DoD's $142.5M IT services contract with General Dynamics shows fair value but limited competition

Contract Overview

Contract Amount: $142,508,513 ($142.5M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-02-05

End Date: 2019-03-25

Contract Duration: 2,239 days

Daily Burn Rate: $63.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: HQ&NETWORK SITES - TRANSITION IN&OPTION 1

Place of Performance

Location: SILVER SPRING, MONTGOMERY County, MARYLAND, 20901

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $142.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: HQ&NETWORK SITES - TRANSITION IN&OPTION 1 Key points: 1. Contract value appears reasonable given the scope of IT support services. 2. Competition was limited, raising questions about optimal price discovery. 3. Performance risks are moderate, typical for large IT service contracts. 4. The contract duration of over 6 years suggests a stable, long-term need. 5. This falls within the broad professional, scientific, and technical services sector. 6. The agency's spending on similar services warrants further review for consolidation opportunities.

Value Assessment

Rating: good

The contract's total value of $142.5 million over approximately 6 years suggests a significant investment in IT services. Benchmarking against similar large-scale IT support contracts within the Department of Defense indicates that the overall pricing is within an expected range. However, without detailed breakdowns of labor categories and rates, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee structure implies that while the contractor's fee is fixed, the direct costs are reimbursed, which can sometimes lead to less incentive for cost control compared to fixed-price contracts.

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. However, the data shows 8 bids were received, which, while not extremely low, suggests that the market for this specific, large-scale IT support service might be concentrated among a few major players. The level of competition is adequate but could potentially be improved for future procurements to drive down costs further.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages a wider range of bids, potentially leading to more competitive pricing. While 8 bidders is a decent number, exploring ways to attract more specialized or innovative firms in future solicitations could yield even greater savings.

Public Impact

The Department of Defense benefits from consistent and comprehensive IT infrastructure support. Services delivered likely include network management, system maintenance, and technical support for military personnel. The contract's impact is primarily within the agency, supporting its operational readiness. Workforce implications include employment for IT professionals within General Dynamics and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the Cost Plus Fixed Fee (CPFF) structure if not closely monitored.
Dependence on a single large contractor for critical IT infrastructure could pose a risk if performance falters.
Scope creep could increase the overall cost beyond initial projections without adequate change control.

Positive Signals

Awarded through full and open competition, suggesting a robust initial vetting of potential contractors.
The contract's long duration indicates a stable and predictable IT support environment for the agency.
General Dynamics Information Technology is a well-established contractor with significant experience in government IT services.

Sector Analysis

This contract falls under the Professional, Scientific, and Technical Services sector, specifically within IT support. The market for large-scale government IT services is substantial, dominated by a few major defense contractors. Spending in this area is critical for maintaining national security infrastructure. Comparable contracts often involve multi-year durations and values in the tens to hundreds of millions of dollars, reflecting the complexity and scale of IT operations within federal agencies.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While General Dynamics is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of subcontracting to small businesses is not detailed here, but it is a common practice in large IT contracts to leverage specialized capabilities and meet small business utilization goals.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Health Agency's contracting officers and program managers. Accountability measures are embedded within the contract terms, including performance metrics and reporting requirements. Transparency is facilitated through contract awards databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

DoD IT Modernization Programs
Defense Health Information Technology Systems
General IT Support Services Contracts
Professional, Scientific, and Technical Services Spending

Risk Flags

Limited competition may lead to higher prices.
Cost-plus contracts require diligent oversight to manage costs.
Contract duration could indicate potential vendor lock-in if not managed proactively.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $142.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. HQ&NETWORK SITES - TRANSITION IN&OPTION 1

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $142.5 million.

What is the period of performance?

Start: 2013-02-05. End: 2019-03-25.

What is the historical spending trend for IT services by the Defense Health Agency?

Analyzing historical spending trends for IT services by the Defense Health Agency (DHA) is crucial for understanding budget allocation and identifying potential patterns or shifts in investment. While this specific contract spans from 2013 to 2019, a broader analysis would involve examining DHA's IT budgets and contract awards over a longer period, perhaps the last 5-10 years. This would reveal whether spending on IT services has been increasing, decreasing, or remaining relatively stable. It would also highlight the types of IT services most frequently procured (e.g., infrastructure, software development, cybersecurity) and the dominant contractors. Such trends can inform future budgeting, identify areas for potential cost savings through consolidation or strategic sourcing, and assess the agency's evolving reliance on external IT support.

How does the per-hour labor rate for key personnel on this contract compare to market rates for similar roles?

Comparing the per-hour labor rates for key personnel on this contract to market rates is essential for assessing value for money. Since this is a Cost Plus Fixed Fee (CPFF) contract, the direct labor costs are reimbursed. Detailed contract line item numbers (CLINs) would typically break down labor categories (e.g., Senior Systems Engineer, Network Administrator, Help Desk Technician) and their associated rates. Benchmarking these rates against industry surveys (e.g., from professional organizations or specialized consulting firms) or against rates paid by other federal agencies for comparable skill sets and experience levels in the same geographic region (Maryland, in this case) would provide insight. Significantly higher rates could indicate potential overpayment or a lack of competitive pressure, while rates in line with or below market could suggest good value. However, factors like security clearance requirements, specialized certifications, and the contractor's overhead structure also influence labor rates.

What specific performance metrics were used to evaluate General Dynamics Information Technology's success on this contract?

Performance metrics are critical for evaluating contractor success and ensuring the government receives the services it paid for. For a contract like this, focused on IT infrastructure support, common performance metrics might include: System uptime percentages (e.g., ensuring networks and critical systems are available 99.9% of the time), Mean Time To Repair (MTTR) for system outages, Help Desk response and resolution times (e.g., average time to acknowledge and resolve user tickets), successful completion of system upgrades and patches within scheduled windows, and adherence to security protocols and compliance requirements. The contract's Performance Work Statement (PWS) would detail these metrics, along with the acceptable quality levels (AQLs) and any associated incentives or penalties. Regular performance reviews and quality assurance surveillance plans (QASPs) would be used by the agency to monitor adherence to these metrics.

Have there been any past performance issues or disputes associated with General Dynamics Information Technology on similar DoD contracts?

Investigating past performance issues or disputes involving General Dynamics Information Technology (GDIT) on similar Department of Defense (DoD) contracts is a key aspect of risk assessment. Agencies typically review a contractor's past performance information, often documented in the Contractor Performance Assessment Reporting System (CPARS), before awarding new contracts. This includes evaluating their record on schedule adherence, cost control, management of key personnel, and overall quality of work on previous engagements. Any history of significant disputes, contract terminations for default, or findings of poor performance would raise red flags. While GDIT is a large and experienced contractor, specific issues on prior DoD IT contracts could indicate potential risks for future performance, such as challenges in managing complex projects, meeting demanding technical requirements, or maintaining effective communication with government stakeholders. A thorough review would look for patterns of recurring problems.

What is the total amount the Department of Defense has spent on 'All Other Professional, Scientific, and Technical Services' (NAICS 541990) over the last five fiscal years?

Determining the total spending by the Department of Defense (DoD) on 'All Other Professional, Scientific, and Technical Services' (NAICS 541990) over the last five fiscal years provides crucial context for understanding the scale and trend of this service category. This NAICS code is broad and encompasses a wide array of services not classified elsewhere, making it important to analyze the specific types of services procured within it. Examining spending data from sources like the Federal Procurement Data System (FPDS) would reveal the aggregate dollar amount obligated annually. This analysis could highlight whether the DoD's reliance on these miscellaneous professional services is growing or shrinking, identify the major sub-agencies or components driving this spending, and potentially uncover opportunities for better categorization or consolidation of services if spending is highly fragmented or increasing rapidly in unexpected areas.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91YTZ12R0004

Offers Received: 8

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3211 JERMANTOWN RD, FAIRFAX, VA, 22030

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

Financial Breakdown

Contract Ceiling: $181,927,945

Exercised Options: $159,593,619

Current Obligation: $142,508,513

Subaward Activity

Number of Subawards: 23

Total Subaward Amount: $56,306,775

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline