VA awards $139M contract for VMEC maintenance to HP Inc., a sole-source procurement

Contract Overview

Contract Amount: $139,412,943 ($139.4M)

Contractor: HP Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2008-10-01

End Date: 2013-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $76.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MAINTENANCE OF VMEC

Place of Performance

Location: GREENBELT, PRINCE GEORGE'S County, MARYLAND, 20768, UNITED STATES OF AMERICA

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $139.4 million to HP INC. for work described as: MAINTENANCE OF VMEC Key points: 1. The contract's value of $139 million over five years represents a significant investment in maintaining the Virtual Medical Center (VMEC). 2. The sole-source nature of this award raises questions about potential price efficiencies and the availability of alternative solutions. 3. The duration of the contract (1825 days) suggests a long-term need for these maintenance services. 4. The contract is categorized under 'Software Reproducing' (NAICS 334611), indicating a focus on the technical aspects of software maintenance. 5. The award was made by the Department of Veterans Affairs (VA), highlighting its reliance on this specific service for its operations. 6. The contract's fixed-price structure aims to provide cost certainty for the VA, though it may limit flexibility for unforeseen changes.

Value Assessment

Rating: fair

Benchmarking the value of this $139 million contract is challenging without specific details on the services provided and comparable market rates for VMEC maintenance. The fixed-price nature suggests an attempt at cost control, but the sole-source award limits direct price comparison with competitors. The contract's duration implies a substantial, ongoing need, and the VA's commitment suggests perceived value, but the lack of competition prevents a robust assessment of whether this represents the best possible value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that the Department of Veterans Affairs did not conduct a competitive bidding process. This typically occurs when a specific vendor is the only one capable of providing the required goods or services, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means that the VA did not explore potential alternative solutions or pricing from other vendors, which could lead to higher costs than if the contract had been competed.

Taxpayer Impact: Sole-source procurements can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the most economically advantageous offer.

Public Impact

Veterans and healthcare providers benefit from the reliable functioning of the Virtual Medical Center (VMEC), which supports healthcare delivery and access. The contract ensures the continued operation and maintenance of critical software and infrastructure supporting the VMEC. The geographic impact is national, as the VMEC serves the entire VA healthcare system. The contract supports the IT workforce within HP Inc. and potentially its subcontractors involved in maintaining the VMEC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards can reduce transparency in government spending.
Long-term reliance on a single vendor might create vendor lock-in.
The specific performance metrics and service level agreements are not detailed, making it hard to assess performance quality.
The contract's age (awarded in 2008) raises questions about the continued relevance and modernity of the services provided.

Positive Signals

The contract ensures continuity of essential services for the VMEC, a critical healthcare platform.
The fixed-price contract provides budget certainty for the Department of Veterans Affairs.
HP Inc. is a well-established technology provider with a track record in government contracting.
The contract's duration suggests a stable and predictable operational environment for the VMEC.

Sector Analysis

The IT services sector, particularly software maintenance and support, is a significant area of federal spending. This contract falls within the broader category of IT services, specifically focusing on maintaining a complex software system like the Virtual Medical Center. The market for such specialized maintenance can be concentrated, especially when proprietary systems are involved, which may explain the sole-source nature of this award. Comparable spending benchmarks for large-scale software maintenance contracts vary widely based on system complexity and scope.

Small Business Impact

There is no indication from the provided data that this contract included small business set-asides or subcontracting requirements. As a sole-source award to a large corporation (HP Inc.), it is unlikely to have directly benefited small businesses through set-aside provisions. The impact on the small business ecosystem would be minimal unless HP Inc. voluntarily engaged small businesses as subcontractors, which is not specified.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures would be defined in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is limited due to the sole-source nature and the lack of publicly available detailed performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Veterans Affairs IT Modernization Programs
Healthcare IT Infrastructure Support
Virtual Health Platforms
Software Maintenance and Support Contracts
Federal Health IT Spending

Risk Flags

Sole-source award limits competition and potential cost savings.
Contract duration of five years may not align with rapid technological advancements.
Lack of detailed performance metrics makes oversight challenging.
Potential for vendor lock-in due to specialized nature of VMEC maintenance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $139.4 million to HP INC.. MAINTENANCE OF VMEC

Who is the contractor on this award?

The obligated recipient is HP INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $139.4 million.

What is the period of performance?

Start: 2008-10-01. End: 2013-09-30.

What specific maintenance and support services are included under this $139 million contract for VMEC?

The provided data indicates the contract is for 'MAINTENANCE OF VMEC' and falls under NAICS code 334611 ('Software Reproducing'). However, specific details regarding the scope of services are not available. This likely includes software updates, bug fixes, system patching, technical support, and potentially hardware maintenance related to the VMEC infrastructure. Given the contract's age and sole-source nature, it's crucial to understand if the services have evolved to meet current technological standards and the VA's evolving healthcare needs. Without a detailed statement of work, it's difficult to assess the full value and necessity of the awarded amount.

How does the $139 million contract value compare to similar VMEC maintenance contracts or industry benchmarks?

Direct comparison is difficult due to the sole-source nature of this award and the lack of publicly available data on similar contracts. Typically, federal agencies benchmark IT maintenance costs against industry standards and previous contract awards. The $139 million figure over five years ($27.8 million annually) represents a substantial investment. Without knowing the specific components of VMEC (e.g., number of users, complexity of modules, uptime requirements), it's hard to determine if this price is competitive. A competitive bidding process would have provided a clearer market-based price point.

What are the primary risks associated with a sole-source, five-year contract for critical IT maintenance like VMEC?

The primary risks associated with this sole-source contract include potential cost inefficiencies, as there is no competitive pressure to ensure the lowest possible price. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, without competition, there's a reduced incentive for the contractor (HP Inc.) to innovate or offer superior service levels beyond the contract's minimum requirements. The long duration also means the VA is committed to a specific solution, potentially missing out on newer, more cost-effective technologies that emerge during the contract period.

What is HP Inc.'s track record with the Department of Veterans Affairs and similar large-scale IT maintenance contracts?

HP Inc. is a major technology vendor with a significant history of contracting with the U.S. government, including the Department of Veterans Affairs. While the provided data points to this specific $139 million sole-source contract, HP Inc. likely holds numerous other contracts across various federal agencies for hardware, software, and IT services. Assessing their overall track record would require a broader review of their performance across all VA contracts, including customer satisfaction, on-time delivery, and adherence to contract terms. Their established presence suggests a capacity to handle large, complex IT maintenance requirements.

How has federal spending on software maintenance and support, particularly within the healthcare sector, trended over the period this contract was active (2008-2013)?

During the period this contract was active (FY2008-FY2013), federal spending on IT, including software maintenance and support, generally saw fluctuations influenced by budget cycles and technological shifts. The Affordable Care Act, enacted in 2010, began to drive increased investment in healthcare IT infrastructure and electronic health records (EHRs). Agencies like the VA were increasingly focused on modernizing their systems to improve patient care and operational efficiency. Spending on maintenance and support is a critical component of the IT lifecycle, ensuring the stability of existing systems while agencies planned for upgrades or replacements. This period saw a growing recognition of the importance of robust IT for healthcare delivery.

What are the implications of the 'Software Reproducing' classification (NAICS 334611) for the type of maintenance provided?

The NAICS code 334611, 'Software Reproducing,' primarily relates to the manufacturing of software media (like CDs or DVDs) and the reproduction of software. However, in the context of a maintenance contract, it likely signifies services related to the replication, deployment, and potentially the underlying code management of the VMEC software. This could include creating new builds, managing software versions, ensuring data integrity through reproduction processes, and potentially aspects of software installation and configuration. It suggests a focus on the tangible aspects of software management and distribution rather than purely conceptual design or development.

Industry Classification

NAICS: Manufacturing › Manufacturing and Reproducing Magnetic and Optical Media › Software Reproducing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: VA10108RP0207

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: HP, Inc. (UEI: 009122532)

Address: 6600 ROCKLEDGE DR STE 150, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $182,228,681

Exercised Options: $139,412,943

Current Obligation: $139,412,943

Timeline