Treasury's $18M contract with AES TECHNOLOGY, LLC for IT services shows a high per-unit cost

Contract Overview

Contract Amount: $17,990,189 ($18.0M)

Contractor: AES Technology, LLC

Awarding Agency: Department of the Treasury

Start Date: 2008-12-31

End Date: 2014-10-31

Contract Duration: 2,130 days

Daily Burn Rate: $8.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM SRO

Place of Performance

Location: HYATTSVILLE, PRINCE GEORGE'S County, MARYLAND, 20782

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $18.0 million to AES TECHNOLOGY, LLC for work described as: IBM SRO Key points: 1. The contract's value of approximately $18 million over its period of performance suggests a significant investment in IT services. 2. Competition was conducted under 'full and open competition after exclusion of sources,' indicating a potentially complex procurement process. 3. The contract's duration of 2130 days (approximately 5.8 years) points to a long-term need for these services. 4. The fixed-price contract type aims to control costs, but the per-unit cost analysis is crucial for assessing value. 5. The specific IT services provided are categorized under 'Other Computer Related Services,' a broad classification. 6. The award was made to AES TECHNOLOGY, LLC, with IBM SRO noted, possibly indicating a subcontractor or related entity.

Value Assessment

Rating: questionable

Benchmarking the per-unit cost is challenging without more granular data on the specific services rendered. However, the total award value of $17,990,189.40 over 2130 days results in a daily cost of approximately $8,446. This appears high when compared to typical daily rates for IT support services, even for specialized tasks. Further analysis would be needed to understand if the scope of work justifies this expenditure or if there are opportunities for cost savings through renegotiation or alternative service providers.

Cost Per Unit: $8,446 per day

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources.' This specific clause suggests that while the competition was intended to be open, certain sources may have been excluded for reasons not immediately apparent from the provided data. The number of bidders is not specified, but the 'exclusion of sources' element warrants further investigation into the procurement rationale and its potential impact on the breadth of competition.

Taxpayer Impact: While the competition was intended to be open, the exclusion of sources could limit price discovery and potentially lead to higher costs for taxpayers if the excluded sources offered more competitive pricing.

Public Impact

The primary beneficiary is the Department of the Treasury, specifically the Bureau of the Fiscal Service, which receives essential IT support. The services delivered are broadly classified as 'Other Computer Related Services,' likely encompassing a range of IT infrastructure, maintenance, or support functions. The geographic impact is centered within Maryland, where the contractor is located. Workforce implications are tied to the employment opportunities created by AES TECHNOLOGY, LLC to fulfill this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition type raises questions about the completeness of the bidding process and potential missed opportunities for better pricing.
The high daily cost of approximately $8,446 warrants scrutiny to ensure value for money is being achieved.
The broad classification of 'Other Computer Related Services' makes it difficult to assess the specific value and necessity of the services procured.

Positive Signals

The contract was awarded under a full and open competition framework, suggesting an effort to engage a wide range of potential providers.
The firm fixed-price contract type provides cost certainty for the government, mitigating the risk of cost overruns.
The long performance period indicates a sustained need and potentially a stable, reliable service delivery.

Sector Analysis

The IT services sector is vast and highly competitive. Contracts for 'Other Computer Related Services' can range from basic helpdesk support to complex system integration and maintenance. The market size for such services is in the hundreds of billions of dollars annually. This contract, valued at approximately $18 million, represents a mid-tier award within the federal IT procurement landscape. Comparable spending benchmarks would typically look at the daily or hourly rates for similar service classifications across different agencies.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as the 'small business' flag is false. There is no explicit mention of small business set-asides or subcontracting requirements. This suggests that the prime contract was likely awarded to a larger entity, and opportunities for small businesses would primarily depend on their ability to subcontract with AES TECHNOLOGY, LLC, which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Bureau of the Fiscal Service within the Department of the Treasury. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified services within the agreed budget. Transparency is facilitated through contract databases like FPDS, where award details are recorded. The Inspector General for the Department of the Treasury would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

IT Support Services
Computer Systems Design Services
IT Professional Services
Cloud Computing Services
Cybersecurity Services

Risk Flags

Potential for high per-unit cost
Ambiguity in 'exclusion of sources' clause
Broad service classification limits detailed value assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $18.0 million to AES TECHNOLOGY, LLC. IBM SRO

Who is the contractor on this award?

The obligated recipient is AES TECHNOLOGY, LLC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Bureau of the Fiscal Service).

What is the total obligated amount?

The obligated amount is $18.0 million.

What is the period of performance?

Start: 2008-12-31. End: 2014-10-31.

What specific IT services were provided under this contract, and how do they align with the 'Other Computer Related Services' NAICS code?

The NAICS code 541519, 'Other Computer Related Services,' is a broad category that can encompass a wide array of IT functions beyond software development or computer facilities management. This includes services such as IT consulting, disaster recovery services, computer systems integration design, and IT support services. Without a more detailed statement of work (SOW) or contract line item numbers (CLINs), it is difficult to ascertain the precise nature of the services rendered by AES TECHNOLOGY, LLC. However, given the contract's duration and value, it likely involved ongoing support, maintenance, or integration services critical to the Bureau of the Fiscal Service's operations. The 'IBM SRO' notation might suggest a relationship with IBM, possibly indicating that IBM was a key technology provider or even a subcontractor, further complicating the exact service definition without more data.

How does the daily cost of approximately $8,446 compare to market rates for similar IT services?

The daily cost of approximately $8,446 for IT services under this contract appears to be on the higher end when benchmarked against typical market rates. While rates can vary significantly based on the complexity of the services, the required skill sets, geographic location, and the specific vendor, average daily rates for IT support and consulting often fall in the range of $500 to $1,500. Even for highly specialized or senior-level IT professionals, daily rates rarely exceed $2,000-$3,000. The $8,446 daily figure suggests that the services procured were either exceptionally complex, required unique expertise, involved significant project management overhead, or potentially indicates an area where cost savings could be explored. A detailed breakdown of the services and labor categories would be necessary for a precise comparison.

What are the implications of 'full and open competition after exclusion of sources' for cost and efficiency?

The procurement term 'full and open competition after exclusion of sources' presents a nuanced scenario. Ideally, 'full and open competition' aims to maximize the number of bidders, thereby fostering a competitive environment that drives down prices and encourages innovation. However, the 'exclusion of sources' clause indicates that specific potential bidders were intentionally prevented from participating. The reasons for exclusion could range from national security concerns, specific technical requirements that only a limited number of vendors could meet, or past performance issues. While the intent might be to ensure suitability, excluding sources can inadvertently limit competition, potentially leading to higher prices than if all qualified vendors had been allowed to bid. The efficiency implications depend on whether the exclusion was justified and necessary for the government's needs.

What is the track record of AES TECHNOLOGY, LLC in fulfilling federal contracts, particularly those of similar size and scope?

Information regarding the specific track record of AES TECHNOLOGY, LLC in fulfilling federal contracts of similar size and scope is not directly provided in the summarized data. The award details indicate a contract value of approximately $18 million with a duration of over 2000 days, suggesting a significant engagement. To assess their track record, one would need to examine their past performance on other federal contracts, looking at factors such as on-time delivery, quality of services, adherence to budget, and any reported disputes or contract terminations. The 'IBM SRO' notation might also hint at a relationship with IBM, which could provide context if IBM has a known history with this type of contract. A deeper dive into federal procurement databases would be required to fully evaluate AES TECHNOLOGY, LLC's performance history.

How has federal spending on 'Other Computer Related Services' (NAICS 541519) evolved over the past five years?

Federal spending on 'Other Computer Related Services' (NAICS 541519) has generally seen a steady increase over the past five years, reflecting the government's ongoing reliance on technology for its operations. While specific aggregate figures fluctuate annually, the trend indicates a growing demand for a diverse range of IT services that fall under this broad category. Agencies increasingly outsource specialized IT functions, from cybersecurity and data management to cloud migration and IT infrastructure support, contributing to the growth in this sector. Factors such as digital transformation initiatives, modernization efforts, and the need for advanced technological solutions to address complex government challenges have driven this upward trend in spending. This particular contract with AES TECHNOLOGY, LLC is one component within this larger spending pattern.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 904 BARBARA DRIVE, SAN MARCOS, TX, 90

Business Categories: Category Business, Hispanic American Owned Business, HUBZone Firm, Limited Liability Corporation, Minority Owned Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $45,200,178

Exercised Options: $17,990,189

Current Obligation: $17,990,189

Contract Characteristics

Cost or Pricing Data: NO

Timeline