Department of Labor awards $2.5M follow-on IT contract for VMware support, replacing expiring licenses

Contract Overview

Contract Amount: $2,548,380 ($2.5M)

Contractor: Alvarez LLC

Awarding Agency: Department of Labor

Start Date: 2025-01-01

End Date: 2026-12-31

Contract Duration: 729 days

Daily Burn Rate: $3.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: NON-LABOR, ITAS B: FOLLOW-ON CONTRACT TO REPLACE THE EXISTING VMWARE LICENSE AND SUPPORT CONTRACT (24191605DC19F00025). THE CURRENT CONTRACT EXPIRES DECEMBER 31, 2024. ZERO DOLLAR PR DUE TO CURRENT CONTINUING RESOLUTION AND TO START SOLICITATION. PO

Place of Performance

Location: LEESBURG, LOUDOUN County, VIRGINIA, 20176

State: Virginia Government Spending

Plain-Language Summary

Department of Labor obligated $2.5 million to ALVAREZ LLC for work described as: NON-LABOR, ITAS B: FOLLOW-ON CONTRACT TO REPLACE THE EXISTING VMWARE LICENSE AND SUPPORT CONTRACT (24191605DC19F00025). THE CURRENT CONTRACT EXPIRES DECEMBER 31, 2024. ZERO DOLLAR PR DUE TO CURRENT CONTINUING RESOLUTION AND TO START SOLICITATION. PO Key points: 1. Contract aims to ensure continuity of essential IT infrastructure by replacing expiring VMware licenses. 2. Follow-on nature suggests a need for ongoing services, potentially indicating a stable demand. 3. The contract's value is modest, suggesting it addresses a specific, contained IT requirement. 4. Procurement strategy indicates a competitive process was intended, aiming for fair market pricing. 5. The contract's duration aligns with typical software license and support cycles. 6. Focus on IT infrastructure highlights the critical role of technology in departmental operations.

Value Assessment

Rating: good

The contract value of approximately $2.5 million over two years for VMware license and support appears reasonable for a federal agency's IT infrastructure needs. Benchmarking against similar federal IT support contracts would provide a more precise assessment, but the price seems within expected ranges for enterprise-level software maintenance and licensing. The firm-fixed-price structure helps control costs for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition after exclusion of sources,' indicating that a competitive solicitation was issued, but specific sources were excluded for defined reasons. The presence of 6 bidders suggests a healthy level of competition for this IT support requirement. This competitive environment is generally favorable for price discovery and achieving value for the government.

Taxpayer Impact: A competitive process with multiple bidders helps ensure that taxpayer funds are used efficiently by driving down prices and encouraging innovative solutions from vendors.

Public Impact

Federal employees across the Department of Labor will benefit from continued access to essential IT services. The contract ensures the operational continuity of critical IT systems reliant on VMware technology. Services are delivered primarily within Virginia, supporting the agency's headquarters and regional operations. IT support staff and potentially third-party vendors will be involved in the service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the chosen VMware solution becomes deeply integrated and difficult to replace.
Reliance on a single vendor's technology could pose risks if that vendor experiences financial instability or discontinues key products.
Ensuring adequate technical expertise within the agency to manage and oversee the VMware environment is crucial.

Positive Signals

The use of a competitive bidding process helps mitigate risks associated with sole-sourcing and ensures fair pricing.
A follow-on contract suggests a proven need and potentially a successful prior relationship, indicating stability.
The firm-fixed-price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on software licensing and support for virtualization technology. The market for enterprise virtualization solutions like VMware is mature and competitive, with several major players. Federal spending in this area is substantial, driven by the need for efficient data center operations, cloud integration, and robust IT infrastructure across various agencies. This contract represents a typical expenditure for maintaining essential IT capabilities.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary impact on the small business ecosystem would be through potential subcontracting opportunities if the prime contractor, ALVAREZ LLC, chooses to engage small businesses. Without specific subcontracting plans detailed in the award, it's difficult to assess the direct impact on small business participation.

Oversight & Accountability

Oversight for this contract would likely be managed by the Department of Labor's Office of the Assistant Secretary for Administration and Management (OASAM), which is the acquiring entity. Standard contract management procedures, performance reviews, and financial oversight mechanisms would be in place. Transparency is generally maintained through contract award databases like FPDS. The Inspector General's office for the Department of Labor would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

General Services Administration (GSA) IT Schedule contracts
Other IT Software and Licensing Agreements
Cloud Computing Services
IT Infrastructure Modernization Programs
Cybersecurity Support Services

Risk Flags

Potential for vendor lock-in
Reliance on specific technology vendor
Need for robust contract oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $2.5 million to ALVAREZ LLC. NON-LABOR, ITAS B: FOLLOW-ON CONTRACT TO REPLACE THE EXISTING VMWARE LICENSE AND SUPPORT CONTRACT (24191605DC19F00025). THE CURRENT CONTRACT EXPIRES DECEMBER 31, 2024. ZERO DOLLAR PR DUE TO CURRENT CONTINUING RESOLUTION AND TO START SOLICITATION. PO

Who is the contractor on this award?

The obligated recipient is ALVAREZ LLC.

Which agency awarded this contract?

Awarding agency: Department of Labor (Office of the Assistant Secretary for Administration and Management).

What is the total obligated amount?

The obligated amount is $2.5 million.

What is the period of performance?

Start: 2025-01-01. End: 2026-12-31.

What is the historical spending pattern for VMware support and licensing at the Department of Labor?

Analyzing historical spending requires access to detailed procurement data beyond this single award. However, the 'follow-on' nature of this contract implies a recurring need for VMware services. Previous contracts for similar services would likely show a pattern of annual or multi-year renewals. The value of this current award ($2.5M over two years) can serve as a benchmark for recent spending. To understand the full pattern, one would need to examine contract awards from the Department of Labor over the past 5-10 years related to VMware, looking at total obligated amounts, contract durations, and the number of competitive versus sole-source awards to identify trends in cost, competition, and vendor reliance.

How does the pricing of this VMware contract compare to similar federal awards?

Direct comparison of this $2.5 million contract for VMware license and support requires access to a database of similar federal IT contracts. Key comparison points would include the number of users/servers supported, the specific VMware product suite licensed (e.g., vSphere, Horizon), the level of support (e.g., 24/7, business hours), and the contract duration. Given this is a firm-fixed-price contract awarded competitively with 6 bidders, the pricing is likely aligned with market rates. However, without specific details on the scope of services and the exact VMware products, a precise benchmark is challenging. Generally, competitive awards tend to yield prices closer to fair market value than sole-source contracts.

What are the key risks associated with this follow-on IT contract?

Key risks include potential vendor lock-in, as the agency becomes dependent on VMware's ecosystem, making future transitions costly. There's also a risk related to the vendor's long-term viability or product roadmap changes, which could impact support or necessitate costly upgrades. Technical risks involve ensuring the new licenses and support adequately cover the agency's evolving needs and integrating seamlessly with existing infrastructure. Furthermore, if the competition, while present, was limited in scope or the excluded sources had unique capabilities, there might be a missed opportunity for even better value or innovation. Ensuring robust contract management and performance monitoring is crucial to mitigate these risks.

What is the track record of ALVAREZ LLC in performing similar federal IT contracts?

ALVAREZ LLC's track record in performing similar federal IT contracts can be assessed by reviewing their past performance information available in federal procurement databases (e.g., SAM.gov, FPDS). This would involve looking at previous awards to ALVAREZ LLC for IT services, software licensing, and support, particularly for virtualization technologies. Key indicators include the successful completion of contracts, past performance ratings (if available), any history of contract disputes or terminations, and the types of agencies they have served. A positive track record with similar agencies and contract types would suggest a lower performance risk for this new award.

How does the 'full and open competition after exclusion of sources' procurement method impact value for taxpayers?

This procurement method aims to balance the benefits of full and open competition with specific, justifiable reasons for excluding certain sources. Ideally, it allows for a broad range of potential offerors while potentially focusing the competition on vendors best suited for a niche requirement or when specific security or compatibility issues arise. If the exclusions were well-justified and a sufficient number of qualified bidders (like the 6 in this case) still participated, it can lead to competitive pricing and good value. However, if the exclusions were overly broad or not adequately justified, it could limit competition, potentially leading to higher prices or fewer innovative solutions than a truly open competition might yield.

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 - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 1605TB-25-Q-00019

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 161 FORT EVANS RD NE STE 335, LEESBURG, VA, 20176

Business Categories: Category Business, HUBZone Firm, Limited Liability Corporation, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $6,998,088

Exercised Options: $2,548,380

Current Obligation: $2,548,380

Actual Outlays: $1,171,421

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SD19B

IDV Type: GWAC

Timeline