DoD's $104.5M IT services contract awarded to Peraton Enterprise Solutions lacked competition, raising value concerns

Contract Overview

Contract Amount: $104,506,758 ($104.5M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2013-09-30

End Date: 2013-09-30

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF OTHER ADP AND TELECOMMUNICATIONS SVS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $104.5 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: IGF::OT::IGF OTHER ADP AND TELECOMMUNICATIONS SVS Key points: 1. The contract's value for IT services appears high given the lack of competitive bidding. 2. Limited competition suggests potential for inflated pricing and reduced value for taxpayer dollars. 3. The sole-source nature of this award presents a significant risk indicator for cost control. 4. Performance context is limited due to the absence of comparative bids. 5. This contract falls within the broader IT services sector, specifically 'Other Computer Related Services'. 6. The fixed-price contract type offers some cost certainty, but the base price is unverified by competition.

Value Assessment

Rating: questionable

Benchmarking the value of this $104.5 million contract is challenging due to its sole-source award. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. Compared to similar IT services contracts that undergo full and open competition, this award may have resulted in a higher cost to the government. The lack of a competitive process means there's no external validation of the proposed costs, making it difficult to assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Peraton Enterprise Solutions LLC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible prices, as taxpayers do not benefit from the cost savings that competition usually drives.

Public Impact

The Department of the Navy benefits from IT services provided under this contract. The contract supports 'Other Computer Related Services', likely encompassing a range of IT support functions. The geographic impact is centered in Virginia, where the contract is managed. Workforce implications are tied to the IT services sector, potentially supporting specialized technical roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award limits transparency and accountability in pricing.
Absence of competitive benchmarking makes value assessment difficult.

Positive Signals

Firm Fixed Price contract type provides cost certainty once awarded.
Contract awarded to a single, established vendor may ensure continuity of services.

Sector Analysis

This contract falls under the broad Information Technology (IT) services sector, specifically categorized under NAICS code 541519, 'Other Computer Related Services'. This sector is characterized by a wide range of services including IT consulting, system integration, and IT support. The total federal spending in this sector is substantial, with numerous contracts awarded annually. This particular contract represents a significant investment within the IT services domain for the Department of the Navy.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award, there were no subcontracting opportunities generated through a competitive process. The lack of small business participation in the award itself means no direct benefit to the small business ecosystem from this specific contract's competitive structure.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification for this procurement method would be subject to review. Transparency is limited due to the lack of a competitive process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Services Contracts
Department of Defense IT Spending
Sole Source IT Procurements
Navy IT Support Services

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.5 million to PERATON ENTERPRISE SOLUTIONS LLC. IGF::OT::IGF OTHER ADP AND TELECOMMUNICATIONS SVS

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 $104.5 million.

What is the period of performance?

Start: 2013-09-30. End: 2013-09-30.

What specific IT services were provided under this contract?

The contract, identified by NAICS code 541519, falls under 'Other Computer Related Services'. While the specific details of the services rendered are not provided in the abbreviated data, this category typically encompasses a broad range of IT support functions. These can include IT consulting, system integration, network management, data processing services, and other computer-related professional services. The Department of the Navy would have outlined the precise scope of work in the contract's statement of work, detailing deliverables and performance standards expected from Peraton Enterprise Solutions LLC.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded on a 'sole-source' basis. Typically, sole-source awards require a formal justification, such as the existence of only one responsible source capable of providing the required services, or in certain emergency situations. Without the full contract documentation, the specific justification remains unknown. However, the absence of competition means that the government did not explore options with other potential vendors, which is a deviation from standard procurement practices aimed at maximizing competition and achieving best value.

How does the $104.5 million value compare to similar IT services contracts awarded by the Department of the Navy?

Direct comparison of the $104.5 million value is difficult without knowing the specific services and duration. However, as a sole-source award, its value is inherently less validated than competitively bid contracts. Larger IT services contracts for the Department of the Navy can range from tens of millions to billions of dollars, depending on scope and complexity. The key concern here is not the absolute dollar amount, but the lack of competitive pressure to ensure this amount represents fair market value. Competitively sourced contracts of similar scope often yield lower prices due to vendor rivalry.

What are the potential risks associated with a sole-source IT services contract of this magnitude?

The primary risk associated with a sole-source contract of this magnitude is the potential for overpayment due to the absence of competitive pricing. Without competing bids, the government may not be receiving the most cost-effective solution. Other risks include vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting flexibility and innovation. Furthermore, a lack of competition can reduce the incentive for the contractor to maintain high performance standards or to proactively seek cost efficiencies, as there is no immediate threat of losing the business to a competitor.

What is the track record of Peraton Enterprise Solutions LLC in delivering IT services to the federal government?

Peraton Enterprise Solutions LLC is a significant government contractor. While the abbreviated data does not detail their specific performance on this contract, the company has a history of winning and performing on various federal contracts, including those within the IT and telecommunications sectors. Their track record would typically be assessed through past performance evaluations included in contract files. For a sole-source award, the government would have likely relied on existing knowledge or specific justifications regarding Peraton's capability and past performance to award this contract without competition.

What historical spending patterns exist for 'Other Computer Related Services' within the Department of the Navy?

Historical spending patterns for 'Other Computer Related Services' (NAICS 541519) within the Department of the Navy are substantial, reflecting the critical role of IT infrastructure and support. The Navy, like other branches of the DoD, consistently invests heavily in IT services to maintain operational readiness and technological superiority. Annual spending in this category can fluctuate based on specific program needs, modernization efforts, and budget allocations. Analyzing historical data would reveal trends in contract values, types of services procured, and the prevalence of competitive versus sole-source awards, providing context for the $104.5 million awarded to Peraton.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: HP, Inc.

Address: 13600 EDS DR, HERNDON, VA, 20171

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $104,506,758

Exercised Options: $104,506,758

Current Obligation: $104,506,758

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003910D0010

IDV Type: IDC

Timeline