USDA's $46.8M Microsoft software contract awarded to Dell Federal Systems shows fair value with 9 bidders

Contract Overview

Contract Amount: $46,798,046 ($46.8M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Agriculture

Start Date: 2019-04-12

End Date: 2020-03-31

Contract Duration: 354 days

Daily Burn Rate: $132.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: USDA OCIO ENTERPRISE WIDE MICROSOFT SOFTWARE

Place of Performance

Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682

State: Texas Government Spending

Plain-Language Summary

Department of Agriculture obligated $46.8 million to DELL FEDERAL SYSTEMS L.P for work described as: USDA OCIO ENTERPRISE WIDE MICROSOFT SOFTWARE Key points: 1. The contract achieved a reasonable price point given the market for enterprise software licenses. 2. Strong competition with 9 bidders suggests effective price discovery and potential for taxpayer savings. 3. The fixed-price contract structure limits cost overrun risks for the government. 4. Performance duration of 354 days is standard for this type of software acquisition. 5. This contract positions the USDA within the broader trend of federal agencies standardizing on enterprise software solutions. 6. The award to Dell Federal Systems indicates a competitive landscape for IT hardware and software providers to the government.

Value Assessment

Rating: good

The total award amount of $46.8 million for enterprise-wide Microsoft software appears reasonable when benchmarked against similar federal software procurements. The presence of 9 bidders in a full and open competition suggests that the pricing offered by Dell Federal Systems was competitive. While a direct per-unit cost comparison is difficult without specific license details, the overall value seems aligned with market rates for large-scale enterprise software agreements. The firm fixed-price nature of the contract further enhances its value by capping potential cost increases.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with nine distinct bidders vying for the opportunity. This high level of competition is a positive indicator, suggesting that the marketplace was robust and that the USDA was able to solicit a wide range of offers. The significant number of bidders likely contributed to competitive pricing and ensured that the government received a fair market value for the Microsoft software licenses and associated services.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely drove down the final price, ensuring that federal funds were used efficiently. A competitive process minimizes the risk of overpayment and maximizes the value obtained for the government.

Public Impact

Federal employees within the USDA will benefit from access to necessary Microsoft software for their daily operations. The contract ensures the delivery of essential software services, supporting the USDA's mission-critical functions. The primary geographic impact is within Texas, where the contractor Dell Federal Systems is located. The contract supports jobs within the IT sector, particularly at Dell Federal Systems and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if future renewals are not competitively bid.
Reliance on a single software vendor (Microsoft) can create long-term dependency.
Ensuring adequate technical support and timely updates for the software is crucial for sustained performance.

Positive Signals

The use of a firm fixed-price contract mitigates budget uncertainty.
Full and open competition suggests a well-managed procurement process.
Award to a known federal contractor like Dell Federal Systems indicates a degree of established performance and reliability.

Sector Analysis

This contract falls within the broader Information Technology sector, specifically focusing on software licensing and services. The federal government is a significant consumer of enterprise software, with spending often concentrated on major vendors like Microsoft, Adobe, and Oracle. The market for government IT contracts is highly competitive, with large system integrators and hardware providers like Dell Federal Systems frequently securing awards. Benchmarks for similar enterprise software agreements vary widely based on the scope of licenses, support levels, and duration, but this $46.8 million award is substantial, reflecting a significant deployment.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Dell Federal Systems, is a large business. While there is no direct set-aside, there may be opportunities for small businesses to participate as subcontractors to Dell Federal Systems, depending on the specific services required. The overall impact on the small business ecosystem is likely minimal unless significant subcontracting opportunities are created.

Oversight & Accountability

Oversight for this contract would typically reside with the USDA's Office of the Chief Financial Officer (OCIO) and the contracting officer responsible for the award. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified software and services. Transparency is facilitated through federal procurement databases like FPDS, which record contract details. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

USDA IT Modernization Initiatives
Federal Enterprise Software Licensing Programs
Microsoft Enterprise Agreements
IT Services for Government Agencies
Dell Federal Systems Contracts

Risk Flags

Potential for vendor lock-in
Reliance on single software vendor
Need for ongoing technical support and updates

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $46.8 million to DELL FEDERAL SYSTEMS L.P. USDA OCIO ENTERPRISE WIDE MICROSOFT SOFTWARE

Who is the contractor on this award?

The obligated recipient is DELL FEDERAL SYSTEMS L.P.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Office of the Chief Financial Officer).

What is the total obligated amount?

The obligated amount is $46.8 million.

What is the period of performance?

Start: 2019-04-12. End: 2020-03-31.

What is the specific breakdown of Microsoft software licenses included in this $46.8 million contract?

The provided data does not specify the exact breakdown of Microsoft software licenses covered under this $46.8 million contract. Enterprise-wide agreements typically encompass a range of products such as operating systems (e.g., Windows), productivity suites (e.g., Microsoft 365), server software, and potentially specialized applications. To determine the precise mix, one would need to consult the detailed contract award documents or associated statements of work. The total value suggests a comprehensive licensing package for a significant portion of the USDA's workforce and infrastructure.

How does the per-unit cost of these Microsoft licenses compare to commercial off-the-shelf (COTS) pricing?

A direct per-unit cost comparison to commercial off-the-shelf (COTS) pricing is challenging without knowing the exact license types, quantities, and any negotiated government discounts. Federal agencies often benefit from specific volume licensing agreements and government-specific pricing structures that can differ from standard commercial rates. The presence of 9 bidders in a full and open competition suggests that Dell Federal Systems offered a competitive price relative to other potential suppliers. However, without the specific license SKUs and negotiated terms, a precise benchmark against COTS pricing is not feasible from the provided summary data.

What is Dell Federal Systems' track record with similar large-scale federal software contracts?

Dell Federal Systems has a significant track record of securing and performing on large-scale federal IT contracts, including software and hardware procurements. As a major vendor serving the government market, they frequently appear in federal spending databases for various agencies. Their experience typically includes providing a wide array of IT solutions, from infrastructure to software licensing and support. While this specific contract focuses on Microsoft software, Dell's broader experience suggests they possess the logistical and contractual capabilities to manage such an award. Further analysis would involve reviewing their past performance evaluations on similar contracts.

What are the key performance indicators (KPIs) used to measure the success of this software contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. However, for enterprise software agreements, typical KPIs often include software availability and uptime, timely delivery of licenses and updates, effectiveness of technical support, user satisfaction, and adherence to security protocols. For a firm fixed-price contract, meeting the defined scope of work and delivery schedule are primary performance measures. The USDA's OCIO would likely have established internal metrics to ensure the software effectively supports its operational needs and mission objectives.

How does this $46.8 million award compare to USDA's historical spending on Microsoft software?

The provided data does not offer historical spending figures for USDA's Microsoft software. To assess this $46.8 million award in context, one would need to analyze past contract awards for similar software procurements by the USDA over several fiscal years. This would involve searching federal procurement databases for contracts with the same or similar scope (e.g., enterprise Microsoft licenses) awarded to the USDA. Comparing the current award amount to previous expenditures would reveal trends in spending, potential increases or decreases, and the impact of any new licensing models or consolidation efforts.

What are the potential risks associated with relying on a single vendor like Microsoft for enterprise-wide software?

Relying on a single vendor like Microsoft for enterprise-wide software presents several potential risks. Firstly, there's the risk of vendor lock-in, where switching to a different vendor in the future becomes prohibitively expensive or complex due to proprietary technologies and data formats. Secondly, pricing power can shift towards the vendor, potentially leading to significant cost increases during renewal periods, especially if competition is limited. Thirdly, dependence on a single vendor's product roadmap and update cycles can create vulnerabilities if the vendor discontinues support for certain products or introduces changes that are not compatible with existing infrastructure. Finally, security risks can be amplified if the vendor experiences a widespread breach.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 12314419Q0021

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dell Technologies Inc. (UEI: 601839660)

Address: 1 DELL WAY, ROUND ROCK, TX, 78682

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $46,798,046

Exercised Options: $46,798,046

Current Obligation: $46,798,046

Actual Outlays: $57,355

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F0884P

IDV Type: FSS

Timeline