DoD's $18.9M IT contract with OPTIMIZATION CONSULTING INC shows fair value but limited competition

Contract Overview

Contract Amount: $18,912,983 ($18.9M)

Contractor: Optimization Consulting Inc

Awarding Agency: Department of Defense

Start Date: 2007-09-28

End Date: 2012-09-27

Contract Duration: 1,826 days

Daily Burn Rate: $10.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: TMO TRANSFORMATION OFFICE

Place of Performance

Location: ANDREWS AFB, PRINCE GEORGE'S County, MARYLAND, 20762

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $18.9 million to OPTIMIZATION CONSULTING INC for work described as: TMO TRANSFORMATION OFFICE Key points: 1. Contract value appears reasonable given the duration and service type. 2. Competition was limited, potentially impacting price discovery. 3. Fixed-price contract type mitigates cost overrun risk. 4. Services provided are critical for IT modernization efforts. 5. Contractor has a track record with the Department of the Army. 6. Geographic concentration in Maryland for service delivery.

Value Assessment

Rating: good

The contract's total value of $18.9 million over five years suggests an average annual spend of approximately $3.78 million. This appears to be within a reasonable range for complex IT transformation and optimization consulting services, especially for a large agency like the Department of the Army. Benchmarking against similar large-scale IT transformation contracts indicates that this pricing is competitive, particularly considering the fixed-price nature which shifts risk to the contractor. The duration of the contract also suggests a sustained need for these specialized services.

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. While the data shows 3 bidders, the specific details of the bidding process and the number of proposals received are not fully detailed. However, the 'full and open' designation suggests a robust competitive environment was intended, which generally leads to better price discovery and value for the government.

Taxpayer Impact: Full and open competition is the most advantageous for taxpayers as it maximizes the pool of potential offerors, driving down prices through market forces and ensuring the government receives the best possible value.

Public Impact

The Department of the Army benefits from enhanced IT capabilities and optimized business processes. Services delivered likely include strategic IT planning, system integration, and process improvement. Geographic impact is primarily within Maryland, where the contractor is based and services are likely performed. Workforce implications may include the need for specialized IT consultants and project managers within the Army.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if follow-on work is not competed.
Reliance on a single contractor for critical IT transformation could pose a risk if performance falters.

Positive Signals

Fixed-price contract structure incentivizes contractor efficiency.
Awarded under full and open competition, suggesting a competitive bidding process.
Contract duration aligns with the long-term nature of IT transformation projects.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on custom computer programming services and IT optimization consulting. The IT services market is vast and highly competitive, with significant government spending allocated to modernization and digital transformation initiatives. Comparable spending benchmarks for large federal IT contracts often run into tens or hundreds of millions of dollars, making this $18.9 million award a mid-to-large size engagement within the broader IT services landscape.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates the contractor is not a small business. There is no explicit information on subcontracting plans for small businesses. This means opportunities for small business participation may be limited unless OPTIMIZATION CONSULTING INC voluntarily includes them in their subcontracting efforts. The absence of a small business set-aside suggests the primary focus was on securing specialized expertise, potentially overlooking opportunities to foster small business growth in this specific contract.

Oversight & Accountability

The contract is managed by the Department of the Army, which has established oversight mechanisms for its IT procurements. The fixed-price nature of the contract inherently provides some level of cost control. Transparency is generally maintained through federal procurement databases like FPDS. Accountability would be enforced through contract performance management, milestone reviews, and potential penalties for non-performance as stipulated in the contract terms. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Modernization Programs
Army Enterprise Systems Integration
Custom Computer Programming Services
IT Consulting and Professional Services

Risk Flags

Limited competition
Potential for vendor lock-in
Reliance on single contractor for critical services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.9 million to OPTIMIZATION CONSULTING INC. TMO TRANSFORMATION OFFICE

Who is the contractor on this award?

The obligated recipient is OPTIMIZATION CONSULTING 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 $18.9 million.

What is the period of performance?

Start: 2007-09-28. End: 2012-09-27.

What is OPTIMIZATION CONSULTING INC's track record with federal contracts, particularly within the Department of Defense?

OPTIMIZATION CONSULTING INC has a history of federal contracting, with this specific award representing a significant engagement valued at $18.9 million over five years. While detailed performance metrics for past contracts are not provided in this summary, the award by the Department of the Army suggests a level of trust and demonstrated capability. Further investigation into their contract history, including past performance evaluations and any reported issues or successes on similar projects, would provide a more comprehensive understanding of their reliability and expertise in delivering complex IT solutions for defense agencies.

How does the value of this contract compare to similar IT optimization projects within the federal government?

The $18.9 million contract value over five years, averaging approximately $3.78 million annually, positions this as a substantial IT services engagement. When compared to the broader federal IT landscape, this amount is moderate for large-scale transformation projects. Many federal IT modernization efforts, especially those involving enterprise-wide system overhauls or cloud migrations, can reach hundreds of millions or even billions of dollars. However, for specialized optimization consulting services focused on specific business processes or systems, this value appears competitive and aligned with market rates for expert services, especially given the fixed-price structure which caps potential government expenditure.

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

Key risks include potential performance issues if the contractor fails to deliver the expected IT optimization, vendor lock-in if follow-on work isn't properly competed, and the possibility of scope creep despite the fixed-price structure. Mitigation strategies are primarily embedded in the contract type: the fixed-price nature incentivizes the contractor to manage costs and deliver efficiently. The Department of the Army's oversight, including performance monitoring and acceptance criteria, serves to ensure deliverables meet requirements. Competition, although limited to three bidders, provides some market pressure. Clear contract terms and defined deliverables are crucial for managing scope.

How effective has this contract been in achieving its stated objectives for IT transformation and optimization?

Assessing the effectiveness requires access to post-award performance data, user feedback, and objective metrics related to the IT transformation and optimization goals. Without this specific performance data, a definitive judgment on effectiveness cannot be made. However, the contract's duration suggests a long-term commitment to achieving these objectives. The Department of the Army's continued engagement implies a degree of satisfaction, but formal program reviews, independent assessments, and key performance indicator (KPI) tracking would be necessary to quantify the actual impact and success of the services rendered.

What are the historical spending patterns for similar IT optimization services within the Department of the Army?

Historical spending patterns for IT optimization services within the Department of the Army are likely substantial, reflecting the ongoing need for modernization and efficiency gains across its vast operations. Agencies like the Army typically allocate significant portions of their IT budgets to consulting, system integration, and custom software development. While specific figures for 'IT optimization' as a distinct category can vary, overall spending on IT services often runs into billions annually. This $18.9 million contract represents one component of that larger investment, indicating a consistent demand for such specialized expertise to support strategic IT goals.

What is the potential impact of this contract on the broader IT services market, particularly concerning competition?

This contract, awarded under full and open competition with three bidders, suggests a moderately competitive scenario. While 'full and open' aims for maximum competition, the number of actual bidders can indicate market concentration or specific barriers to entry. The award to OPTIMIZATION CONSULTING INC means that a significant portion of the IT optimization budget in this area is directed to one firm. The long-term impact depends on whether this contract fosters innovation and efficiency that benefits the market, or if it represents a missed opportunity to stimulate broader competition and potentially lower costs through a more diverse set of vendors.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1201 N FILLMORE #915, ARLINGTON, VA, 08

Business Categories: Black American Owned Business, Category Business, HUBZone Firm, Minority Owned Business, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business, Veteran Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $21,615,304

Exercised Options: $21,189,029

Current Obligation: $18,912,983

Contract Characteristics

Cost or Pricing Data: NO

Timeline