Commerce Department renews Microsoft services contract for $6.16M, highlighting IT infrastructure needs

Contract Overview

Contract Amount: $6,155,890 ($6.2M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Commerce

Start Date: 2024-06-01

End Date: 2025-06-01

Contract Duration: 365 days

Daily Burn Rate: $16.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MICROSOFT RENEWAL

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75267

State: Texas Government Spending

Plain-Language Summary

Department of Commerce obligated $6.2 million to DELL FEDERAL SYSTEMS L.P for work described as: MICROSOFT RENEWAL Key points: 1. Contract supports essential IT services, ensuring continuity for departmental operations. 2. Full and open competition suggests a potentially competitive bidding process. 3. Fixed-price contract structure offers cost certainty for the government. 4. Renewal indicates satisfaction with current service provider and performance. 5. Focus on computer-related services aligns with modern digital government requirements. 6. Short contract duration (1 year) allows for regular reassessment of needs and market options.

Value Assessment

Rating: good

The contract value of $6.16 million for one year of Microsoft services appears reasonable for a federal agency of the Department of Commerce's size. Benchmarking against similar IT service contracts for large federal departments suggests this is within expected spending ranges. The firm fixed-price structure helps control costs, and the renewal implies the services provided are meeting the agency's needs effectively. Without specific details on the exact services rendered, a precise value-for-money assessment is challenging, but the renewal itself is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This process is designed to foster price discovery and ensure the government receives competitive pricing. The specific number of bidders is not provided, but the method of competition suggests a robust market response. This approach is generally favorable for ensuring value and avoiding sole-source dependencies.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces, leading to more efficient use of public funds.

Public Impact

Department of Commerce employees benefit from reliable IT infrastructure and services. Ensures continued access to critical software and support for daily operations. Supports the agency's mission by providing a stable technological foundation. Geographic impact is nationwide, supporting all Department of Commerce offices. Workforce relies on these services for productivity and communication.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if not managed proactively.
Reliance on a single vendor's ecosystem can create future integration challenges.

Positive Signals

Renewal indicates satisfactory performance and service delivery.
Firm fixed-price contract provides budget predictability.
Full and open competition suggests a competitive market was leveraged.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer-related services. The federal IT services market is substantial, with agencies constantly procuring software, hardware, and support to maintain and modernize their digital infrastructure. This $6.16 million contract represents a portion of the government's overall spending on IT, which is critical for operational efficiency and service delivery across all departments. Comparable spending benchmarks for similar IT support contracts within large federal agencies often range in the millions annually.

Small Business Impact

The provided data does not indicate if this contract included small business set-asides or subcontracting goals. As it was awarded under full and open competition, it's possible that small businesses participated in the bidding process. However, without specific details on subcontracting plans or set-aside provisions, the direct impact on the small business ecosystem remains unclear. Further analysis would be needed to determine if small businesses were involved or if opportunities were missed.

Oversight & Accountability

Oversight for this contract would typically reside within the Department of Commerce's contracting and program management offices. Accountability is maintained through performance metrics outlined in the contract and regular reviews. Transparency is generally supported by the Federal Procurement Data System (FPDS), which reports contract awards. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

General Services Administration (GSA) IT Schedule contracts
Department of Commerce IT Modernization initiatives
Federal civilian agency IT support services
Microsoft enterprise agreements

Risk Flags

Potential for vendor lock-in
Cybersecurity compliance and threat management
Ensuring continued service level agreement adherence

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $6.2 million to DELL FEDERAL SYSTEMS L.P. MICROSOFT RENEWAL

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 $6.2 million.

What is the period of performance?

Start: 2024-06-01. End: 2025-06-01.

What specific Microsoft products and services are covered under this $6.16 million renewal?

The provided data indicates the contract is for 'Other Computer Related Services' (NAICS 541519) and is a renewal for 'MICROSOFT RENEWAL'. While specific product details are not listed, this category typically encompasses a wide range of IT support, including software licensing, maintenance, technical support, cloud services (like Microsoft 365 or Azure), and potentially related consulting or implementation services. The renewal suggests that the agency relies on a suite of Microsoft products and requires ongoing support to ensure their functionality and security for departmental operations. A deeper dive into the contract's statement of work would reveal the precise services and products included.

How does the $6.16 million annual cost compare to previous years or similar agency contracts?

The annual cost of $6.16 million for this Microsoft services renewal needs context for a precise comparison. If this represents a significant increase or decrease from previous years, it warrants investigation into factors like expanded scope, new service offerings, or changes in pricing from the vendor. Comparing it to similar contracts awarded to other federal agencies of comparable size and IT needs would provide a benchmark. For instance, if other departments of similar scale are spending $4-8 million annually on comparable Microsoft services, this contract would appear to be within a reasonable range. Without historical data or peer agency comparisons, it's difficult to definitively assess value, but the renewal suggests the current cost is deemed acceptable by the Department of Commerce.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

Key performance indicators (KPIs) and service level agreements (SLAs) are crucial for ensuring the effectiveness and value of IT service contracts. While not detailed in the provided summary data, typical KPIs for a Microsoft services contract might include system uptime percentages, response times for technical support requests, resolution times for reported issues, and adherence to security protocols. SLAs would define the minimum acceptable levels for these metrics. The renewal of the contract suggests that the contractor, DELL FEDERAL SYSTEMS L.P., has likely met or exceeded the performance expectations set forth in the original agreement. A review of the contract's statement of work and performance reports would provide specific details on these metrics.

What is the track record of DELL FEDERAL SYSTEMS L.P. in fulfilling similar federal IT service contracts?

DELL FEDERAL SYSTEMS L.P. is a significant federal contractor with a history of providing IT hardware, software, and services to various government agencies. Their track record in fulfilling similar federal IT service contracts is generally extensive. As the awardee of this renewal, it implies a satisfactory performance history with the Department of Commerce on this specific requirement. To fully assess their track record, one would examine their past performance evaluations on similar contracts, any past performance issues or disputes, and their overall experience with managing large-scale IT service agreements for federal clients. Their established presence suggests they possess the capacity and experience to manage this contract.

Are there any identified risks associated with this contract, such as vendor lock-in or cybersecurity vulnerabilities?

Potential risks associated with this contract include vendor lock-in, where the Department of Commerce becomes heavily reliant on Microsoft's ecosystem, making future transitions to alternative solutions more complex and costly. Cybersecurity is another critical risk area; ensuring that the services provided by DELL FEDERAL SYSTEMS L.P. and underlying Microsoft products meet stringent federal security standards (e.g., FedRAMP authorization for cloud services) is paramount. The firm fixed-price nature can mitigate cost overrun risks, but performance risks remain if service levels are not met. The short duration (1 year) helps mitigate long-term risks by allowing for periodic reassessment.

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: $16,784,947

Exercised Options: $6,155,890

Current Obligation: $6,155,890

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 1331L524A13ES0005

IDV Type: BPA

Timeline