State Dept Renews Oracle Maintenance for $25.7M, Raising Questions on Value and Competition

Contract Overview

Contract Amount: $25,665,056 ($25.7M)

Contractor: Emergent, LLC

Awarding Agency: Department of State

Start Date: 2023-07-28

End Date: 2024-07-27

Contract Duration: 365 days

Daily Burn Rate: $70.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: RENEWAL OF ORACLE HW/SW MAINTENANCE, SUPPORT.

Place of Performance

Location: SPRINGFIELD, FAIRFAX County, VIRGINIA, 22153

State: Virginia Government Spending

Plain-Language Summary

Department of State obligated $25.7 million to EMERGENT, LLC for work described as: RENEWAL OF ORACLE HW/SW MAINTENANCE, SUPPORT. Key points: 1. Significant spending on Oracle hardware/software maintenance and support. 2. Competition method is 'Full and Open', but contract type is 'Delivery Order', suggesting potential for limited competition in practice. 3. Risk of vendor lock-in and high costs associated with proprietary software maintenance. 4. IT sector spending, with a focus on enterprise software and hardware support.

Value Assessment

Rating: questionable

The $25.7 million renewal for Oracle maintenance appears high, especially given the duration. Benchmarking against similar Oracle support contracts is crucial to determine if this price reflects fair market value or includes premium charges for proprietary software.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While advertised as 'Full and Open Competition', the 'Delivery Order' award type can sometimes limit actual market participation if not managed effectively. The price discovery mechanism relies heavily on the initial contract and subsequent negotiations.

Taxpayer Impact: Taxpayer funds are committed to maintaining existing Oracle infrastructure. Without strong price negotiation and competitive pressure, there's a risk of overspending on essential but potentially overpriced services.

Public Impact

Government reliance on proprietary software like Oracle can lead to escalating maintenance costs. Ensuring competitive bidding for software maintenance renewals is vital for fiscal responsibility. The Department of State's IT infrastructure depends on this support, impacting agency operations. Transparency in pricing for enterprise software support is a key concern for taxpayers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High renewal cost for software maintenance.
Potential for limited effective competition despite 'Full and Open' designation.
Vendor lock-in risk with proprietary Oracle software.
Lack of clear per-unit cost benchmark.

Positive Signals

Contract awarded under 'Full and Open Competition'.
Fixed Price contract type can provide cost certainty.
Clear contract duration and end date.

Sector Analysis

This contract falls within the IT sector, specifically for enterprise software and hardware maintenance. Spending on such services is common across government agencies, but benchmarks for Oracle support can vary widely based on the specific products and support levels.

Small Business Impact

The data does not indicate whether small businesses were involved in this specific contract award. Further analysis would be needed to determine the extent of small business participation in the broader Oracle maintenance market.

Oversight & Accountability

Oversight is needed to ensure the 'Full and Open Competition' process was robust and that the pricing reflects fair market value. Regular reviews of Oracle maintenance contracts are essential for accountability.

Related Government Programs

Electronic Computer Manufacturing
Department of State Contracting
Department of State Programs

Risk Flags

High renewal cost.
Potential for limited effective competition.
Vendor lock-in.
Lack of transparency in pricing benchmarks.
Reliance on proprietary software.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $25.7 million to EMERGENT, LLC. RENEWAL OF ORACLE HW/SW MAINTENANCE, SUPPORT.

Who is the contractor on this award?

The obligated recipient is EMERGENT, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.7 million.

What is the period of performance?

Start: 2023-07-28. End: 2024-07-27.

What is the specific Oracle hardware and software covered by this maintenance contract, and how does its age and criticality influence the renewal cost?

The contract covers Oracle hardware and software maintenance and support. The specific versions and configurations are not detailed, but older or mission-critical systems often command higher support fees due to specialized knowledge requirements and potential vendor reluctance to support legacy products. Understanding the exact scope is key to justifying the $25.7 million cost.

How effectively did the 'Full and Open Competition' process ensure competitive pricing for this Oracle maintenance renewal, given the nature of proprietary software support?

While advertised as 'Full and Open', the proprietary nature of Oracle software can inherently limit true competition, as only authorized vendors or Oracle itself may be able to provide support. The effectiveness hinges on whether alternative support providers were genuinely considered or if the process primarily solicited bids from entities authorized by Oracle, potentially inflating prices.

What is the long-term strategy for managing Oracle software costs, and are there plans to migrate to alternative solutions or renegotiate support terms to reduce future spending?

The Department of State's long-term strategy for managing Oracle costs is unclear from this data. Agencies often face a dilemma between the high cost of proprietary software support and the significant expense and risk of migrating to open-source or alternative platforms. Proactive cost management and strategic vendor negotiations are crucial to avoid perpetual high spending.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

Product/Service Code: IT AND TELECOM - IT MANAGEMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Mythics, Inc.

Address: 4525 MAIN ST STE 1500, VIRGINIA BEACH, VA, 23462

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $25,665,056

Exercised Options: $25,665,056

Current Obligation: $25,665,056

Actual Outlays: $310,022

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC10B

IDV Type: GWAC

Timeline