging without access to a broader dataset of comparable contracts. The term 'enterprise-level' can encompass a wide range of IT functions and scopes. However, considering the contract type (IT services, specifically 'Other Computer Related Services') and the awarding agency (Department of the Navy), this amount falls within a common range for significant IT service engagements. The benchmarked value (br) of $7,494,200 suggests the awarded amount was nearly double, which could indicate a premium for the specific performance incentives or a broader scope than the benchmark represents. Further analysis would require identifying contracts with similar objectives and scales.

What is the track record of Peraton Enterprise Solutions LLC in delivering similar performance-based IT contracts for the federal government?

Peraton Enterprise Solutions LLC (co) has a history of performing various IT and technology services for the federal government. While this specific contract focuses on 'enterprise level performance incentives,' Peraton's broader portfolio often includes complex IT solutions, system integration, and support services. Assessing their track record for performance-based contracts would involve reviewing past performance evaluations, contract awards, and any reported issues or successes on similar engagements. Without specific details on Peraton's performance on this particular contract (as it's an older award from FY08), a comprehensive assessment relies on their general reputation and historical contract data across different agencies and service types.

Given the $14M award and a duration of 187 days, what was the implied daily or monthly spending rate, and is this rate indicative of high or low cost?

The contract duration was 187 days, which is approximately 6.2 months. Dividing the total award of $14,014,126.64 by 187 days yields a daily spending rate of approximately $74,942 per day. On a monthly basis, this equates to roughly $2.27 million per month ($14,014,126.64 / 6.2 months). Whether this rate is indicative of high or low cost is difficult to determine without context. For enterprise-level IT performance incentives, which can involve complex system integration, data analysis, and strategic management, such a rate might be considered moderate to high, reflecting the specialized nature of the services and the potential for significant impact. A direct comparison to similar short-term, high-impact IT projects would be necessary for a definitive cost assessment.

What are the potential risks associated with a fixed-price contract for performance incentives, especially over a short duration?

Fixed-price contracts, while generally preferred for cost control, can pose risks when applied to performance incentives, particularly over short durations like the 187 days of this contract. A primary risk is that the contractor might focus solely on meeting the minimum incentive thresholds to secure payment, rather than striving for optimal performance or innovation, especially if the incentive structure is not sufficiently robust. Conversely, if the performance metrics are poorly defined or unattainable, the contractor could incur losses, potentially leading to disputes or reduced effort. For short durations, the ability to significantly impact 'enterprise-level' performance might be limited, making the effectiveness of the incentive structure crucial. The contractor (Peraton Enterprise Solutions LLC) might also face challenges in accurately estimating the resources needed for such a short, performance-driven engagement.

How does the 'Other Computer Related Services' NAICS code (541519) align with the concept of 'Enterprise Level Performance Incentive'?

The NAICS code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide range of IT services not specifically classified elsewhere. This can include IT consulting, systems integration, IT support, and performance management services. An 'Enterprise Level Performance Incentive' contract would logically fall under this code if its primary function involves leveraging computer systems and related services to improve overall organizational performance. For instance, the contract might involve implementing new software, optimizing existing systems, providing data analytics to track performance, or offering consulting services to enhance operational efficiency through technology. The broadness of 541519 allows it to accommodate diverse IT service contracts, including those focused on incentivizing performance improvements across an organization's IT infrastructure and operations.

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: FIRM 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: $14,014,127

Exercised Options: $14,014,127

Current Obligation: $14,014,127

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002400D6000

IDV Type: IDC

Timeline