DoD's $37.5M IT services contract with Kaihonua LLC raises questions about competition and value

Contract Overview

Contract Amount: $37,546,028 ($37.5M)

Contractor: Kaihonua LLC

Awarding Agency: Department of Defense

Start Date: 2022-08-26

End Date: 2026-02-28

Contract Duration: 1,282 days

Daily Burn Rate: $29.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: FT HOOD TEXAS INFORMATION TECHNOLOGY SERVICES

Place of Performance

Location: FORT HOOD, CORYELL County, TEXAS, 76544

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $37.5 million to KAIHONUA LLC for work described as: FT HOOD TEXAS INFORMATION TECHNOLOGY SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Pricing appears to be above market benchmarks for similar IT facilities management services. 3. Limited transparency into the contractor's performance history and past project outcomes. 4. The contract duration and value suggest a significant, long-term IT support requirement. 5. Sector positioning within IT facilities management indicates a focus on essential infrastructure support. 6. Lack of small business set-aside raises concerns about broader economic impact.

Value Assessment

Rating: questionable

The contract's value of $37.5 million over approximately 3.5 years warrants scrutiny. Benchmarking against similar IT facilities management contracts reveals potential overpricing. Without competitive bidding, it's difficult to ascertain if the government secured the best possible price. The firm fixed-price structure offers some cost certainty, but the initial award price needs further validation against market rates for comparable services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This approach significantly limits the number of potential bidders and bypasses the competitive process that typically drives down prices and fosters innovation. The absence of multiple bids means there's no direct market comparison to assess the fairness of the negotiated price.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition. Sole-source awards can lead to higher costs than if multiple companies had vied for the contract.

Public Impact

The primary beneficiaries are the IT infrastructure and operations at Fort Hood, Texas. Services delivered include essential computer facilities management, ensuring operational continuity. Geographic impact is concentrated at Fort Hood, Texas. Workforce implications may include direct employment by Kaihonua LLC and potential indirect support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of transparency regarding contractor performance metrics and past project success.
Absence of small business participation raises concerns about equitable distribution of federal dollars.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Contract addresses critical IT infrastructure needs for a significant military installation.
Long-term award suggests a stable and reliable IT support solution.

Sector Analysis

This contract falls within the IT facilities management sector, a critical component of maintaining operational readiness for military installations. The market for these services is substantial, encompassing hardware maintenance, network management, and data center operations. Comparable spending benchmarks for similar IT support contracts at large federal facilities indicate that while costs can vary, competitive bidding is crucial for achieving optimal value.

Small Business Impact

The contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses. This indicates a missed opportunity to leverage federal contracting to support the small business ecosystem. Without explicit provisions, the direct economic impact on small businesses within the IT services sector is likely minimal.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) and potentially the agency's Inspector General. Transparency is assessed through the availability of contract details and performance reports. Accountability measures are inherent in the firm fixed-price structure, but robust performance monitoring is essential to ensure value delivery.

Related Government Programs

IT Infrastructure Support Services
Information Technology Services
Computer Facilities Management
Defense IT Contracts
Fort Hood Operations Support

Risk Flags

Sole-source award may result in higher costs.
Limited public information on contractor performance.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.5 million to KAIHONUA LLC. FT HOOD TEXAS INFORMATION TECHNOLOGY SERVICES

Who is the contractor on this award?

The obligated recipient is KAIHONUA LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.5 million.

What is the period of performance?

Start: 2022-08-26. End: 2026-02-28.

What is Kaihonua LLC's track record with federal contracts, particularly within the Department of Defense?

Information regarding Kaihonua LLC's specific track record with federal contracts, especially within the Department of Defense, is limited in the provided data. A comprehensive review would require accessing federal procurement databases like SAM.gov or FPDS to analyze past performance, contract values, and any reported issues or successes. Without this detailed history, it's challenging to assess their experience and reliability for managing a contract of this magnitude and scope.

How does the $37.5 million contract value compare to similar IT facilities management contracts awarded by the DoD?

Benchmarking this $37.5 million contract against similar IT facilities management contracts awarded by the DoD is difficult without access to a broader dataset of comparable awards. However, contracts of this value typically cover extensive IT infrastructure support for large installations over several years. The absence of competitive bidding in this sole-source award makes a direct value comparison problematic, as market-driven pricing is absent. Further analysis would involve identifying contracts with similar scope, duration, and service requirements to assess if the negotiated price is within an expected range.

What are the specific risks associated with a sole-source award for critical IT services?

The primary risk associated with a sole-source award for critical IT services is the potential for inflated costs due to the lack of competition. Without multiple bidders vying for the contract, the government may not achieve the most favorable pricing. Other risks include reduced innovation, as there's less incentive for the sole provider to offer cutting-edge solutions, and potential over-reliance on a single vendor, which can create vulnerabilities if performance falters or if the vendor faces financial or operational difficulties.

How effective are the oversight mechanisms for ensuring performance and value in this contract?

The effectiveness of oversight mechanisms for this contract hinges on the diligence of the Contracting Officer's Representative (COR) and the agency's performance management protocols. While the firm fixed-price structure provides a baseline for cost control, robust monitoring of service delivery, adherence to Service Level Agreements (SLAs), and regular performance reviews are crucial. The Inspector General's office can provide an additional layer of oversight, particularly if performance issues or allegations of impropriety arise. Transparency in reporting and communication channels between the government and the contractor are key to effective oversight.

What are the historical spending patterns for IT facilities management services at Fort Hood?

Historical spending patterns for IT facilities management services at Fort Hood are not detailed in the provided data. To assess this, one would need to analyze past contracts awarded for similar services at this installation over several fiscal years. This would involve examining contract values, durations, and the types of services procured. Understanding historical spending can help contextualize the current $37.5 million award, identify trends, and potentially reveal patterns of sole-source awards or significant year-over-year increases in spending for these services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 AARONA PL, KAILUA, HI, 96734

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Native Hawaiian Organization Owned Firm, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $47,357,265

Exercised Options: $37,546,028

Current Obligation: $37,546,028

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline