Commerce renews Oracle licenses for $17.1M, raising questions about long-term software cost management

Contract Overview

Contract Amount: $17,105,396 ($17.1M)

Contractor: Affigent, LLC

Awarding Agency: Department of Commerce

Start Date: 2023-05-12

End Date: 2026-05-11

Contract Duration: 1,095 days

Daily Burn Rate: $15.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ORACLE LICENSES AND MAINTENANCE RENEWAL

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Commerce obligated $17.1 million to AFFIGENT, LLC for work described as: ORACLE LICENSES AND MAINTENANCE RENEWAL Key points: 1. The contract represents a significant investment in essential software infrastructure for the USPTO. 2. Renewal pricing should be benchmarked against previous agreements and market alternatives to ensure value. 3. Reliance on a single vendor for critical software can introduce long-term cost escalation risks. 4. The contract's duration of three years provides a stable period for USPTO operations. 5. Understanding the specific Oracle products and versions covered is key to assessing their necessity. 6. The 'Other Computer Related Services' NAICS code suggests a broad scope beyond simple licensing.

Value Assessment

Rating: fair

This $17.1 million renewal for Oracle licenses and maintenance is a substantial expenditure. Without direct comparative data on Oracle's current market pricing for similar enterprise agreements, it's difficult to definitively assess value. However, the duration and the nature of software maintenance renewals often lead to predictable, albeit sometimes escalating, costs. The agency should ensure that the terms of the renewal reflect competitive market rates and that the included maintenance and support are demonstrably necessary and cost-effective compared to potential alternatives or direct support models.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were initially excluded. The presence of two bidders suggests some level of competition, but the exclusion of other potential vendors raises questions about the breadth of the competitive landscape. This limited competition may have influenced pricing, potentially leading to a less favorable outcome for the government compared to a truly open and unrestricted bidding process.

Taxpayer Impact: Limited competition can result in higher prices for taxpayers as the pool of potential bidders is restricted, reducing the downward pressure on costs.

Public Impact

USPTO employees and patent examiners benefit from continued access to critical Oracle software. The contract ensures the operational continuity of patent and trademark processing systems. The geographic impact is primarily national, supporting the USPTO's federal mandate. IT professionals supporting these systems will continue their work, maintaining essential infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with Oracle software, limiting future flexibility and cost-saving opportunities.
Risk of price increases in future renewals if competitive pressures are not maintained.
Dependence on a single vendor for critical software maintenance and support.

Positive Signals

Ensures continuity of essential IT services for the USPTO.
The fixed-price contract provides budget certainty for the three-year term.
Awarded after a competitive process, suggesting some level of vetting.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on software licensing and maintenance for enterprise resource planning (ERP) and database management systems. The market for enterprise software, particularly from major vendors like Oracle, is characterized by high switching costs and long-term customer relationships. Spending benchmarks for similar Oracle license renewals can vary widely based on the specific products, user counts, and support levels, but multi-million dollar annual expenditures are common for large federal agencies.

Small Business Impact

There is no indication that this contract involved small business set-asides. The nature of enterprise software licensing and maintenance from major vendors like Oracle typically involves large prime contractors or direct vendor agreements, with limited opportunities for small businesses to participate directly as prime awardees. Subcontracting opportunities for small businesses are unlikely to be significant in this type of renewal.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The Department of Commerce's Office of the Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this expenditure. Transparency is maintained through contract databases like FPDS, which provide public access to contract details, awardees, and amounts.

Related Government Programs

Oracle Database Software Licenses and Maintenance
Enterprise Resource Planning (ERP) Software
IT Infrastructure Support Services
Software as a Service (SaaS) Renewals
Federal Information Technology Acquisition Reform Act (FITARA) Compliance

Risk Flags

Limited competition may impact price.
Potential for long-term cost escalation with proprietary software.
Lack of detailed product/version information hinders full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $17.1 million to AFFIGENT, LLC. ORACLE LICENSES AND MAINTENANCE RENEWAL

Who is the contractor on this award?

The obligated recipient is AFFIGENT, LLC.

Which agency awarded this contract?

Awarding agency: Department of Commerce (U.S. Patent and Trademark Office).

What is the total obligated amount?

The obligated amount is $17.1 million.

What is the period of performance?

Start: 2023-05-12. End: 2026-05-11.

What specific Oracle products and versions are covered under this renewal, and what is their criticality to USPTO operations?

The provided data does not specify the exact Oracle products and versions included in this $17.1 million renewal. However, given the agency (USPTO) and the vendor (Oracle), it is highly probable that the contract covers core database technologies (e.g., Oracle Database Enterprise Edition) and potentially related middleware or application software critical for managing patent and trademark applications, intellectual property data, and internal operational systems. The criticality is assumed to be high, as software renewals of this magnitude typically support essential business functions. Further details would require accessing the contract's statement of work or technical documentation.

How does the per-unit cost of these Oracle licenses and maintenance compare to previous contract periods or similar federal agency contracts?

Benchmarking the per-unit cost for this Oracle license and maintenance renewal against previous periods or similar federal contracts is challenging without more granular data. The provided information only includes the total award amount ($17.1 million) and duration (3 years). To perform a meaningful comparison, one would need details on the number of licenses, user types (e.g., named users, concurrent users), specific product editions, and the level of support included in both this and prior contracts. Additionally, market research reports or data from other agencies procuring similar Oracle products would be necessary to establish a fair market price. The 'fair' rating in the value assessment reflects this lack of specific comparative data.

What is Affigent, LLC's track record with Oracle software contracts, particularly with federal agencies?

Affigent, LLC has a history of securing federal contracts, including those involving IT services and software. While the provided data indicates they are the awardee for this Oracle license renewal, their specific track record with Oracle products and maintenance for federal agencies would require a deeper dive into contract databases. It's important to assess if Affigent, LLC is a direct reseller/partner of Oracle, a systems integrator, or a reseller of other IT products. Their experience in managing large-scale Oracle deployments, providing technical support, and ensuring compliance with federal regulations would be key factors in evaluating their capability to deliver value on this contract.

What are the potential risks associated with renewing Oracle licenses for a three-year term, and what mitigation strategies are in place?

The primary risks associated with a three-year renewal of Oracle licenses and maintenance include potential vendor lock-in, escalating costs over time, and the possibility of paying for unused or underutilized software features. Oracle's licensing models can be complex, and renewals often come with price increases. Mitigation strategies could involve rigorous negotiation based on market intelligence, exploring alternative software solutions during the contract term, ensuring strict adherence to license usage policies to avoid over-licensing, and potentially seeking multi-year discounts. The USPTO should also be evaluating its long-term strategy for database and application software to avoid perpetual reliance on a single vendor if more cost-effective or flexible options emerge.

How does this spending compare to the USPTO's overall IT budget or historical spending on Oracle products?

To assess how this $17.1 million Oracle license renewal fits into the USPTO's overall IT spending, one would need access to the agency's historical IT budgets and detailed expenditure reports. This figure represents a significant portion of an agency's IT budget, especially if it's an annual cost. Comparing it to previous years' spending on Oracle products would reveal trends in software costs and the agency's commitment to the Oracle ecosystem. Without this context, it's difficult to determine if this renewal represents an increase, decrease, or stable spending pattern relative to the USPTO's broader IT investment strategy.

Industry Classification

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

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nana Regional Corporation, Inc.

Address: 2553 DULLES VIEW DR, HERNDON, VA, 20171

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, DoT Certified Disadvantaged Business Enterprise, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,105,396

Exercised Options: $17,105,396

Current Obligation: $17,105,396

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC59B

IDV Type: GWAC

Timeline