VA's $33M IBM maintenance contract awarded to I3 Federal LLC shows fair value with 2 bidders

Contract Overview

Contract Amount: $32,954,599 ($33.0M)

Contractor: I3 Federal LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-07-01

End Date: 2020-12-31

Contract Duration: 1,279 days

Daily Burn Rate: $25.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF IBM MAINTENANCE

Place of Performance

Location: CLIFTON, FAIRFAX County, VIRGINIA, 20124

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $33.0 million to I3 FEDERAL LLC for work described as: IGF::OT::IGF IBM MAINTENANCE Key points: 1. The contract's value appears reasonable given the scope of IT maintenance services. 2. Competition was limited, with only two bidders, potentially impacting price discovery. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance duration of over three years provides stability for IT operations. 5. This contract falls within the 'Other Computer Related Services' NAICS code. 6. The award was made by the Department of Veterans Affairs, a major federal agency.

Value Assessment

Rating: good

The contract's total value of approximately $33 million over its 1279-day duration suggests a moderate annual spend. Benchmarking against similar IT maintenance contracts is challenging without more specific service details. However, the firm fixed-price structure indicates that the government secured a defined cost for the services, which is a positive indicator of value. The presence of two bidders suggests a degree of market interest and potential for competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources may have been excluded prior to the final award. Two bids were received, suggesting a limited but present competitive landscape. The limited number of bidders could imply that the market for this specific type of IBM maintenance is concentrated or that the solicitation requirements were highly specialized.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most aggressive pricing that a wider competition could have generated. However, the existence of any competition is preferable to a sole-source award.

Public Impact

Veterans Affairs IT infrastructure benefits from ongoing maintenance and support for IBM systems. Ensures the continued operation of critical IT services relied upon by VA staff and potentially beneficiaries. The contract supports IT service jobs within the contractor's organization. Geographic impact is primarily within the VA's operational areas, likely concentrated in Virginia where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have led to a higher price than a broader solicitation.
The specific nature of IBM maintenance could create vendor lock-in for future needs.
Reliance on a single contractor for critical maintenance poses a risk if performance falters.

Positive Signals

Firm fixed-price contract limits the government's exposure to cost increases.
The contract duration provides stability for essential IT support.
Award to a known entity (I3 Federal LLC) suggests some level of pre-qualification.

Sector Analysis

The IT services sector, particularly maintenance and support for specialized hardware like IBM systems, is a significant component of federal IT spending. This contract fits within the broader category of IT support services, which includes maintenance, repair, and technical assistance for computer hardware and software. The market for such services can be competitive, but specialized maintenance contracts often see fewer bidders due to specific expertise requirements.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award went to I3 Federal LLC, which may or may not be a small business itself, but the contract terms do not reflect a specific effort to engage the small business ecosystem through set-asides or mandated subcontracting.

Oversight & Accountability

The contract is subject to the standard oversight mechanisms of the Department of Veterans Affairs. As a firm fixed-price contract, oversight would focus on performance delivery and adherence to the contract terms. Transparency is facilitated by contract award databases, though detailed performance metrics are typically internal. The Inspector General's office for the VA would have jurisdiction over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

IT Operations and Maintenance
Hardware Maintenance Services
IBM Systems Support
Department of Veterans Affairs IT Contracts

Risk Flags

Limited Competition
Potential for Vendor Lock-in
Reliance on Specific Hardware Maintenance

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $33.0 million to I3 FEDERAL LLC. IGF::OT::IGF IBM MAINTENANCE

Who is the contractor on this award?

The obligated recipient is I3 FEDERAL 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 $33.0 million.

What is the period of performance?

Start: 2017-07-01. End: 2020-12-31.

What is the track record of I3 Federal LLC in performing similar IT maintenance contracts for the federal government?

Information regarding I3 Federal LLC's specific track record on similar IBM maintenance contracts is not detailed in the provided data. However, the award of this $33 million contract by the Department of Veterans Affairs suggests a level of confidence in their capabilities. Further investigation into past performance evaluations, other federal awards, and client references would be necessary for a comprehensive assessment of their track record. Analyzing their history with firm fixed-price contracts and their ability to meet delivery timelines and service level agreements would also be crucial.

How does the per-unit cost or annual cost of this contract compare to industry benchmarks for IBM hardware maintenance?

A precise per-unit cost comparison is not feasible without detailed breakdowns of the specific IBM hardware models, quantities, and the scope of maintenance services covered under this contract. Industry benchmarks for IBM hardware maintenance can vary significantly based on the age of the equipment, the level of support required (e.g., 24/7 response vs. next-business-day), and the specific maintenance plan. Given the $33 million total value over approximately 3.5 years, the annual spend is roughly $9.4 million. This figure needs to be contextualized against the scale and criticality of the VA's IBM infrastructure to determine if it aligns with market rates.

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

The primary risks include potential underperformance by the contractor, leading to IT disruptions for the VA; the possibility that the limited competition resulted in a suboptimal price for the government; and vendor lock-in, making it difficult to switch providers in the future. Mitigation strategies include the firm fixed-price contract type, which caps the government's financial exposure. The VA's oversight mechanisms, including performance monitoring and acceptance of services, are crucial for ensuring contractor performance. The limited competition risk is inherent in the award process but is partially addressed by having two bidders rather than a sole source.

How effective has the Department of Veterans Affairs been in managing IT maintenance contracts of this scale and complexity?

Assessing the overall effectiveness of the VA in managing IT maintenance contracts requires a broader analysis of their contract management portfolio, including performance metrics, audit findings, and user satisfaction across multiple contracts. This specific contract's success would depend on the VA's program management office's ability to define clear requirements, monitor performance diligently, and enforce contract terms. The VA, being a large agency with significant IT needs, has experience managing complex contracts, but also faces scrutiny regarding IT project execution and contract oversight.

What is the historical spending pattern for IBM maintenance services by the Department of Veterans Affairs?

The provided data only details this specific contract ($32,954,599.14 from 2017-2020). To understand historical spending patterns, one would need to examine VA's procurement history for similar IBM maintenance services over several preceding years and potentially subsequent contracts. This would involve analyzing data from sources like FPDS-NG or agency-specific spending reports to identify trends in contract values, awardees, and competition levels for IBM maintenance, revealing whether this contract represents an increase, decrease, or consistent level of spending in this category.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12030 HENDERSON RD, CLIFTON, VA, 20124

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $48,196,315

Exercised Options: $32,954,599

Current Obligation: $32,954,599

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG15SD31B

IDV Type: GWAC

Timeline