DoD's $89.5M contract for wired telecommunications services awarded to General Dynamics Information Technology shows fair value

Contract Overview

Contract Amount: $89,547,376 ($89.5M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-08-31

End Date: 2020-04-30

Contract Duration: 1,338 days

Daily Burn Rate: $66.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::CL::IGF FUNDING SOURCE 1

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22030

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $89.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IGF::CL::IGF FUNDING SOURCE 1 Key points: 1. Contract value appears reasonable given the duration and scope of services. 2. Competition was robust, suggesting a competitive pricing environment. 3. Performance risks seem manageable, with a fixed-fee structure incentivizing efficiency. 4. This contract supports critical IT infrastructure for the Department of the Navy. 5. The services fall within the established telecommunications sector for government IT. 6. Small business participation was not a primary focus of this award.

Value Assessment

Rating: good

The contract's total value of $89.5 million over approximately 3.7 years suggests a reasonable annual spend of around $24 million. Benchmarking against similar large-scale telecommunications infrastructure contracts for the Department of Defense indicates this pricing is within expected ranges. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for cost reimbursement, includes a fixed fee component that should provide some incentive for the contractor to manage costs effectively. Without specific per-unit data, a direct cost comparison is difficult, but the overall value appears to align with industry standards for similar government services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of two bidders suggests a moderate level of competition for this specific award. While two bidders are better than one, a higher number of competitors could potentially drive prices down further. However, for specialized telecommunications services, two bidders may represent a healthy competitive landscape, ensuring that the government receives proposals from qualified and capable firms.

Taxpayer Impact: Full and open competition, even with two bidders, generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and better service offerings compared to sole-source or limited competition scenarios.

Public Impact

The Department of the Navy benefits from enhanced and reliable wired telecommunications infrastructure. Services delivered likely include network installation, maintenance, and support for naval operations. The geographic impact is primarily within Virginia, where the contractor is located and likely services Navy facilities. Workforce implications include employment opportunities for telecommunications technicians, engineers, and support staff within General Dynamics Information Technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if not managed closely due to CPFF structure.
Dependence on a single large contractor for critical infrastructure.
Limited visibility into specific cost drivers without detailed breakdowns.

Positive Signals

Awarded through full and open competition, indicating market validation.
Fixed fee component provides some cost control incentive.
Contractor has a significant presence and experience in government IT services.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on wired telecommunications carriers (NAICS code 517110). The market for government telecommunications services is substantial, with agencies constantly requiring robust and secure network infrastructure. General Dynamics Information Technology is a major player in the government IT services market, and this contract represents a typical engagement for providing essential network services. Comparable spending benchmarks in this area often involve multi-year contracts for network upgrades, maintenance, and operational support, with values ranging from tens to hundreds of millions of dollars depending on scope and duration.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no explicit subcontracting goals for small businesses were mandated. General Dynamics Information Technology is a large prime contractor, and while they may utilize small businesses in their supply chain, this award does not appear to be structured to directly promote small business participation as a primary objective. The focus is on securing essential telecommunications services through a large, capable provider.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Performance reviews, regular reporting requirements, and audits would be standard mechanisms to ensure accountability and transparency. The Inspector General's office for the Department of Defense may also conduct audits or investigations if specific concerns regarding waste, fraud, or abuse arise. The CPFF structure necessitates diligent oversight to ensure costs are reasonable and allocable.

Related Government Programs

Department of Defense IT Services
Navy Network Infrastructure Modernization
Wired Telecommunications Services Contracts
General Dynamics IT Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Potential for cost creep in CPFF contracts.
Reliance on a single vendor for critical infrastructure.
Need for robust government oversight of expenditures.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $89.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IGF::CL::IGF FUNDING SOURCE 1

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 $89.5 million.

What is the period of performance?

Start: 2016-08-31. End: 2020-04-30.

What is General Dynamics Information Technology's track record with similar DoD contracts?

General Dynamics Information Technology (GDIT) has a long and extensive history of performing IT services for the Department of Defense and other federal agencies. They are a major contractor frequently awarded large-scale contracts for network infrastructure, cybersecurity, cloud services, and enterprise IT support. Their track record generally includes successful delivery on complex projects, though like any large contractor, they have also faced scrutiny on specific contracts regarding performance or cost management. For telecommunications services specifically, GDIT has managed numerous contracts involving the installation, maintenance, and operation of wired and wireless networks supporting military installations globally. Their experience suggests a strong capability to handle the requirements of this $89.5 million contract.

How does the value of this contract compare to other wired telecommunications contracts awarded by the Navy?

The $89.5 million total value for this contract, spanning approximately 3.7 years, translates to an average annual value of roughly $24 million. When compared to other wired telecommunications contracts awarded by the Department of the Navy, this falls within a moderate to large range. The Navy, like other branches of the DoD, invests heavily in its communication networks. Contracts for similar services, such as network backbone upgrades, data center connectivity, and enterprise-wide telecommunications support, can range from a few million dollars for smaller, localized projects to hundreds of millions for major, multi-year modernization efforts. This contract appears to represent a significant, but not exceptionally large, investment in maintaining and potentially upgrading the Navy's wired communication infrastructure in a specific region or for a defined set of facilities.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to General Dynamics Information Technology, revolve around cost control and contractor efficiency. For the government, the risk is that the contractor may not be sufficiently incentivized to control costs, as the government agrees to reimburse allowable costs. While the fixed fee provides a ceiling on the profit, there's less direct pressure on the contractor to minimize expenditures compared to fixed-price contracts. This can lead to potential cost overruns if not managed diligently. For the contractor, the risk lies in accurately estimating the costs and ensuring all incurred costs are allowable under the contract terms to receive their fee. Effective government oversight is crucial to mitigate these risks by scrutinizing costs and ensuring adherence to the contract's scope and objectives.

How effective is full and open competition in ensuring value for money in IT infrastructure contracts?

Full and open competition is generally considered the most effective method for ensuring value for money in IT infrastructure contracts. By allowing all responsible sources to compete, the government maximizes the pool of potential offerors, increasing the likelihood of receiving competitive pricing and innovative solutions. This broad competition drives down costs as contractors vie for the award. Furthermore, it provides a benchmark against which the government can assess the reasonableness of proposed prices. While the number of bidders in this specific case was two, the principle remains: a competitive process, compared to sole-source or limited competition, inherently creates pressure on contractors to offer their best value proposition, thereby benefiting taxpayers through potentially lower costs and higher quality services.

What is the typical duration and funding profile for contracts of this nature?

Contracts for large-scale IT infrastructure and telecommunications services, such as this one, typically have durations ranging from one to five years, often with options for extension. This contract's duration of approximately 3.7 years (1338 days) is well within this typical range. Funding for such contracts is usually allocated on an annual basis through the government's appropriations process, meaning that while the contract may be awarded for a longer term, funding is subject to annual availability. The total value of $89.5 million represents the ceiling amount for the entire contract period, and actual spending would align with the work performed and funds appropriated each fiscal year. This phased funding approach allows agencies to manage budgets and reassess needs over the contract's life.

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: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

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: $91,037,420

Exercised Options: $91,037,420

Current Obligation: $89,547,376

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $22,766,738

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06D0012

IDV Type: IDC

Timeline