DoD's $111.5M contract for custom computer programming services awarded to Jacobs Technology Inc. shows potential value concerns

Contract Overview

Contract Amount: $73,140,959 ($73.1M)

Contractor: Jacobs Technology Inc.

Awarding Agency: Department of Defense

Start Date: 2006-05-01

End Date: 2011-09-27

Contract Duration: 1,975 days

Daily Burn Rate: $37.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: 200608!003203!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0310 !A!N! !N! ! !20060501!20070428!111472226!111472226!074103508!N!SVERDRUP TECHNOLOGY, INC !6703 ODYSSEY DR NW STE 303!HUNTSVILLE !AL!35806!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000001945021!N!N!000000000000!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541511!E! !3! ! ! ! ! !99990909!B!F!N!A! !A!U!U!2!002!B! !C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $73.1 million to JACOBS TECHNOLOGY INC. for work described as: 200608!003203!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0310 !A!N! !N! ! !20060501!20070428!111472226!111472226!074103508!N!SVERDRUP TECHNOLOGY, INC !6703 ODYSSEY DR NW STE 303!HUNTSVILLE !AL!35806!37000!089!01!HUNTSVILLE !MADI… Key points: 1. The contract's cost-plus-fixed-fee structure may lead to cost overruns if not managed tightly. 2. With only two bidders, the level of competition might not have secured the best possible pricing. 3. The contract duration of 1975 days (over 5 years) suggests a need for robust performance monitoring. 4. The service category, 'Custom Computer Programming Services,' is broad and could encompass a wide range of activities. 5. The award to a single entity for a significant duration warrants scrutiny of contractor performance and cost control.

Value Assessment

Rating: questionable

The total award amount of $111,472,226 for custom computer programming services over approximately five years requires careful benchmarking. Without specific deliverables or performance metrics, it's difficult to definitively assess value for money. However, the cost-plus-fixed-fee (CPFF) contract type, while offering flexibility, can sometimes lead to higher costs if the contractor's efficiency is not rigorously monitored. Comparing this to similar large-scale IT service contracts within the DoD would be crucial for a more precise valuation.

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. However, with only two bidders identified, the breadth of competition may have been limited. A higher number of bidders typically fosters more competitive pricing and a wider array of innovative solutions. The limited number of bidders here could suggest barriers to entry or a specialized market, potentially impacting price discovery.

Taxpayer Impact: While full and open competition is generally favorable for taxpayers, the limited number of bidders in this instance may have resulted in a less competitive price than could have been achieved with broader participation.

Public Impact

The primary beneficiary is the Department of Defense, specifically the U.S. Aviation and Missile Command, receiving custom computer programming services. The services delivered likely support critical missile and aviation systems, enhancing operational capabilities. The geographic impact is primarily within the United States, with the contractor located in Huntsville, Alabama. Workforce implications include the potential for skilled IT professionals to be engaged in developing and maintaining advanced defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize higher spending if not closely managed.
Limited competition (2 bidders) may have resulted in a higher price than a more competitive scenario.
The broad nature of 'Custom Computer Programming Services' could lead to scope creep if not clearly defined and managed.
Long contract duration (over 5 years) increases the risk of performance degradation or evolving technological obsolescence without proper oversight.

Positive Signals

Awarded under 'full and open competition,' theoretically allowing the best solutions to emerge.
Contractor is a known entity (Jacobs Technology Inc.), suggesting some level of established capability.
The contract is for essential defense IT services, supporting critical national security functions.

Sector Analysis

This contract falls within the Information Technology sector, specifically custom computer programming services. The market for such services is vast and highly competitive, with numerous large and small businesses offering specialized expertise. The Department of Defense is a major consumer of IT services, with annual spending in the hundreds of billions. Benchmarking this contract's value would require comparison against other large-scale, long-term IT service contracts awarded by federal agencies, particularly those focused on defense applications.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and the prime contractor, Jacobs Technology Inc., is a large entity. There is no explicit information regarding subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this specific prime contract appears minimal, though the prime contractor may engage small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Aviation and Missile Command contracting officers and program managers. Accountability measures would be defined within the contract's terms and conditions, including performance standards and reporting requirements. Transparency is facilitated by the Federal Procurement Data System (FPDS), which publishes contract awards. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Services
Custom Software Development Contracts
Aviation and Missile Systems Support
Federal IT Services Procurement
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Potential for cost overruns due to CPFF structure
Limited competition may impact price
Long contract duration requires sustained oversight
Broad service category risks scope creep

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.1 million to JACOBS TECHNOLOGY INC.. 200608!003203!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q06C0310 !A!N! !N! ! !20060501!20070428!111472226!111472226!074103508!N!SVERDRUP TECHNOLOGY, INC !6703 ODYSSEY DR NW STE 303!HUNTSVILLE !AL!35806!37000!089!01!HUNTSVILLE !MADISON !ALABAMA !+000001945021!N!N!000000000000!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541511!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is JACOBS TECHNOLOGY INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $73.1 million.

What is the period of performance?

Start: 2006-05-01. End: 2011-09-27.

What is the track record of Jacobs Technology Inc. in performing similar large-scale IT service contracts for the Department of Defense?

Jacobs Technology Inc. has a significant history of performing large-scale engineering, technology, and professional services contracts, including for various government agencies. While specific performance details for this particular contract (W31P4Q06C0310) are not detailed in the provided data, their extensive experience suggests a capacity to handle complex IT projects. A deeper dive into past performance reviews, any contract disputes, or awards/penalties associated with their government contracts would provide a more comprehensive understanding of their reliability and effectiveness in delivering similar services. Examining their portfolio of past DoD contracts, particularly those involving custom programming for aviation and missile systems, would be key to assessing their suitability and past success.

How does the awarded amount compare to industry benchmarks for custom computer programming services of similar scope and duration?

Benchmarking this $111.5 million contract for custom computer programming services over approximately five years against industry standards is challenging without granular details on the specific services rendered, required expertise, and performance metrics. However, the Cost Plus Fixed Fee (CPFF) structure, while common for R&D or uncertain scope projects, can lead to costs exceeding fixed-price contracts if not managed diligently. The average IT services contract value varies widely based on complexity, technology stack, and duration. For long-term, complex defense IT projects, such figures are not unusual, but the key lies in the value delivered relative to cost. A thorough analysis would involve comparing the contractor's labor rates, overhead, and fee against market averages for comparable skill sets and project types, adjusted for the specific security and operational requirements of the DoD.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type in this context?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Jacobs Technology Inc., is the potential for cost overruns and reduced contractor incentive for efficiency. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee. While the fee is fixed, the total cost is variable. If the contractor does not manage costs effectively or if project requirements expand without adequate scope control, the total cost to the government can escalate significantly beyond initial projections. This necessitates robust government oversight to monitor costs, control scope creep, and ensure the contractor is performing efficiently to achieve the project objectives within the anticipated cost envelope.

What specific performance metrics or deliverables were likely included in this contract to ensure program effectiveness?

While the provided data does not detail specific performance metrics or deliverables, contracts of this nature for custom computer programming services typically include a Statement of Work (SOW) outlining detailed requirements, milestones, and expected outcomes. Performance metrics likely focused on factors such as adherence to project timelines, successful completion of programming tasks, system integration capabilities, software quality (e.g., bug rates, performance efficiency), and user acceptance testing. Deliverables would probably include software code, system documentation, test results, and potentially training materials. Effective program management by the U.S. Aviation and Missile Command would involve regular reviews against these metrics and deliverables to ensure the contractor is meeting contractual obligations and achieving the intended program objectives.

How has the Department of the Army's spending on 'Custom Computer Programming Services' (NAICS 541511) trended over the past decade?

The Department of the Army, like other branches of the DoD, has consistently allocated substantial funding towards 'Custom Computer Programming Services' (NAICS 541511) over the past decade. Spending in this category generally trends upwards, driven by the increasing reliance on sophisticated IT systems for command, control, intelligence, logistics, and weapon system modernization. Factors influencing this trend include evolving technological landscapes, cybersecurity needs, the integration of new platforms, and the sustainment of legacy systems. While specific annual figures fluctuate based on budgetary priorities and major program initiatives, the overall demand for custom programming remains high, reflecting the critical role of IT in modern military operations. Analyzing historical spending patterns would reveal peaks and troughs related to specific modernization efforts or budget cycles.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Jacobs Engineering Group Inc (UEI: 074103508)

Address: 6703 ODYSSEY DR NW STE 303, HUNTSVILLE, AL, 35806

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $73,140,959

Exercised Options: $73,140,959

Current Obligation: $73,140,959

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline