State Department's $151M IT Support Contract Awarded to Acuity Inc. Shows Mixed Value

Contract Overview

Contract Amount: $151,340,828 ($151.3M)

Contractor: Acuity Inc

Awarding Agency: Department of State

Start Date: 2014-09-29

End Date: 2021-03-28

Contract Duration: 2,372 days

Daily Burn Rate: $63.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: LABOR HOURS

Sector: IT

Official Description: IGF::OT::IGF IT SUPPORT SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20520

State: District of Columbia Government Spending

Plain-Language Summary

Department of State obligated $151.3 million to ACUITY INC for work described as: IGF::OT::IGF IT SUPPORT SERVICES Key points: 1. Contract value of $151.3 million over nearly six years suggests significant investment in IT infrastructure. 2. The contract was awarded under full and open competition, indicating a broad market search. 3. A relatively high number of bids (63) suggests strong market interest and potential for competitive pricing. 4. The contract's duration of over 3 years (2372 days) allows for sustained IT support but also carries long-term cost risks. 5. The use of labor hours pricing can sometimes lead to cost overruns if not managed tightly. 6. Performance context is crucial given the long duration and the critical nature of IT support services.

Value Assessment

Rating: fair

Benchmarking the value of this $151.3 million contract is challenging without specific performance metrics and detailed cost breakdowns. However, the average annual spend of approximately $25.2 million for IT support services is substantial. Comparing this to similar large-scale IT support contracts across federal agencies would be necessary for a definitive value assessment. The use of labor hours, while flexible, can sometimes inflate costs if not meticulously tracked and managed against defined deliverables and service levels. The number of bids received (63) suggests a competitive environment, which should theoretically drive better pricing, but the ultimate value depends on the quality of services delivered and the efficiency of execution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which is a complex category indicating an initial exclusion followed by a broader competition. The high number of bids received (63) suggests that despite any initial exclusions, the opportunity was widely advertised and attracted significant market interest. A robust competition level like this generally provides the government with a wider range of technical solutions and pricing options, fostering price discovery and potentially leading to more favorable terms for the taxpayer.

Taxpayer Impact: A high number of bidders in a full and open competition typically benefits taxpayers by driving down prices through competitive pressure. It also increases the likelihood that the government secures the best value solution for its needs.

Public Impact

The Department of State benefits from sustained and potentially high-quality IT support services, crucial for its global operations. Federal employees and contractors within the State Department gain access to reliable IT infrastructure and technical assistance. The contract supports IT jobs, potentially including skilled labor within the contractor's workforce. Geographic impact is likely concentrated in Washington D.C., where the contract is managed and services are potentially delivered.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Labor hours pricing model can lead to cost unpredictability if not strictly managed.
Long contract duration (nearly 6 years) increases the risk of technology obsolescence or changing requirements.
Dependence on a single contractor for critical IT support can create vendor lock-in.
Performance metrics and service level agreements (SLAs) are critical for ensuring value, and their effectiveness is not detailed here.

Positive Signals

Awarded under full and open competition with a high number of bidders (63), indicating strong market interest and potential for competitive pricing.
The contract provides essential IT support, ensuring the continuity of critical government functions.
The contractor, Acuity Inc., has secured a significant federal contract, suggesting a level of established capability.
The contract duration allows for stability and deep integration of IT support services.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design and related services. The federal IT market is vast, with agencies consistently investing heavily in maintaining and upgrading their technological infrastructure to support operations, cybersecurity, and data management. Contracts like this are common across government, supporting everything from network administration to software development. Benchmarks for similar IT support contracts vary widely based on scope, duration, and specific services, but a contract of this magnitude ($151M) represents a significant portion of an agency's IT budget.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, Acuity Inc., is likely a larger entity. While there's no direct information on subcontracting plans, large federal IT contracts often involve small business participation through subcontracting opportunities. The absence of a small business set-aside means that small businesses would have had to compete directly or seek subcontracting roles, potentially limiting their direct prime contracting opportunities on this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and program managers. The contract's duration and value suggest regular performance reviews and financial audits would be standard. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is generally facilitated through contract award databases like FPDS, but detailed performance data and cost breakdowns are often not publicly available.

Related Government Programs

General Services Administration (GSA) IT Schedule Contracts
Chief Information Officer (CIO) Support Services
Department of State IT Modernization Efforts
Federal Civilian Agency IT Spending
Computer Systems Design and Related Services Contracts

Risk Flags

Potential for cost overruns due to labor-hour pricing and long duration.
Risk of vendor lock-in over the contract's extended period.
Need for robust oversight to ensure value and performance.
Potential for technology obsolescence over the contract's lifecycle.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $151.3 million to ACUITY INC. IGF::OT::IGF IT SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is ACUITY INC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $151.3 million.

What is the period of performance?

Start: 2014-09-29. End: 2021-03-28.

What is Acuity Inc.'s track record with federal IT support contracts, particularly with the Department of State?

Acuity Inc. has a history of securing federal contracts, including those related to IT services. Analyzing their past performance on similar contracts, especially with the Department of State, would reveal their reliability, ability to meet deadlines, and adherence to budget. Federal procurement data (like FPDS) can show the number and value of contracts awarded to Acuity Inc. previously, the agencies they've served, and any performance ratings or past performance evaluations available. A review of their contract history would help assess their experience level and suitability for managing a contract of this scale and criticality.

How does the per-hour labor cost for this contract compare to market rates for similar IT support services?

Determining the exact per-hour labor cost requires access to the specific rates negotiated within the contract, which are often not fully public. However, if such data were available, it could be benchmarked against industry standards for IT support roles (e.g., system administrators, network engineers, help desk technicians) in the Washington D.C. area. Factors like the skill level, experience required, and specific services provided would influence these rates. A comparison against GSA schedules or other competitively awarded federal contracts for similar labor categories would provide a valuable assessment of whether the government secured competitive pricing for the labor provided under this contract.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract, and how has Acuity Inc. performed against them?

The specific KPIs and SLAs are typically detailed within the contract's statement of work (SOW) and are crucial for evaluating performance and value. These might include metrics such as system uptime, response times for help desk tickets, project completion rates, and security compliance adherence. Without access to these specific contractual terms and Acuity Inc.'s performance data against them, it's impossible to definitively assess the quality of service delivered. Agencies usually have internal mechanisms for monitoring contractor performance, and this information would be vital for a comprehensive risk assessment and value determination.

Given the contract's duration and labor-hour pricing, what is the potential for cost overruns, and what controls are in place?

Contracts using labor-hour pricing inherently carry a risk of cost overruns if the scope of work expands or if tasks take longer than anticipated without corresponding adjustments to the overall budget ceiling. The nearly six-year duration of this contract amplifies this risk. Effective cost control relies heavily on robust oversight from the Department of State, including detailed tracking of hours worked, validation of tasks performed, and strict adherence to the contract's ceiling. Mechanisms like regular budget reviews, milestone-based payments (if applicable), and clear change order processes are essential to mitigate overruns. The number of bidders suggests competition, but ongoing vigilance is key.

How does the total contract value of $151.3 million compare to historical IT spending by the Department of State for similar services?

To assess this, one would need to analyze the Department of State's historical IT spending data over the past several years, specifically looking at contracts for IT support, systems design, and maintenance. Comparing the annual average spend of approximately $25.2 million for this contract against previous years' expenditures would indicate whether this represents an increase, decrease, or stable level of investment. Factors such as agency growth, evolving technological needs, and budget allocations would influence these historical trends. Understanding this context helps determine if the current spending level is justified and aligned with the agency's strategic IT objectives.

What is the potential impact of this contract on the broader federal IT services market, particularly concerning competition and innovation?

A contract of this size awarded through full and open competition can have a significant impact. It signals a substantial opportunity, potentially attracting established players and encouraging new entrants to develop capabilities. The high number of bidders (63) suggests a healthy competitive landscape for this type of service. However, the long duration could also mean less frequent opportunities for other firms to compete for similar large-scale support roles over the contract period. It can drive innovation if the contract incentivizes advanced solutions, but it could also lead to market concentration if the incumbent contractor becomes deeply entrenched.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 1300 PENNSYLVANIA AVE NW STE 700, WASHINGTON, DC, 20004

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $151,340,828

Exercised Options: $151,340,828

Current Obligation: $151,340,828

Actual Outlays: $6,993,859

Subaward Activity

Number of Subawards: 560

Total Subaward Amount: $743,621,315

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS06F1248Z

IDV Type: GWAC

Timeline