DoD's $51.5M cloud software management contract awarded to Highlight Technologies shows fair value but limited competition

Contract Overview

Contract Amount: $51,533,489 ($51.5M)

Contractor: Highlight Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-08-17

End Date: 2024-08-17

Contract Duration: 1,096 days

Daily Burn Rate: $47.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: THE ENTERPRISE CLOUD MANAGEMENT AGENCY (ECMA) HAS A REQUIREMENT FOR CLOUD SOFTWARE MANAGEMENT SERVICES. THE ECMA REQUIRES THE CONTRACTOR TO PROVIDE END-TO-END MANAGEMENT AND PROCUREMENT OF COMMERCIAL OFF THE SHELF (COTS) SOFTWARE TOOLS.

Place of Performance

Location: FAIRFAX, FAIRFAX CITY County, VIRGINIA, 22030

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $51.5 million to HIGHLIGHT TECHNOLOGIES, INC. for work described as: THE ENTERPRISE CLOUD MANAGEMENT AGENCY (ECMA) HAS A REQUIREMENT FOR CLOUD SOFTWARE MANAGEMENT SERVICES. THE ECMA REQUIRES THE CONTRACTOR TO PROVIDE END-TO-END MANAGEMENT AND PROCUREMENT OF COMMERCIAL OFF THE SHELF (COTS) SOFTWARE TOOLS. Key points: 1. Contract provides essential end-to-end management and procurement of COTS software tools for cloud environments. 2. Pricing appears reasonable when benchmarked against similar IT services contracts. 3. Competition was limited, with only three bidders, potentially impacting price discovery. 4. Contract duration of three years allows for sustained service delivery. 5. The contract is positioned within the broader IT services sector, specifically cloud management. 6. No small business set-aside was utilized, with no indication of subcontracting plans.

Value Assessment

Rating: good

The contract's total value of $51.5 million over three years suggests a fair price for comprehensive cloud software management services. Benchmarking against similar IT services contracts indicates that the pricing is within an acceptable range for the scope of work. The Time and Materials pricing structure, while requiring careful oversight, allows for flexibility in addressing evolving cloud software needs. The awarded amount is comparable to other large-scale IT service procurements within the Department of Defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive indicator for achieving competitive pricing. However, only three bids were received, suggesting that the market for this specific niche of cloud software management services might be concentrated or that the requirements were highly specialized. While competition was present, the limited number of bidders could have constrained the full potential for price reduction that might be seen in a more crowded field.

Taxpayer Impact: The presence of three bidders indicates a degree of competition, which is generally beneficial for taxpayers. However, a lower number of bids than anticipated could mean that taxpayers did not benefit from the most aggressive pricing possible. Further analysis of the bid details would be needed to confirm if the final price fully reflects optimal taxpayer value.

Public Impact

The Department of the Army benefits from streamlined procurement and management of critical cloud software. End-users within the Army will have access to necessary COTS software tools for their operations. The contract supports the modernization of IT infrastructure within the Department of Defense. Workforce implications are likely related to IT specialists managing cloud environments and software procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) may indicate potential market concentration or barriers to entry.
Time and Materials contract type requires diligent oversight to prevent cost overruns.
No explicit small business set-aside or subcontracting plan mentioned.

Positive Signals

Awarded under full and open competition, allowing any qualified vendor to bid.
Contract provides end-to-end management, suggesting a comprehensive solution.
Duration of three years allows for stability and continuity of services.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on cloud computing and software management. The market for cloud management services is rapidly growing as government agencies increasingly migrate to cloud-based infrastructures. The total contract value of approximately $51.5 million over three years is substantial, reflecting the complexity and importance of managing enterprise-level cloud software. Comparable spending benchmarks in this area often involve multi-year, multi-million dollar contracts for specialized IT services.

Small Business Impact

This contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements. This means that the primary contract was awarded to a large business, and opportunities for small businesses to participate as subcontractors are not guaranteed. The absence of a small business subcontracting plan could limit the direct economic benefit to the small business ecosystem in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Time and Materials (T&M) pricing structure necessitates robust oversight to ensure that labor hours and material costs are reasonable and directly related to the contract's objectives. Transparency is expected through regular reporting requirements and contract performance reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

DoD Cloud Computing Strategy
Commercial Off-The-Shelf (COTS) Software Procurement
IT Services and Support Contracts
Enterprise Resource Planning (ERP) Systems Management

Risk Flags

Limited competition
Time and Materials pricing structure requires close oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.5 million to HIGHLIGHT TECHNOLOGIES, INC.. THE ENTERPRISE CLOUD MANAGEMENT AGENCY (ECMA) HAS A REQUIREMENT FOR CLOUD SOFTWARE MANAGEMENT SERVICES. THE ECMA REQUIRES THE CONTRACTOR TO PROVIDE END-TO-END MANAGEMENT AND PROCUREMENT OF COMMERCIAL OFF THE SHELF (COTS) SOFTWARE TOOLS.

Who is the contractor on this award?

The obligated recipient is HIGHLIGHT TECHNOLOGIES, 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 $51.5 million.

What is the period of performance?

Start: 2021-08-17. End: 2024-08-17.

What is Highlight Technologies, Inc.'s track record with similar DoD contracts?

Highlight Technologies, Inc. has a history of performing IT services for the Department of Defense. While specific details on past cloud software management contracts of this exact scope are not immediately available in the provided data, their award suggests they possess the necessary qualifications and past performance to be considered for such a requirement. Further investigation into their contract history, including past performance evaluations and any prior awards for cloud services or software procurement, would provide a more comprehensive understanding of their capabilities and reliability in delivering complex IT solutions to the DoD.

How does the awarded amount compare to the initial estimated value or budget?

The provided data indicates an awarded amount of $51,533,488.58. Without the initial estimated value or budget for this requirement, a direct comparison is not possible. However, the fact that it was awarded under full and open competition suggests that the final price was determined through the bidding process. If the awarded amount is significantly higher or lower than typical budgets for similar services, it could warrant further investigation into the scope of work or the effectiveness of the competition.

What are the primary risks associated with a Time and Materials contract for cloud software management?

The primary risk associated with a Time and Materials (T&M) contract for cloud software management is the potential for cost overruns if not properly managed and overseen. Unlike fixed-price contracts, T&M contracts pay the contractor for the actual labor hours and materials used. This can lead to increased costs if the project scope expands, inefficiencies arise, or if the contractor does not diligently track and report hours. For cloud software management, risks include scope creep in software tool integration, unexpected complexities in procurement, or extended support periods. Robust government oversight, clear task definitions, and regular performance reviews are crucial to mitigate these risks and ensure value for money.

How effective is the competition level (3 bidders) in ensuring optimal price discovery for taxpayers?

A competition level with three bidders is generally considered adequate but not ideal for ensuring optimal price discovery for taxpayers. While it indicates that multiple vendors were interested and capable, a higher number of bidders (e.g., five or more) typically leads to more aggressive pricing as companies vie for the contract. With only three bidders, there's a greater possibility that the market is somewhat concentrated, or that certain barriers prevented more vendors from participating. This could mean that taxpayers may not be benefiting from the lowest possible price achievable in a more robustly competitive environment. The specific nature of the services and the complexity of the requirement also play a role in determining what constitutes 'optimal' competition.

What is the historical spending trend for cloud software management services within the Department of the Army?

The provided data does not include historical spending trends for cloud software management services within the Department of the Army. This specific contract, valued at approximately $51.5 million over three years, represents a significant investment. To understand historical trends, one would need to analyze past contracts for similar services, looking at the number of awards, total spending, and average contract values over several fiscal years. Such an analysis would reveal whether spending in this area is increasing, decreasing, or remaining stable, and how this current contract fits into that broader picture.

Are there any specific performance metrics or KPIs tied to this contract?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) tied to this contract. However, for a contract of this nature, involving end-to-end management and procurement of COTS software, typical KPIs would likely include metrics related to software availability, procurement cycle times, cost savings achieved through negotiation, user satisfaction, and adherence to security protocols. The Time and Materials pricing structure implies that performance will be closely monitored through deliverables and service level agreements, even if specific KPIs are not detailed in this summary.

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 › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Highlight Technologies Inc.

Address: 9990 FAIRFAX BLVD, FAIRFAX, VA, 22030

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

Financial Breakdown

Contract Ceiling: $113,275,829

Exercised Options: $51,533,489

Current Obligation: $51,533,489

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F0040X

IDV Type: FSS

Timeline