DoD's $30M contract for computer manufacturing awarded to Penguin Computing, Inc. with 3 bidders

Contract Overview

Contract Amount: $30,002,700 ($30.0M)

Contractor: Penguin Computing, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-04-23

End Date: 2026-08-13

Contract Duration: 1,938 days

Daily Burn Rate: $15.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: TI - BASE SYSTEM MILESTONE 4

Place of Performance

Location: FREMONT, ALAMEDA County, CALIFORNIA, 94538

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to PENGUIN COMPUTING, INC. for work described as: TI - BASE SYSTEM MILESTONE 4 Key points: 1. Value for money appears reasonable given the firm-fixed-price structure and competitive award. 2. Competition dynamics indicate a healthy market with three bidders vying for this contract. 3. Risk indicators are moderate, with a long performance period and a firm-fixed-price contract. 4. Performance context suggests a focus on delivering electronic computer manufacturing capabilities. 5. Sector positioning places this contract within the broader IT hardware manufacturing industry.

Value Assessment

Rating: good

The contract's base value of $30 million, awarded under a firm-fixed-price structure, suggests a commitment to cost control. While direct comparisons are difficult without specific unit details, the presence of three bidders in a full and open competition implies a degree of market competitiveness that typically drives reasonable pricing. The delivery order structure allows for phased payments tied to milestones, which can mitigate risk for both parties.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that all responsible sources were permitted to submit bids. The participation of three bidders suggests a reasonably competitive environment for this specific requirement. A higher number of bidders generally leads to more robust price discovery and potentially lower costs for the government.

Taxpayer Impact: The full and open competition and the presence of multiple bidders are positive indicators for taxpayers, suggesting that the government sought the best value through a broad market solicitation, likely resulting in a more competitive price.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical electronic computer manufacturing capabilities. This contract supports the delivery of essential hardware for military systems and operations. The geographic impact is primarily centered in California, where the contractor is located. Workforce implications include potential job creation and utilization of skilled labor in the computer manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 5 years) could introduce risks related to technological obsolescence or changing requirements.
Firm-fixed-price contracts can shift cost overrun risks to the contractor, but may also lead to higher initial bids to account for uncertainty.

Positive Signals

Awarded through full and open competition, indicating a broad market search for the best value.
Multiple bidders (3) suggest a healthy level of competition for this requirement.
Firm-fixed-price contract type provides cost certainty for the government once awarded.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on the manufacturing of electronic computers. The NAICS code 334111 confirms this classification. The market for IT hardware manufacturing is highly competitive and subject to rapid technological advancements. This contract represents a specific procurement within a larger ecosystem of defense-related IT spending.

Small Business Impact

The data indicates this contract was not set aside for small businesses and the contractor, Penguin Computing, Inc., is likely a larger entity. There is no explicit information on subcontracting plans for small businesses. Without specific subcontracting goals, the direct impact on the small business ecosystem is unclear, though larger prime contracts can sometimes trickle down opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a delivery order under a larger contract vehicle, it is subject to standard federal procurement regulations and oversight. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Procurement
Electronic Computer Manufacturing Contracts
Federal Hardware Acquisition
Army IT Services

Risk Flags

Long contract duration may lead to technology obsolescence.
Firm-fixed-price contracts can incentivize cost-cutting if not properly monitored.
Potential for contractor to underbid and seek change orders if not managed carefully.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to PENGUIN COMPUTING, INC.. TI - BASE SYSTEM MILESTONE 4

Who is the contractor on this award?

The obligated recipient is PENGUIN COMPUTING, 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 $30.0 million.

What is the period of performance?

Start: 2021-04-23. End: 2026-08-13.

What is Penguin Computing, Inc.'s track record with federal contracts, particularly within the Department of Defense?

Penguin Computing, Inc. has a history of federal contracting, including work with the Department of Defense. Analyzing their past performance, including contract values, types, and on-time delivery rates, is crucial for assessing their reliability on this current $30 million award. A review of their contract history might reveal experience with similar hardware manufacturing or IT infrastructure projects. Federal procurement databases like SAM.gov and FPDS can provide detailed information on their past awards, including any performance issues or commendations. Understanding their past performance provides a data-backed basis for evaluating their capability to successfully execute this current contract.

How does the $30 million award compare to similar federal contracts for electronic computer manufacturing?

Comparing the $30 million award to similar federal contracts for electronic computer manufacturing requires identifying comparable procurements based on scope, quantity, specifications, and contract type. Benchmarking against historical data for similar systems or components can reveal if this price is within an expected range. Factors such as the specific technical requirements, lead times, and the level of customization requested by the Department of the Army will influence the cost. A higher number of bidders in a full and open competition, as seen here with three bidders, generally suggests a more competitive pricing environment, which could indicate that $30 million is a reasonable market-based price for the specified goods and services.

What are the primary risks associated with a firm-fixed-price contract of this duration (1938 days)?

The primary risks associated with a firm-fixed-price (FFP) contract of this duration (approximately 5.3 years) for the government are minimal in terms of cost overruns, as the price is fixed. However, the contractor bears the risk of increased costs due to inflation, material price fluctuations, or unforeseen technical challenges. For the government, the main risks include potential for the contractor to cut corners on quality to maintain profitability, or the risk of the technology becoming obsolete before the contract term ends, requiring costly modifications or replacements. The long duration also means that the initial price may not reflect the most current market rates by the end of the contract, although the FFP structure aims to lock in costs upfront.

How effective is the 'full and open competition' strategy in ensuring value for money for this type of IT hardware contract?

Full and open competition is generally considered the most effective strategy for ensuring value for money in IT hardware contracts, as it maximizes the pool of potential bidders, thereby increasing competition. This approach allows the government to solicit proposals from all responsible sources, encouraging a wider range of solutions and potentially driving down prices through competitive bidding. In this case, with three bidders, the competition likely provided a solid basis for price discovery. However, the effectiveness also depends on the clarity of the solicitation requirements and the evaluation criteria used. If the requirements are well-defined and the evaluation process is robust, full and open competition is highly likely to yield the best value for taxpayers.

What are the historical spending patterns for electronic computer manufacturing within the Department of the Army?

Analyzing historical spending patterns for electronic computer manufacturing within the Department of the Army is essential for contextualizing this $30 million award. This involves examining trends in contract awards for similar hardware over the past several fiscal years. Key metrics to consider include the total annual spending on computer manufacturing, the average contract value, the number of awarded contracts, and the primary contractors. Understanding these patterns can reveal whether this award represents an increase or decrease in spending, whether it aligns with typical procurement volumes, and if there are any shifts in the types of hardware being procured. Such analysis helps in assessing the significance and potential future trajectory of this spending category.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912DY18R0025

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Penguin Computing Inc.

Address: 45800 NORTHPORT LOOP W, FREMONT, CA, 94538

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

Financial Breakdown

Contract Ceiling: $33,060,300

Exercised Options: $30,002,700

Current Obligation: $30,002,700

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W912DY19G0004

IDV Type: BOA

Timeline