Microsoft ELA contract awarded to CDW Government LLC for over $340 million, spanning five years

Contract Overview

Contract Amount: $340,332,328 ($340.3M)

Contractor: CDW Government LLC

Awarding Agency: Department of State

Start Date: 2019-03-01

End Date: 2024-02-29

Contract Duration: 1,826 days

Daily Burn Rate: $186.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MICROSOFT ELA

Place of Performance

Location: VERNON HILLS, LAKE County, ILLINOIS, 60061

State: Illinois Government Spending

Plain-Language Summary

Department of State obligated $340.3 million to CDW GOVERNMENT LLC for work described as: MICROSOFT ELA Key points: 1. The contract represents a significant investment in software licensing and support for the Department of State. 2. CDW Government LLC, a large IT reseller, secured this award through full and open competition. 3. The duration of the contract (five years) suggests a long-term need for these Microsoft products and services. 4. The fixed-price nature of the contract provides cost certainty for the government. 5. Analysis of the per-unit cost against market benchmarks is crucial for assessing value. 6. The contract's performance will be monitored by the Department of State, with potential oversight from the IG.

Value Assessment

Rating: good

The total award amount of $340.3 million over five years averages to approximately $68 million annually. Benchmarking this against similar large-scale enterprise agreements for Microsoft software across federal agencies is necessary. Given the volume and scope, the pricing is likely competitive, but a detailed unit-cost analysis against commercial equivalents and other government ELA pricing would provide a clearer picture of value for money. The fixed-price structure mitigates risk of cost overruns.

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 presence of six bids suggests a reasonably competitive environment. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific details of the bidding process and the number of responsive bids would further clarify the strength of the competition.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among vendors, driving down costs and encouraging innovation.

Public Impact

Federal employees across the Department of State will benefit from access to up-to-date Microsoft software and services. The contract ensures the availability of essential productivity software, operating systems, and potentially cloud services. The geographic impact is nationwide, supporting State Department operations globally. Workforce implications include ensuring employees have the necessary tools to perform their duties effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with Microsoft products over the long term.
Reliance on a single large reseller (CDW) could limit future flexibility in procurement.
Ensuring actual usage and need aligns with the licensed software to avoid overspending.

Positive Signals

Provides a consolidated and potentially cost-effective way to procure necessary software licenses.
The fixed-price contract offers budget predictability.
Full and open competition suggests a competitive award process.

Sector Analysis

This contract falls within the broader IT services sector, specifically software licensing and enterprise agreements. The market for enterprise software, particularly from major vendors like Microsoft, is dominated by a few large players and a robust reseller channel. Federal agencies frequently enter into such agreements to standardize software and achieve economies of scale. Comparable spending benchmarks would involve looking at other large federal ELAs for Microsoft or similar software suites.

Small Business Impact

While this contract was awarded to CDW Government LLC, a large reseller, the analysis does not indicate specific small business set-asides or subcontracting requirements were a primary driver for this particular award. Further investigation into CDW's subcontracting plan would be needed to assess the impact on the small business ecosystem. Large IT reseller contracts can sometimes include provisions for small business participation, but this is not explicitly stated here.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's contracting officers and program managers. The Inspector General's office for the Department of State may also conduct audits or investigations related to contract performance and spending. Transparency is facilitated through contract award databases, but detailed performance metrics and spending breakdowns may not be publicly available.

Related Government Programs

General Services Administration (GSA) Schedule IT-70
Other Agency-Specific Software Enterprise Agreements
Department of Defense Enterprise Software Agreements

Risk Flags

Long contract duration may not align with rapid technology changes.
Potential for over-licensing if usage is not actively managed.
Reliance on a single vendor's ecosystem.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $340.3 million to CDW GOVERNMENT LLC. MICROSOFT ELA

Who is the contractor on this award?

The obligated recipient is CDW GOVERNMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $340.3 million.

What is the period of performance?

Start: 2019-03-01. End: 2024-02-29.

What is the historical spending pattern for Microsoft software licenses within the Department of State prior to this contract?

Analyzing historical spending on Microsoft software by the Department of State is crucial for context. Without specific prior contract data, it's difficult to ascertain if this $340 million ELA represents an increase, decrease, or stable level of investment. Agencies often consolidate licensing through ELAs to gain better pricing and manageability compared to ad-hoc purchases. Understanding previous procurement methods (e.g., individual licenses, other resellers, different agreement types) and their associated costs would help determine if this ELA offers improved value or reflects evolving software needs and pricing structures.

How does the per-user or per-device cost under this ELA compare to commercial pricing or other federal agency ELAs?

Benchmarking the per-unit cost is a key indicator of value for money. This involves comparing the effective price per user or device under this $340 million ELA against Microsoft's commercial list prices, volume discount pricing, and pricing achieved by other federal agencies through similar Enterprise License Agreements. Factors like the specific software suite included (e.g., Office 365, Windows, server licenses), the number of users/devices, and the contract duration significantly influence these comparisons. A lower per-unit cost compared to commercial rates and competitive federal agreements would suggest good value, while a higher cost might warrant further scrutiny into the scope or necessity of the included services.

What specific Microsoft products and services are included in this $340 million ELA, and are they all necessary for the Department of State's mission?

The scope of products and services within a large ELA like this is critical for assessing its value and necessity. This $340 million contract likely covers a broad range of Microsoft software, potentially including operating systems, productivity suites (like Microsoft 365), server software, and possibly cloud services. A thorough analysis would require a detailed breakdown of the included SKUs and quantities. The agency must demonstrate that the procured software directly supports its mission requirements and that the quantities align with actual user needs. Over-licensing or procuring features that are not utilized can lead to significant waste, even under a competitive contract.

What is CDW Government LLC's track record in delivering similar large-scale IT contracts for federal agencies?

CDW Government LLC is a major IT reseller with extensive experience serving federal, state, and local governments. Their track record typically involves fulfilling large orders for hardware, software, and related services through various contract vehicles, including GSA Schedules. For large Enterprise License Agreements like this Microsoft ELA, CDW's role often involves procurement, licensing management, and potentially some level of technical support or integration services, depending on the contract specifics. Assessing their past performance on similar ELAs, including on-time delivery, responsiveness to issues, and overall customer satisfaction, provides insight into the likelihood of successful contract execution for the Department of State.

What are the potential risks associated with a five-year enterprise license agreement for software?

A five-year Enterprise License Agreement (ELA) carries several potential risks. Firstly, technology evolves rapidly; software included today might be outdated or superseded by newer versions within the five-year term, potentially leading to underutilization or the need for costly upgrades outside the ELA. Secondly, there's a risk of vendor lock-in, making it difficult and expensive to switch to alternative software solutions or vendors during the contract period. Thirdly, if the agency's needs change significantly, the ELA might not be flexible enough to adapt, leading to paying for unused licenses or lacking critical functionalities. Finally, the large, upfront commitment requires careful financial planning and carries the risk of budget overruns if not managed meticulously.

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

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 230 N MILWAUKEE AVE, VERNON HILLS, IL, 60061

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $341,744,968

Exercised Options: $340,803,208

Current Obligation: $340,332,328

Actual Outlays: $158,146,887

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC28B

IDV Type: GWAC

Timeline