State Department renews Salesforce services for $57.6M, highlighting ongoing reliance on cloud-based CRM
Contract Overview
Contract Amount: $57,572,778 ($57.6M)
Contractor: V3gate, LLC
Awarding Agency: Department of State
Start Date: 2024-04-01
End Date: 2025-03-31
Contract Duration: 364 days
Daily Burn Rate: $158.2K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: SALESFORCE RENEWALS
Place of Performance
Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921
State: Colorado Government Spending
Plain-Language Summary
Department of State obligated $57.6 million to V3GATE, LLC for work described as: SALESFORCE RENEWALS Key points: 1. The contract represents a significant investment in maintaining critical customer relationship management capabilities. 2. Competition dynamics for this renewal appear limited, potentially impacting price negotiation. 3. The fixed-price contract structure offers cost predictability but may limit flexibility for evolving needs. 4. Performance context is crucial to assess if the renewed services align with current operational demands. 5. This spending falls within the broader IT services sector, supporting essential government functions.
Value Assessment
Rating: fair
Benchmarking the value of this Salesforce renewal is challenging without specific service level agreements and usage metrics. However, the total award of $57.6 million over one year suggests a substantial ongoing commitment. Comparing this to other large-scale CRM implementations or renewals within federal agencies could provide a clearer picture of cost-effectiveness. The firm fixed-price nature indicates a defined cost, but the true value depends on the realized benefits and efficiency gains for the Department of State.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which suggests that while competition was considered, specific circumstances led to the exclusion of certain potential bidders. This type of award can sometimes indicate a specialized need or a situation where only a limited number of vendors could realistically meet the requirements. The limited competition may have implications for price discovery, potentially leading to higher costs than a fully open competition with multiple bidders.
Taxpayer Impact: Taxpayers may face higher costs due to the restricted competitive landscape. The lack of broad competition could mean less downward pressure on pricing, as the vendor may have had less incentive to offer the most aggressive bid.
Public Impact
The Department of State's personnel and operational units benefit from continued access to Salesforce's CRM functionalities. Essential services include managing constituent interactions, tracking diplomatic engagements, and internal workflow management. The geographic impact is primarily national, supporting the Department's operations from its headquarters and potentially extending to its global missions. Workforce implications include ensuring that employees have the necessary tools to perform their duties efficiently, particularly those involved in external relations and internal coordination.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition could lead to suboptimal pricing for taxpayers.
- Reliance on a single vendor for critical CRM functions poses a potential risk if the vendor's service or pricing changes unfavorably.
- The 'after exclusion of sources' clause warrants scrutiny to ensure fair consideration of all capable vendors.
Positive Signals
- The firm fixed-price contract provides budget certainty for the Department of State.
- Renewal ensures continuity of essential IT services, preventing disruption to critical operations.
- The contract award indicates a commitment to leveraging modern IT solutions for government functions.
Sector Analysis
The IT services sector, particularly cloud-based software and CRM solutions, is a significant area of federal spending. Agencies increasingly rely on platforms like Salesforce to manage vast amounts of data and streamline operations. Comparable spending benchmarks for federal CRM contracts can vary widely based on the scope of services, number of users, and contract duration. This $57.6 million award positions it as a substantial contract within the CRM sub-sector, reflecting the scale of the Department of State's needs.
Small Business Impact
This contract does not appear to have a specific small business set-aside. The nature of large-scale enterprise software renewals often favors established vendors with extensive experience and resources. There is no explicit indication of subcontracting opportunities for small businesses within the provided data, suggesting that the primary focus is on the direct service provision by the awarded contractor.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of State's contracting officers and program managers. Accountability measures are embedded in the contract's performance requirements and delivery schedules. Transparency is facilitated through contract award databases, though detailed performance metrics and usage data may not be publicly disclosed. Inspector General jurisdiction would apply if any issues of fraud, waste, or abuse arise.
Related Government Programs
- Federal Cloud Computing Strategy
- IT Modernization Initiatives
- Customer Relationship Management Systems
- Department of State IT Procurement
Risk Flags
- Limited competition may impact price.
- Reliance on a single vendor for critical software.
- Justification for exclusion of sources needs review.
Tags
it-services, crm, salesforce, department-of-state, cloud-computing, firm-fixed-price, limited-competition, it-modernization, software-renewal, federal-agency
Frequently Asked Questions
What is this federal contract paying for?
Department of State awarded $57.6 million to V3GATE, LLC. SALESFORCE RENEWALS
Who is the contractor on this award?
The obligated recipient is V3GATE, LLC.
Which agency awarded this contract?
Awarding agency: Department of State (Department of State).
What is the total obligated amount?
The obligated amount is $57.6 million.
What is the period of performance?
Start: 2024-04-01. End: 2025-03-31.
What is the historical spending trend for Salesforce services at the Department of State?
Analyzing historical spending on Salesforce services at the Department of State is crucial for understanding the long-term investment and identifying potential trends in cost escalation or efficiency. Without specific historical data, it's difficult to ascertain if this $57.6 million renewal represents an increase, decrease, or stable expenditure compared to previous years. Federal procurement databases often track contract awards over time, which would allow for a year-over-year comparison. Such an analysis would reveal if the Department is consolidating its Salesforce usage, expanding its reliance, or negotiating more favorable terms. Understanding this trend provides context for the current award's value and sustainability.
How does the pricing of this Salesforce renewal compare to similar federal government contracts for comparable services?
Directly comparing the pricing of this $57.6 million Salesforce renewal to similar federal contracts requires access to detailed pricing structures and service level agreements (SLAs) for those other contracts. Salesforce pricing can vary significantly based on the specific modules licensed, the number of users, the level of support, and any negotiated enterprise discounts. If this contract is for a large number of users and comprehensive features, the price might be in line with other large federal CRM deployments. However, if the scope is narrower or if other agencies have secured better volume discounts, this renewal could be considered less competitive. Benchmarking against publicly available contract data for other federal agencies using Salesforce or similar CRM platforms would be necessary for a robust comparison.
What are the specific performance metrics and service level agreements (SLAs) associated with this contract?
The provided data does not include the specific performance metrics or Service Level Agreements (SLAs) tied to this $57.6 million Salesforce renewal. These details are typically outlined in the contract's statement of work (SOW) and are critical for assessing the value and effectiveness of the services. SLAs often define uptime guarantees, response times for support, data security standards, and performance benchmarks. Without these, it's challenging to evaluate whether the Department of State is receiving adequate service for its investment. The renewal implies satisfactory past performance, but concrete metrics are needed for objective evaluation and to ensure accountability.
What is the risk associated with the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type?
The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type introduces a moderate level of risk. While it signifies that a broad competition was initially considered, the subsequent exclusion of sources suggests that only a limited pool of vendors was ultimately eligible or pursued. This can stem from highly specialized requirements, proprietary technology, or unique vendor capabilities. The risk lies in potentially higher costs due to reduced competition and the possibility that a more innovative or cost-effective solution from an excluded vendor was not considered. It necessitates careful justification for the exclusion to ensure fairness and optimal use of taxpayer funds.
How does this contract align with the Department of State's broader IT modernization and digital transformation goals?
This Salesforce renewal directly supports the Department of State's IT modernization and digital transformation goals by ensuring the continued availability and functionality of a core cloud-based CRM platform. Salesforce is a widely adopted tool for enhancing customer engagement, streamlining internal processes, and managing data effectively. By renewing this contract, the Department signals its commitment to leveraging modern software solutions to improve operational efficiency and service delivery. The investment in a robust CRM system is often a foundational element of digital transformation, enabling better data utilization, improved communication, and enhanced decision-making across the organization.
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: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 555 MIDDLE CREEK PKWY STE 120, COLORADO SPRINGS, CO, 80921
Business Categories: Category Business, Hispanic American Owned Business, Limited Liability Corporation, Minority Owned Business, 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: $57,572,778
Exercised Options: $57,572,778
Current Obligation: $57,572,778
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: NNG15SD27B
IDV Type: GWAC
Timeline
Start Date: 2024-04-01
Current End Date: 2025-03-31
Potential End Date: 2027-03-31 00:00:00
Last Modified: 2025-04-02
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