DoD's $235M IT support contract to CACI Enterprise Solutions raises value and competition questions

Contract Overview

Contract Amount: $235,731,627 ($235.7M)

Contractor: CACI Enterprise Solutions, LLC

Awarding Agency: Department of Defense

Start Date: 2022-03-03

End Date: 2026-08-02

Contract Duration: 1,613 days

Daily Burn Rate: $146.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DAI APPLICATION DEVELOPMENT AND SUSTAINMENT SUPPORT SERVICES - EBS PO 4556364846

Place of Performance

Location: FORT BELVOIR, FAIRFAX County, VIRGINIA, 22060

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $235.7 million to CACI ENTERPRISE SOLUTIONS, LLC for work described as: DAI APPLICATION DEVELOPMENT AND SUSTAINMENT SUPPORT SERVICES - EBS PO 4556364846 Key points: 1. Contract value appears high relative to duration, suggesting potential for cost efficiencies. 2. Full and open competition was utilized, but the number of bidders is not specified, impacting price discovery assessment. 3. Risk indicators are moderate, with a long performance period and firm-fixed-price structure. 4. Performance context is within IT application development and sustainment, a critical but often complex sector. 5. Sector positioning is within IT services for defense logistics, a specialized but significant area of federal spending.

Value Assessment

Rating: fair

The contract's total value of over $235 million spread across approximately four years (1613 days) suggests an average annual spend of roughly $59 million. Benchmarking this against similar IT sustainment contracts within the Department of Defense is crucial. Without specific details on the scope of services, it's difficult to definitively assess value for money. However, the firm-fixed-price structure provides some cost certainty, though the overall price point warrants scrutiny for potential efficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for ensuring a broad range of potential offerors and fostering competitive pricing. However, the specific number of bids received is not detailed in the provided data. A higher number of bids typically leads to more robust price discovery and potentially lower costs for the government. The absence of this detail limits a full assessment of the competition's effectiveness.

Taxpayer Impact: Full and open competition theoretically benefits taxpayers by driving down prices through a wider pool of bidders. However, without knowing the number of bids, it's hard to confirm if this potential was fully realized in this instance.

Public Impact

The Department of Defense, specifically the Defense Logistics Agency, benefits from sustained IT support. Services delivered include application development and sustainment, crucial for operational efficiency. Geographic impact is primarily within Virginia, where CACI Enterprise Solutions is located. Workforce implications include employment for IT professionals supporting the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if scope creep occurs despite firm-fixed-price.
Long contract duration could lead to vendor lock-in or reduced agility.
Dependence on a single contractor for critical IT sustainment.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Full and open competition suggests a competitive award process.
Contractor has a significant presence in IT services.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on application development and sustainment for defense logistics. The federal IT services market is substantial, with agencies increasingly relying on contractors for specialized expertise. Comparable spending benchmarks would involve analyzing other large-scale IT support contracts awarded by the DoD or similar agencies for sustainment and development services, considering factors like service complexity and duration.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The prime contractor, CACI Enterprise Solutions, is a large business, and any subcontracting would likely be at the discretion of the awardee.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which incentivizes the contractor to meet defined deliverables within budget. Transparency is generally facilitated through contract award databases, though detailed performance metrics and oversight reports may not always be publicly accessible.

Related Government Programs

Defense IT Modernization Programs
Logistics Information Systems
Application Development Services
IT Sustainment Contracts
DoD Enterprise Resource Planning (ERP) Support

Risk Flags

Potential for cost inefficiencies due to high annual spend.
Long contract duration may hinder technology adoption.
Limited transparency on the number of bidders in full and open competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $235.7 million to CACI ENTERPRISE SOLUTIONS, LLC. DAI APPLICATION DEVELOPMENT AND SUSTAINMENT SUPPORT SERVICES - EBS PO 4556364846

Who is the contractor on this award?

The obligated recipient is CACI ENTERPRISE SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $235.7 million.

What is the period of performance?

Start: 2022-03-03. End: 2026-08-02.

What is CACI Enterprise Solutions' track record with similar large-scale IT sustainment contracts within the Department of Defense?

CACI Enterprise Solutions, LLC has a substantial history of performing IT services for the Department of Defense and other federal agencies. They are a large, established government contractor known for a wide range of IT support, including application development, sustainment, cybersecurity, and enterprise IT management. Their track record often involves complex, long-term contracts similar to this one. Analyzing their past performance on contracts with comparable scope, duration, and value would provide insight into their reliability, efficiency, and ability to manage large IT projects within the defense sector. Specific performance metrics from previous contracts, if available, would be key to a thorough assessment.

How does the estimated annual cost of this contract compare to industry benchmarks for similar IT sustainment services?

The contract's total value of approximately $235.7 million over roughly 4 years (1613 days) translates to an average annual cost of about $59 million. To benchmark this effectively, one would need to compare it against industry data for IT application development and sustainment services provided to large organizations, particularly within the defense sector. Factors such as the complexity of the applications, the criticality of the systems, the level of support required (e.g., 24/7 operations), and the specific technologies involved significantly influence pricing. Without detailed service level agreements and scope of work, a precise comparison is challenging. However, general market surveys for IT managed services and application support can offer a preliminary indication of whether this annual spend is within a typical range or appears elevated.

What are the primary risks associated with a firm-fixed-price contract of this magnitude and duration for IT sustainment?

A primary risk with a firm-fixed-price (FFP) contract of this scale is the potential for the contractor to cut corners on quality or service delivery to maximize profit, especially if unforeseen technical challenges arise or if the initial cost estimates were too low. While FFP provides cost certainty for the government, it shifts the risk of cost overruns to the contractor. If the scope of work is not precisely defined or if significant changes are required, change order negotiations can become contentious and costly. For long-duration contracts, there's also the risk of technological obsolescence, where the contracted services or systems may become outdated before the contract ends, requiring costly modifications or replacements. Ensuring robust contract management and clear performance metrics are crucial to mitigate these risks.

How effective is 'full and open competition' in ensuring competitive pricing for specialized IT services like application sustainment?

Full and open competition is generally considered the most effective method for ensuring competitive pricing, as it allows any responsible source to submit an offer. For specialized IT services, its effectiveness hinges on the number of qualified bidders capable of meeting the specific technical requirements. If the market for such specialized sustainment services is limited, even full and open competition might result in only a few bids, potentially reducing the competitive pressure on pricing. The Defense Logistics Agency's process would ideally involve extensive market research to ensure a sufficient pool of capable vendors. The ultimate measure of effectiveness is whether the resulting price reflects fair market value, which requires analyzing the number of bids received and the final negotiated price against independent cost estimates or benchmarks.

What are the potential implications of this contract's long duration (over 4 years) on the government's ability to adopt new technologies?

A long contract duration, such as this one extending over four years, can present challenges for the government's agility in adopting new technologies. The incumbent contractor may be incentivized to maintain the status quo, potentially making it more difficult or costly to introduce newer, more efficient solutions if they are not part of the original contract scope. Furthermore, the government might be hesitant to invest in transitioning to new technologies if significant contractual obligations remain with the current provider. This can lead to a lag in modernization and potentially higher long-term costs if the government is locked into supporting legacy systems or services for an extended period. Effective contract management, including provisions for incorporating new technologies or phased transitions, is vital to mitigate this risk.

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 › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: SP470922Q1002

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CACI International Inc

Address: 14370 NEWBROOK DR STE 247, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $235,731,627

Exercised Options: $235,731,627

Current Obligation: $235,731,627

Actual Outlays: $83,256,366

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $28,101,040

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP470917D0009

IDV Type: IDC

Timeline