VA awards $37.9M for IT support, with 6 bidders indicating moderate competition

Contract Overview

Contract Amount: $37,920,215 ($37.9M)

Contractor: Cerner Federal Solutions LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-06-22

End Date: 2019-06-21

Contract Duration: 729 days

Daily Burn Rate: $52.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: IGF::OT::IGF CSOC

Place of Performance

Location: HINES, COOK County, ILLINOIS, 60141

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $37.9 million to CERNER FEDERAL SOLUTIONS LLC for work described as: IGF::OT::IGF CSOC Key points: 1. Contract value appears reasonable given the duration and scope of IT support services. 2. Moderate competition suggests potential for price negotiation, but not necessarily the lowest possible cost. 3. Performance risk is mitigated by the contractor's existing relationship and established systems. 4. This contract supports critical IT infrastructure for the VA, impacting healthcare delivery. 5. The IT services sector is highly competitive, with many firms capable of performing this work.

Value Assessment

Rating: good

The contract's total value of $37.9 million over two years suggests an average annual spend of approximately $18.95 million. Benchmarking against similar IT support contracts within the federal government, this figure appears to be within a reasonable range, considering the complexity and criticality of supporting the Department of Veterans Affairs' systems. Without specific details on the exact services rendered, a precise value-for-money assessment is challenging, but the pricing seems competitive for the scope.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six bidders vying for the opportunity. The presence of multiple bidders suggests a healthy level of interest and capability within the market for these services. While six bidders indicate a degree of competition, it is not exceptionally high, which could mean that further price negotiation might have yielded even better results for the government.

Taxpayer Impact: The full and open competition with six bidders provides a reasonable baseline for price discovery, ensuring taxpayers are not overpaying due to a lack of market engagement.

Public Impact

Veterans will benefit from improved IT systems supporting their healthcare and benefits. Essential IT infrastructure and computer systems design services are delivered. The geographic impact is primarily within Illinois, where the contractor is located. Workforce implications include the potential for IT specialists to be employed on this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if requirements are not clearly defined and managed.
Reliance on a single contractor for critical IT systems could pose a risk if performance falters.

Positive Signals

Contractor has prior experience with VA systems, suggesting familiarity and reduced ramp-up time.
Full and open competition indicates a broad market search, potentially leading to better value.

Sector Analysis

The IT services sector is a vast and dynamic market within the federal government, encompassing a wide range of support, development, and maintenance activities. This contract for computer systems design services falls within a critical sub-sector that underpins the operational capabilities of agencies like the VA. Federal spending in this area is consistently high, reflecting the increasing reliance on technology for service delivery and administration. Comparable spending benchmarks would typically involve analyzing other large-scale IT support contracts awarded to similar-sized firms.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have specific small business set-aside provisions. While the prime contractor is a large entity, there may be opportunities for small businesses to participate as subcontractors, depending on the specific needs and subcontracting plans developed by Cerner Federal Solutions LLC. The impact on the small business ecosystem would largely depend on the extent to which subcontracting opportunities are made available.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Veterans Affairs' contracting officers and program managers. Accountability measures are embedded within the contract terms, including performance standards and delivery schedules. Transparency is generally maintained through federal procurement databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

VA Electronic Health Record Modernization
Federal Civilian IT Modernization
Department of Defense IT Services
Health Information Technology Services

Risk Flags

Potential for cost overruns
Risk of schedule delays
Scope creep management

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $37.9 million to CERNER FEDERAL SOLUTIONS LLC. IGF::OT::IGF CSOC

Who is the contractor on this award?

The obligated recipient is CERNER FEDERAL SOLUTIONS LLC.

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 $37.9 million.

What is the period of performance?

Start: 2017-06-22. End: 2019-06-21.

What is the track record of Cerner Federal Solutions LLC with the Department of Veterans Affairs?

Cerner Federal Solutions LLC has a significant track record with the Department of Veterans Affairs, particularly in the realm of health IT. They were a key player in the VA's ambitious Electronic Health Record (EHR) modernization program, although this program has faced considerable challenges and scrutiny regarding cost, performance, and implementation timelines. This specific contract, awarded in 2017, predates some of the most intense scrutiny of the larger EHR project but indicates a sustained relationship for IT support services. Their history with the VA suggests familiarity with the agency's complex systems and operational needs, which can be a positive factor for contract performance. However, the broader context of VA IT projects, including the EHR, also highlights potential risks associated with large-scale IT endeavors and contractor performance.

How does the value of this contract compare to similar IT support contracts within the VA?

The total contract value of $37.9 million over two years, averaging approximately $18.95 million annually, places this contract in the mid-to-large tier for IT support services within the Department of Veterans Affairs. The VA is a major federal agency with substantial IT infrastructure needs, and contracts of this magnitude are not uncommon for comprehensive system design and support. When compared to other VA IT contracts, its value appears reasonable, especially considering the duration and the specialized nature of computer systems design services. However, a more precise comparison would require detailed analysis of the specific services rendered, the technical complexity, and the performance metrics stipulated in this contract versus others. Without that granular detail, it's difficult to definitively state if it represents exceptional or merely standard value.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract likely revolve around performance, schedule adherence, and potential cost overruns, common in IT service contracts. Given that this is a computer systems design services contract, there's also a risk of scope creep if requirements are not meticulously managed, leading to increased costs and extended timelines. Mitigation strategies typically include robust contract management by the VA, clearly defined performance work statements (PWS), key performance indicators (KPIs), and regular progress reviews. The fact that the contract was awarded under full and open competition with multiple bidders might also suggest a degree of market vetting that could indirectly mitigate risks by selecting a capable vendor. Furthermore, the contractor's existing relationship with the VA could imply familiarity with agency processes, potentially reducing operational risks.

What is the historical spending pattern for computer systems design services at the VA?

The Department of Veterans Affairs (VA) has consistently been a significant spender on information technology services, including computer systems design. Historical spending patterns reveal a substantial and often increasing investment in IT infrastructure, modernization efforts, and support services to manage its vast network of healthcare facilities and benefits administration systems. The VA's IT budget typically runs into the billions of dollars annually, with a notable portion allocated to services like system design, integration, cybersecurity, and maintenance. Spending on computer systems design services specifically has likely fluctuated based on major initiatives, such as EHR implementations or infrastructure upgrades. Analyzing historical VA spending data would show a trend of continuous investment in IT, reflecting the agency's critical mission and the growing complexity of its technological needs.

How does the competition level (6 bidders) impact the potential value for taxpayers?

A competition level with six bidders for a federal contract generally indicates a healthy market response and provides a reasonable basis for price discovery. For taxpayers, this level of competition suggests that the government likely received multiple proposals, allowing for comparison and negotiation to achieve a fair and reasonable price. It reduces the risk of awarding a contract at an inflated price due to a lack of viable alternatives. While more bidders could potentially drive prices even lower, six bidders typically signifies that the market is sufficiently engaged. This level of competition helps ensure that the selected contractor is both capable and offers competitive pricing, thereby optimizing the use of taxpayer funds for the required IT services.

Industry Classification

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

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: 6

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cerner Corporation

Address: 13800 COPPERMINE ROAD, OFFICE 206, HERNDON, VA, 20171

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $38,498,018

Exercised Options: $37,920,215

Current Obligation: $37,920,215

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $21,028,032

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA11816D1009

IDV Type: IDC

Timeline