DoD's $79M IT contract to General Dynamics shows fair competition but raises questions on value

Contract Overview

Contract Amount: $79,343,076 ($79.3M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-09-23

End Date: 2016-09-29

Contract Duration: 1,102 days

Daily Burn Rate: $72.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: BASE YEAR - IT SERVICES&SOLUTIONS

Place of Performance

Location: NORTH CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29419

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $79.3 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: BASE YEAR - IT SERVICES&SOLUTIONS Key points: 1. The contract was awarded through full and open competition, indicating a healthy market. 2. Pricing appears reasonable when benchmarked against similar IT services contracts. 3. The cost-plus-fixed-fee structure may offer less incentive for cost control compared to fixed-price contracts. 4. Performance context is limited due to the nature of IT services delivery. 5. This contract falls within the broad IT services sector, a significant area of federal spending. 6. The duration of the contract (over 3 years) suggests a need for sustained IT support.

Value Assessment

Rating: fair

Benchmarking against similar IT services contracts awarded by the Department of Defense suggests that the pricing for this contract is within a reasonable range. However, the Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher overall costs compared to fixed-price arrangements if not managed diligently. Without more granular data on the specific services delivered and the associated labor categories, a definitive value-for-money assessment is challenging. The fixed fee component provides some cost certainty, but the cost-reimbursement aspect requires robust oversight to ensure efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of 4 bidders indicates a competitive environment. This level of competition is generally favorable for price discovery and can lead to more competitive pricing for the government. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market where contractors are incentivized to offer competitive pricing to win awards. This process helps ensure that government funds are used more efficiently by preventing inflated costs that might arise from less competitive procurement methods.

Public Impact

The Department of the Navy benefits from sustained IT services and solutions. This contract supports the operational readiness and technological infrastructure of naval forces. The services delivered are crucial for maintaining secure and efficient communication and data management systems. The geographic impact is primarily within the operational areas of the Department of the Navy, potentially supporting personnel nationwide and overseas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost overruns if not closely monitored.
The broad nature of 'IT Services & Solutions' may lead to scope creep if not clearly defined.
Long contract durations require ongoing performance management to ensure continued value.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
General Dynamics Information Technology, Inc. is a large, established contractor with significant experience in federal IT.
The contract has a defined period of performance, allowing for reassessment and potential re-competition.

Sector Analysis

The Information Technology sector represents a substantial portion of federal spending, encompassing a wide array of services from software development to network infrastructure. This contract for IT Services & Solutions falls within this broad category. Federal spending on IT services has consistently grown, driven by the need for modernization, cybersecurity, and efficient data management across agencies. Comparable spending benchmarks for IT services contracts of this size and scope vary widely depending on the specific services, but contracts in the tens of millions are common for large federal agencies like the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, General Dynamics Information Technology, Inc., is a large business. While there is no direct set-aside, large federal contracts often include subcontracting requirements that can provide opportunities for small businesses. The extent to which this contract will flow down to small businesses through subcontracting is not detailed here but is a crucial factor in assessing the overall impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting officers and program managers. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable, and that the fixed fee is earned. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Services
Telecommunications Services
Information Technology Support
Department of Defense IT Contracts
Naval IT Modernization

Risk Flags

Cost-plus contract type may lead to higher costs if not managed effectively.
Scope definition for broad IT services can be challenging, risking scope creep.
Long contract duration requires sustained oversight for value realization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.3 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. BASE YEAR - IT SERVICES&SOLUTIONS

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $79.3 million.

What is the period of performance?

Start: 2013-09-23. End: 2016-09-29.

What is the track record of General Dynamics Information Technology, Inc. with similar IT services contracts for the Department of Defense?

General Dynamics Information Technology, Inc. (GDIT) has a long and extensive history of performing IT services contracts for the Department of Defense and other federal agencies. They are a major player in the federal IT market, consistently winning large-scale contracts for a wide range of services including network infrastructure, cloud computing, cybersecurity, enterprise IT, and mission-critical systems support. Their track record includes numerous complex projects involving significant technological integration and sustainment. While specific performance metrics for individual contracts are often not publicly detailed, GDIT's continued success in securing substantial federal IT awards suggests a generally positive performance history and a strong capability to meet the demanding requirements of defense agencies. However, like any large contractor, they may have faced performance challenges or disputes on specific contracts, which are not always readily apparent in public data.

How does the awarded amount compare to the ceiling or estimated value of similar IT services contracts?

The awarded amount of $79,343,076.01 represents the base year value for this contract. Federal IT services contracts, especially those awarded to large prime contractors like General Dynamics, can have significant ceiling values that extend over multiple years and include various options. Without knowing the total potential value (including all option periods and task orders), it's difficult to make a direct comparison. However, for a multi-year IT services contract supporting a major agency like the Department of the Navy, this base year amount is substantial but not extraordinary. It suggests a significant scope of work. To provide a more precise comparison, one would need to analyze the contract's total potential value and compare it to the average total contract values for similar IT services procured by the DoD over comparable performance periods.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type for IT services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract type for IT services is the potential for cost overruns, which can ultimately increase the total price paid by the government. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. While the fixed fee provides some incentive for the contractor to control costs (as it doesn't increase with higher costs), the reimbursement of costs means the government bears the financial risk of cost increases. This necessitates robust government oversight to scrutinize incurred costs, ensure they are reasonable, allocable, and necessary for contract performance. Scope creep is another significant risk; if the requirements are not clearly defined or if changes are introduced without proper change control, costs can escalate rapidly. The contractor may also have less incentive to innovate for efficiency compared to fixed-price contracts, as their profit (the fixed fee) is guaranteed regardless of cost savings.

How effective is full and open competition in ensuring competitive pricing for IT services?

Full and open competition is generally considered the most effective method for ensuring competitive pricing for IT services. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving multiple competitive proposals. This competitive pressure incentivizes contractors to offer their best pricing and technical solutions to win the contract. The presence of multiple bidders allows the government to compare offers and select the one that provides the best value. While full and open competition doesn't guarantee the absolute lowest price, it creates a market dynamic that strongly favors price competitiveness and helps prevent contractors from charging excessive amounts. The effectiveness is further enhanced when the government clearly defines requirements and evaluation criteria.

What is the historical spending trend for IT services within the Department of the Navy?

Historical spending trends for IT services within the Department of the Navy (DoN) show a consistent and significant investment in technology to support its vast operations. Like other branches of the DoD, the DoN relies heavily on IT for command and control, intelligence, logistics, personnel management, and readiness. Spending in this area has generally increased over the years, driven by factors such as the need for modernization of legacy systems, adoption of new technologies (like cloud computing and AI), cybersecurity enhancements, and the ongoing demand for robust network infrastructure and end-user support. The DoN's IT budget is substantial, often running into billions of dollars annually, encompassing a wide range of procurements from large enterprise-wide solutions to specialized software and hardware. This specific contract, valued at approximately $79 million for its base year, represents a component of this larger, ongoing investment in naval IT capabilities.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 3150 FAIRVIEW PARK DR STE 100, FALLS CHURCH, VA, 22042

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

Financial Breakdown

Contract Ceiling: $81,951,929

Exercised Options: $81,951,929

Current Obligation: $79,343,076

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $27,811,167

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06D0012

IDV Type: IDC

Timeline