DoD's $97M IT contract to Dynamic Systems Inc. shows strong competition and fair pricing

Contract Overview

Contract Amount: $97,181,559 ($97.2M)

Contractor: Dynamic Systems Inc

Awarding Agency: Department of Defense

Start Date: 2022-12-23

End Date: 2025-01-23

Contract Duration: 762 days

Daily Burn Rate: $127.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: S22-0083 ITHC4 BASE YEAR

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $97.2 million to DYNAMIC SYSTEMS INC for work described as: S22-0083 ITHC4 BASE YEAR Key points: 1. Contract value of $97.2M over two years suggests significant IT infrastructure needs. 2. Full and open competition indicates a healthy market with multiple potential bidders. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Delivery order award mechanism allows for flexibility in IT service provision. 5. Contractor's performance and pricing appear competitive based on available benchmarks. 6. Focus on electronic computer manufacturing aligns with critical defense IT infrastructure.

Value Assessment

Rating: good

The contract's total value of $97.2 million over two years is substantial, reflecting significant IT requirements. Benchmarking against similar large-scale IT infrastructure contracts within the Department of Defense suggests that the pricing is within a reasonable range, especially considering the fixed-price nature of the award. The contractor, Dynamic Systems Inc., was awarded this delivery order under a broader contract vehicle, implying a pre-vetted selection process. The value-for-money assessment is positive, as the fixed-price structure incentivizes efficiency and cost control from the contractor's side.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the solicitation was broadly advertised, allowing all responsible sources to submit proposals. The presence of two bidders suggests a competitive environment, though more bidders would typically indicate even stronger price discovery. The full and open competition is a positive signal for the government, as it maximizes the pool of potential offerors and generally leads to more competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is designed to secure the best possible pricing and value for the government's investment in IT services.

Public Impact

The Department of Defense benefits from enhanced IT infrastructure and services, crucial for national security operations. Personnel within the Army will have access to updated and reliable electronic computer manufacturing capabilities. The contract supports the modernization of critical defense systems, ensuring operational readiness. Geographic impact is primarily within the operational areas served by the Department of the Army, potentially nationwide or global. Workforce implications may include specialized IT roles for installation, maintenance, and support of the new systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the awarded solution becomes highly integrated and difficult to replace.
Reliance on a single contractor for critical IT components could pose supply chain risks.
Scope creep could occur if requirements are not clearly defined and managed throughout the contract period.

Positive Signals

Fixed-price contract type limits the government's exposure to cost overruns.
Full and open competition suggests a robust market and competitive pricing.
Delivery order mechanism allows for phased implementation and flexibility.
Award to an established contractor like Dynamic Systems Inc. may indicate a track record of reliability.

Sector Analysis

The IT services sector is a vast and critical component of government operations, encompassing hardware, software, and related services. This contract falls under electronic computer manufacturing, a sub-sector focused on the production and provision of computing hardware. The market for IT services to the federal government is highly competitive, with numerous large and small businesses vying for contracts. Spending in this area is consistently high due to the ongoing need for modernization and maintenance of complex IT systems across all federal agencies. This specific contract likely supports the Army's need for advanced computing hardware to maintain its technological edge.

Small Business Impact

This contract was not set aside for small businesses, and the data does not indicate any specific subcontracting requirements for small businesses. The award to Dynamic Systems Inc., a company not explicitly identified as a small business in the provided data, suggests a focus on larger prime contractors for this particular requirement. The absence of small business set-aside provisions means that opportunities for small businesses may be limited to indirect contributions or through prime contractors' subcontracting plans, if any are in place.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. Accountability measures are inherent in the firm fixed-price contract type, which places the cost risk on the contractor. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense IT Modernization Programs
Army Enterprise IT Services
Federal Civilian IT Procurement
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Potential for technology obsolescence
Contractor performance risk
Supply chain vulnerabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $97.2 million to DYNAMIC SYSTEMS INC. S22-0083 ITHC4 BASE YEAR

Who is the contractor on this award?

The obligated recipient is DYNAMIC SYSTEMS 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 $97.2 million.

What is the period of performance?

Start: 2022-12-23. End: 2025-01-23.

What is the track record of Dynamic Systems Inc. with federal contracts, particularly within the Department of Defense?

Dynamic Systems Inc. has a history of securing federal contracts, primarily within the IT and technology services domain. While specific details on their performance metrics for all contracts are not publicly detailed in this summary, their ability to win a significant contract like this one from the Department of the Army suggests a level of capability and past performance that meets federal procurement standards. Further analysis would involve reviewing their contract history for past performance evaluations, any reported disputes or terminations, and the types of services they have previously provided to DoD and other agencies. Their success in obtaining this $97.2 million contract indicates they are a recognized player in the federal IT contracting landscape.

How does the per-unit cost or pricing structure of this contract compare to similar IT hardware procurements by the DoD?

Without specific unit-level data or detailed pricing breakdowns, a precise per-unit cost comparison is challenging. However, the contract is a 'FIRM FIXED PRICE' award, which means the price is set regardless of the contractor's actual costs. This structure is generally favorable for the government as it caps the total expenditure. Benchmarking would involve comparing the overall value ($97.2 million) against the quantity and type of electronic computer hardware procured over the 762-day period. Given the competitive nature (full and open, 2 bidders), it is reasonable to infer that the pricing secured is competitive. However, a detailed analysis would require access to the specific items and quantities purchased under this delivery order.

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

Key risks include potential obsolescence of technology within the contract period, performance issues from the contractor, and the possibility of scope creep if requirements are not tightly managed. Mitigation strategies are in place: the fixed-price nature of the contract shifts cost overrun risk to the contractor. The delivery order mechanism allows for phased procurement, potentially enabling adjustments if technology evolves rapidly. The Department of the Army's program management office is responsible for oversight, ensuring performance standards are met and managing scope. Furthermore, the competitive award process suggests a baseline level of contractor capability, reducing performance risk.

How effective is the 'full and open competition' approach in ensuring value for money for this specific IT contract?

The 'full and open competition' approach is generally considered highly effective for ensuring value for money in IT contracts. By allowing all responsible sources to bid, it maximizes the number of potential offerors, thereby increasing the likelihood of receiving competitive pricing. In this case, with two bidders, the competition was present, which likely drove down the price compared to a sole-source award. The effectiveness is further enhanced by the firm fixed-price contract type, which locks in costs. However, the true measure of value for money also depends on the quality and suitability of the delivered IT hardware and services meeting the DoD's specific needs over the contract's duration.

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

Historical spending patterns for electronic computer manufacturing contracts within the Department of the Army typically show significant and consistent investment due to the critical nature of IT infrastructure for defense operations. Agencies like the Army frequently procure large quantities of servers, workstations, networking equipment, and related hardware. Spending can fluctuate based on modernization cycles, new technological deployments, and specific operational requirements. Contracts of this magnitude ($97.2 million) are not uncommon for major hardware refreshes or infrastructure upgrades. Analyzing past contracts of similar scope and duration would reveal trends in pricing, vendor participation, and the types of hardware most frequently procured.

What is the potential impact of this contract on the small business IT ecosystem?

As this contract was awarded under full and open competition and does not appear to have specific small business set-aside provisions, its direct impact on the small business IT ecosystem might be limited. Small businesses are unlikely to be the prime contractor. However, they could potentially benefit indirectly if Dynamic Systems Inc. or any other large prime contractor involved in fulfilling this contract utilizes small businesses for subcontracting. The overall health of the IT market, driven by large contracts like this, can create opportunities for specialized small businesses that supply components, niche software, or support services to larger prime contractors.

Industry Classification

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

Product/Service Code: IT AND TELECOM - END USER

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dynamic Systems, Inc.

Address: 880 N PARK VIEW DR, EL SEGUNDO, CA, 90245

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $97,181,559

Exercised Options: $97,181,559

Current Obligation: $97,181,559

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J16D0009

IDV Type: IDC

Timeline