The

Soter Group

July 2015 Issue #12

Department of Homeland Security (DHS) Contract Vehicle Update

A simple but common reminder to those in the Federal contracting community is that, even with the
correct set of capabilities, past performance, and customer relationships, without the proper access and
channels, the likelihood of success is limited. This means being on
the right contract vehicles and schedules and having the right set of DHS Market Environment
partners.
- $64.9B Requested Total
FY16 Budget Authority
How does this apply in the Department of Homeland Security (DHS)
- $13.5B Funded FY14
context? Back in 2009 and 2010, there was a lot of hype and
Contract Obligations
activity around the DHS EAGLE II acquisition. Given the attractive
- 8.8K+ Current Vendors
$22 billion ceiling and the indefinite delivery, indefinite quantity
contracts (IDIQ) status as DHSs preferred source for IT services procurement, most in the contractor
community positioned to be on the right core team and spent countless hours responding to the request
for proposal (RFP). It appeared to be a vital vehicle for accessing the large, but competitive, DHS
market. After a lengthy source selection process and dozens of protests, DHS made awards to 86
unrestricted and 64 small business prime contractors between late 2012 and early 2014.
How has all this work paid off? It is still too early to tell, but to date, there is very little to show for most
of the prime contractors and their core team members. While the expectation is that DHS will continue
to transition existing EAGLE task orders and other legacy work to the EAGLE II contract vehicle, this
process will be gradual, and there is uncertainty regarding the total volume that will ultimately be
awarded through EAGLE II. As a result of the lengthy EAGLE II acquisition process, many DHS contracting
officers had to look to alternatives for competing and awarding contracts. This included a combination
of GSA schedules and governmentwide acquisition contracts (GWACs), other DHS indefinite delivery
vehicles (IDVs) (e.g., various enterprise-level blanket purchase agreements), and a multitude of
definitive contracts or stand-alone contracts that do not leverage a pre-existing IDV.
Fiscal Year (FY) 2015 Contracting Trends Deviate from Historical Norm
A look into DHS contracting data shows that in the current year to date, DHS has been contracting in a
manner distinctly different from the past several years. For example, DHS has moved sharply towards
the utilization of definitive contracts versus existing IDVs, including EAGLE II. Between FY11 and FY14,
definitive contracts have accounted for between 26-29% of annual prime obligations. As of the end of
Q3FY15, this figure stands at 36%.

1100 North Glebe Road, Suite 1010, Arlington, VA 22201 | Tel: 703.224.4407 | Fax: 703.224.8001 | info@thesotergroup.com
2015 The Soter Group. All Rights Reserved.

July 2015 Issue #12

The Soter Group

Annual DHS Prime Contract ObligaHons, by Award Type
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

IDV
Denimve Contract
28%

26%

2011

2012

28%

29%

36%

2013

2014

Q1-Q3FY15

Government Fiscal Year

Within just the subset of contracts that leverage existing IDVs (i.e., exclusive of definitive contracts),
between Q1 and Q3 of the current fiscal year, EAGLE II has only accounted for approximately 2.1% of
total prime contract obligations. Meanwhile, DHS component-specific IDVs and minor department-wide
IDVs (i.e., exclusive of the mainstream, DHS contract vehicles such as EAGLE I/II, FirstSource I/II, PACTS,
TABSS) actually garnered an increased share of department prime contract obligations. Year to date,
this proportion has spiked to over 65.4%, after being very consistent at an average of 58.9% between
FY11 and FY14.
DHS Prime Contract ObligaHons, by IDV
(excludes DeniHve Contracts)
100%

DHS FIRSTSOURCE

90%

DHS PACTS

80%

DHS FIRSTSOURCE II

70%
60%

DHS EAGLE II

50%

USCG TABSS

40%

GSA GWACs

30%

Other Federal

20%

GSA Schedule 70

10%

DHS EAGLE

0%
2011

2012

2013
Government Fiscal Year

2014

Q1-Q3FY15

Other GSA
Other DHS

During the first nine months of this fiscal year, the use of GSA vehicles, including Schedule 70 and the
various GSA GWACs (i.e., Alliant, Alliant Small Business, 8(a) STARS II, and VETS) has also decreased
relative to the past several years, presumably losing favor to in-house, DHS component IDVs.
1100 North Glebe Road, Suite 1010, Arlington, VA 22201 | Tel: 703.224.4407 | Fax: 703.224.8001 | info@thesotergroup.com
2015 The Soter Group. All Rights Reserved.

July 2015 Issue #12

The Soter Group

FY14 DHS Prime Contract ObligaHons, by IDV
(excludes DeniHve Contracts)
$263

$209

$318

$132

$85

Other DHS
DHS EAGLE

$418

Other GSA

$486

GSA Schedule 70
GSA GWACs

$997

DHS FIRSTSOURCE II

$5,624

Other Federal

$1,040

USCG TABSS
DHS PACTS
DHS EAGLE II

(in $ millions)

DHS EAGLE II Slow to Fill Predecessors Shoes

Isolating the EAGLE and EAGLE II contract vehicles indicates that prime obligations through EAGLE have
been declining since the peak of $1.6 billion in FY11, which is entirely expected given the expiration of
EAGLE and the wind-down of task orders. However, EAGLE II remains far short of making up that
difference; through the first three quarters of FY15, prime obligations through EAGLE II contracts has
totaled just under $119 million. Much of this legacy work has likely transitioned to other contract
vehicles or has been recompeted or awarded through definitive contracts. Ultimately, EAGLE II has a
long way to go before fully replacing the original EAGLE contract vehicle. While people continue to
reference the $22 billion ceiling value over a 5-year base period and one, two-year option period
which represents an average of just over $3.1 billion per year it seems clear that the actual total value
of EAGLE II task orders will likely fall well below that ceiling.

Millions

DHS EAGLE and EAGLE II Prime Contract ObligaHons

$1,800
$1,600
$1,400
$1,200
$1,000
DHS EAGLE II

$800
$600

DHS EAGLE

$400
$200
$-
2011

2012

2013

2014

Q1-Q3FY15

Government Fiscal Year

1100 North Glebe Road, Suite 1010, Arlington, VA 22201 | Tel: 703.224.4407 | Fax: 703.224.8001 | info@thesotergroup.com
2015 The Soter Group. All Rights Reserved.

The Soter Group

July 2015 Issue #12

Conclusion
The FY15 contracting environment at DHS, so far, has been characterized by several key aberrations:
DHS is relying more heavily on definitive contracts versus orders off of existing IDVs; contracting offices
are leveraging component-specific IDVs to a greater extent; and activity through one of DHSs largest
contract vehicles, EAGLE II, remains slow. However, Q4 could still prove to cause everything to revert
back towards the historical norm.
While the underlying tenet remains true, having access to the right contract vehicle alone does not
guarantee business success. Perhaps the primary lessons from this analysis are to embrace diversity and
to not overcommit to a single opportunity, channel, or partner. This diversity ensures access to a
maximum range of opportunities, while also providing potential, existing, and past government
customers ease of access to the contracted products and services they need. A more important
takeaway may be to establish reasonable expectations and objectives that are grounded by fact and
data and to make business decisions accordingly.
About The Soter Group
The Soter Group provides services to both the Federal government and the commercial entities that
support it. Our Commercial Services Division provides market research and assessments, competitive
assessments, and strategic advisory services to commercial clients seeking to enter or grow in the
Federal government security market. Justin Taft, President & CEO, and Peter Wong, Director of Market
Research, authored these perspectives. The Soter Group welcomes the opportunity for our research to
be cited in third-party reports. To learn more and to hire The Soter Group, please visit
www.TheSoterGroup.com and/or email info@TheSoterGroup.com.
Report July 2015: Perspectives Department of Homeland Security (DHS) Contract Vehicle Update
To access and read all of our free market reports please visit: https://www.scribd.com/thesotergroupllc

1100 North Glebe Road, Suite 1010, Arlington, VA 22201 | Tel: 703.224.4407 | Fax: 703.224.8001 | info@thesotergroup.com
2015 The Soter Group. All Rights Reserved.