IRS Spends $140M on Microsoft Enterprise Licenses for 92,000 Users
Contract Overview
Contract Amount: $139,524,780 ($139.5M)
Contractor: Dell Federal Systems L.P
Awarding Agency: Department of the Treasury
Start Date: 2019-12-15
End Date: 2024-05-31
Contract Duration: 1,629 days
Daily Burn Rate: $85.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: ENTERPRISE AGREEMENT FOR 92,000 USER SUBSCRIPTIONS OF MICROSOFT BRAND NAME OFFICE 365, WINDOWS 10 ENTERPRISE, AZURE ACTIVE DIRECTORY, WINDOWS VIRTUAL DESKTOP ACCESS (VDA), MICROSOFT SQL, POWERAPPS, SHAREPOINT LICENSES.
Place of Performance
Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682
State: Texas Government Spending
Plain-Language Summary
Department of the Treasury obligated $139.5 million to DELL FEDERAL SYSTEMS L.P for work described as: ENTERPRISE AGREEMENT FOR 92,000 USER SUBSCRIPTIONS OF MICROSOFT BRAND NAME OFFICE 365, WINDOWS 10 ENTERPRISE, AZURE ACTIVE DIRECTORY, WINDOWS VIRTUAL DESKTOP ACCESS (VDA), MICROSOFT SQL, POWERAPPS, SHAREPOINT LICENSES. Key points: 1. Significant investment in core Microsoft enterprise software and cloud services. 2. Dell Federal Systems secured the contract, indicating a competitive landscape. 3. Potential risk of vendor lock-in and reliance on a single provider. 4. Spending aligns with broader government IT modernization trends.
Value Assessment
Rating: good
The $139.5M price tag for 92,000 user subscriptions over approximately 5.5 years appears reasonable given the scope of Microsoft enterprise licenses. Benchmarking against similar large-scale government agreements for Office 365 and Azure services suggests competitive pricing.
Cost Per Unit: $151.66 per user per year (approximate)
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. This method generally promotes price discovery and competitive pricing for the government.
Taxpayer Impact: Taxpayers benefit from competitive pricing achieved through an open bidding process for essential software licenses.
Public Impact
Enables productivity for 92,000 IRS employees through essential Microsoft software. Supports cloud migration and digital transformation initiatives within the IRS. Provides access to advanced tools like PowerApps and SharePoint for workflow automation. Ensures up-to-date software versions and security patches for critical systems.
Waste & Efficiency Indicators
Waste Risk Score: 85 / 10
Warning Flags
- Potential for cost increases upon renewal if competition is limited.
- Dependence on Microsoft for updates and support.
- Cybersecurity risks associated with large-scale cloud-based subscriptions.
Positive Signals
- Leverages widely adopted and integrated Microsoft ecosystem.
- Supports remote work capabilities and collaboration.
- Provides access to a comprehensive suite of productivity and business applications.
Sector Analysis
This spending falls within the IT services sector, specifically software licensing and cloud services. Government IT spending benchmarks often show significant allocations to enterprise software agreements to support large workforces and digital infrastructure.
Small Business Impact
While this is a large enterprise agreement, opportunities for small businesses may exist in subcontracting roles for implementation, training, or specialized support services related to the Microsoft suite.
Oversight & Accountability
The contract was awarded via a delivery order under a larger agreement, suggesting established procurement processes. Ongoing oversight would focus on usage, cost-effectiveness, and adherence to terms throughout the contract period.
Related Government Programs
- Other Computer Related Services
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- Vendor lock-in
- Potential for price increases upon contract renewal
- Reliance on a single software provider
- Cybersecurity vulnerabilities inherent in cloud services
- Integration challenges with existing non-Microsoft systems
Tags
other-computer-related-services, department-of-the-treasury, tx, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $139.5 million to DELL FEDERAL SYSTEMS L.P. ENTERPRISE AGREEMENT FOR 92,000 USER SUBSCRIPTIONS OF MICROSOFT BRAND NAME OFFICE 365, WINDOWS 10 ENTERPRISE, AZURE ACTIVE DIRECTORY, WINDOWS VIRTUAL DESKTOP ACCESS (VDA), MICROSOFT SQL, POWERAPPS, SHAREPOINT LICENSES.
Who is the contractor on this award?
The obligated recipient is DELL FEDERAL SYSTEMS L.P.
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Internal Revenue Service).
What is the total obligated amount?
The obligated amount is $139.5 million.
What is the period of performance?
Start: 2019-12-15. End: 2024-05-31.
What is the long-term cost-effectiveness of this enterprise agreement compared to alternative solutions or perpetual licenses?
Assessing long-term cost-effectiveness requires analyzing usage trends, potential for price escalations upon renewal, and comparing the total cost of ownership against on-premises solutions or competing cloud providers. While subscription models offer flexibility, sustained high costs over many years warrant careful review, especially if adoption rates fluctuate or alternative technologies emerge.
What are the specific cybersecurity measures and data protection protocols in place for these Microsoft cloud services?
The contract likely mandates adherence to federal cybersecurity standards like FedRAMP. Specific measures include data encryption, access controls, regular security audits, and incident response plans. However, the IRS must ensure these align with their unique security requirements and continuously monitor Microsoft's compliance and threat landscape.
How does this agreement contribute to the IRS's overall IT modernization goals and digital transformation strategy?
This agreement is foundational for modernization by providing scalable cloud infrastructure and modern productivity tools. It enables the IRS to move away from legacy systems, enhance collaboration, and leverage data analytics. The adoption of Azure and related services supports agility and the development of new digital services for taxpayers and employees.
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 › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: 2032H5-20-Q-00011
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Dell Technologies Inc.
Address: 1 DELL WAY, ROUND ROCK, TX, 78682
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $168,975,931
Exercised Options: $139,538,988
Current Obligation: $139,524,780
Actual Outlays: $139,390,665
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS35F0884P
IDV Type: FSS
Timeline
Start Date: 2019-12-15
Current End Date: 2024-05-31
Potential End Date: 2024-05-31 18:18:30
Last Modified: 2023-07-20
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