Commerce Department awards $12.8M for Dell Microsoft licenses, highlighting IT infrastructure needs

Contract Overview

Contract Amount: $12,817,796 ($12.8M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Commerce

Start Date: 2024-06-01

End Date: 2029-05-31

Contract Duration: 1,825 days

Daily Burn Rate: $7.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DELL MICROSOFT LICENSES

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75267

State: Texas Government Spending

Plain-Language Summary

Department of Commerce obligated $12.8 million to DELL FEDERAL SYSTEMS L.P for work described as: DELL MICROSOFT LICENSES Key points: 1. The contract value represents a significant investment in essential software licensing. 2. Competition dynamics for this type of IT procurement are typically robust. 3. Performance risk appears low given the nature of software licensing. 4. This spending supports the core IT operations of the Department of Commerce. 5. The contract falls within the broader category of IT services and software. 6. Long-term licensing agreements can offer cost predictability.

Value Assessment

Rating: good

The contract value of $12.8 million for Dell Microsoft licenses appears reasonable for a five-year term supporting a federal agency. Benchmarking against similar large-scale software license procurements for federal entities suggests this price point is within expected ranges. The firm fixed-price structure provides cost certainty, and the absence of significant performance metrics indicates a focus on delivery rather than complex service integration, which generally lowers price variability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but the competitive nature of the award suggests that pricing was subject to market forces. This approach is generally favorable for ensuring fair market value and preventing overpayment.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible pricing for essential software licenses, reducing the risk of inflated costs.

Public Impact

Federal employees within the Department of Commerce will benefit from access to necessary Microsoft software. The services delivered are the provision of software licenses, crucial for daily operations. The geographic impact is primarily within the Department of Commerce's operational locations. Workforce implications include enabling productivity through up-to-date software tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if future renewals are not competitively re-bid.
Reliance on a single vendor for critical software could pose supply chain risks.
Ensuring adequate training and support for users of the licensed software.

Positive Signals

Awarded through full and open competition, indicating a fair market process.
Firm fixed-price contract provides budget certainty for the agency.
Long-term agreement (5 years) allows for stable IT planning and operations.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on software licensing. The market for enterprise software licenses, particularly for major vendors like Microsoft, is substantial and highly competitive. Federal agencies are significant consumers of these licenses, often procuring them through large blanket purchase agreements (BPAs) or direct contracts. Spending benchmarks for similar IT software procurements by federal agencies can range from millions to hundreds of millions of dollars annually, depending on the scope and agency size.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While this contract itself may not directly involve small business set-asides, the prime contractor, Dell Federal Systems L.P., may engage small businesses for subcontracting opportunities. The overall impact on the small business ecosystem would depend on Dell's subcontracting strategy, which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of Commerce. Accountability is ensured through the firm fixed-price terms, requiring delivery of the specified licenses. Transparency is facilitated by the contract award being made under full and open competition, with data often available through public contract databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

General Services Administration (GSA) Schedule Contracts
IT Software and Licensing Procurements
Department of Commerce IT Modernization Efforts
Enterprise Software Agreements

Risk Flags

Potential for vendor lock-in
Risk of technological obsolescence over the contract term
Dependence on a single vendor for critical software

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $12.8 million to DELL FEDERAL SYSTEMS L.P. DELL MICROSOFT LICENSES

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 Commerce (Office of the Secretary).

What is the total obligated amount?

The obligated amount is $12.8 million.

What is the period of performance?

Start: 2024-06-01. End: 2029-05-31.

What is the historical spending pattern for Dell Microsoft licenses within the Department of Commerce?

Analyzing historical spending requires access to detailed procurement data over multiple fiscal years. Without specific historical data for this contract vehicle or similar license procurements by the Department of Commerce, it is difficult to establish a precise spending pattern. However, federal agencies typically engage in multi-year licensing agreements for major software vendors like Microsoft to ensure continuity and manage costs. Spending can fluctuate based on agency-wide software needs, technology refresh cycles, and budget allocations. A trend towards cloud-based solutions might also influence future on-premise license spending. Further analysis would involve querying federal procurement databases for past awards to Dell or other vendors for comparable Microsoft products within the Department of Commerce.

How does the per-unit cost of these Microsoft licenses compare to commercial market rates?

Determining the exact per-unit cost comparison is challenging without knowing the specific Microsoft products and license types included in this $12.8 million contract. Federal agencies often negotiate volume discounts through large purchasing vehicles like GSA Schedules or direct agreements, which can result in pricing significantly different from standard commercial list prices. While the contract is firm fixed-price, the specific unit pricing is not publicly detailed. Generally, government pricing can be competitive due to the scale of purchases, but sometimes commercial entities may secure better deals through different channels or enterprise agreements. A detailed comparison would require obtaining the specific license SKUs and comparing them against current commercial price lists and negotiated enterprise agreements.

What is the track record of Dell Federal Systems L.P. in fulfilling similar federal IT contracts?

Dell Federal Systems L.P. has a substantial track record of fulfilling IT contracts for the federal government. As a major IT hardware and software provider, they are a frequent awardee of contracts across various agencies, including those for software licenses, hardware, and related services. Their experience typically encompasses large-scale deployments and long-term support agreements. Performance data for specific past contracts would be available through federal procurement databases, which often include contract performance ratings and past performance information. Generally, Dell's established presence and significant market share suggest a high likelihood of successful contract execution for standard software licensing.

What are the potential risks associated with a long-term (5-year) software licensing agreement?

Long-term software licensing agreements, such as this 5-year contract, present several potential risks. Firstly, technological obsolescence is a concern; software and hardware evolve rapidly, and a 5-year commitment might lock the agency into outdated technology if not managed proactively. Secondly, vendor lock-in can occur, making it difficult and costly to switch to alternative solutions or vendors in the future. Thirdly, pricing structures might become unfavorable over time if market rates decrease or if the vendor increases renewal costs significantly. Finally, changes in the vendor's business strategy, such as acquisitions or shifts in product focus, could impact support and future development. Mitigating these risks often involves careful contract negotiation, including exit clauses, regular market reviews, and planning for technology refreshes.

How does this contract contribute to the Department of Commerce's overall IT modernization goals?

This contract for Dell Microsoft licenses directly supports IT modernization by ensuring that the Department of Commerce has access to current and supported software. Modern software versions often include enhanced security features, improved performance, and compatibility with newer technologies, which are foundational for any modernization effort. By securing these licenses through a competitive, firm-fixed-price agreement, the department can budget effectively for essential IT infrastructure. While this contract focuses on licensing, it enables the use of modern productivity tools and platforms that are critical for digital transformation initiatives and improving operational efficiency across the agency.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Francisco Partners Management, L.P.

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

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,398,293

Exercised Options: $12,817,796

Current Obligation: $12,817,796

Actual Outlays: $16,238,281

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 1331L524A13ES0005

IDV Type: BPA

Timeline