SSA renews BMC software maintenance for over $180M, raising questions on value and competition

Contract Overview

Contract Amount: $180,070,190 ($180.1M)

Contractor: BMC Software, Inc.

Awarding Agency: Social Security Administration

Start Date: 2019-12-31

End Date: 2026-11-30

Contract Duration: 2,526 days

Daily Burn Rate: $71.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: GSA FSS DELIVERY ORDER FOR RENEWAL OF BMC SOFTWARE MAINTENANCE. POP: 12/01/2019 - 11/30/2026 (BASE + 6 OPTION YEARS)

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77042

State: Texas Government Spending

Plain-Language Summary

Social Security Administration obligated $180.1 million to BMC SOFTWARE, INC. for work described as: GSA FSS DELIVERY ORDER FOR RENEWAL OF BMC SOFTWARE MAINTENANCE. POP: 12/01/2019 - 11/30/2026 (BASE + 6 OPTION YEARS) Key points: 1. The contract's significant value over its extended period warrants scrutiny for cost-effectiveness. 2. Full and open competition was utilized, but the number of bidders is not specified, impacting price discovery assessment. 3. The firm-fixed-price structure shifts risk to the contractor, but ongoing maintenance costs require careful monitoring. 4. This renewal supports critical IT infrastructure for the Social Security Administration's operations. 5. The contract's duration suggests a long-term reliance on BMC software, potentially limiting future flexibility. 6. Benchmarking against similar software maintenance contracts is crucial to assess value for money.

Value Assessment

Rating: fair

The total value of $180,007,019 over approximately seven years represents a substantial investment in software maintenance. Without detailed breakdowns of annual costs or specific service levels, it is difficult to definitively benchmark this against similar contracts. The firm-fixed-price nature suggests a predictable cost, but the overall value proposition hinges on the necessity and efficiency of the BMC software for the SSA's mission-critical functions. Further analysis of per-unit costs for specific software modules or support tiers would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the provided data does not specify the number of bids received. A higher number of bids typically leads to more competitive pricing and better value for the government. The absence of this detail makes it challenging to fully assess the effectiveness of the competition in driving down costs.

Taxpayer Impact: While full and open competition is generally favorable for taxpayers, the lack of specific bid numbers prevents a definitive conclusion on whether the most cost-effective solution was secured. Taxpayers benefit when robust competition leads to optimal pricing.

Public Impact

The primary beneficiary is the Social Security Administration, ensuring the continuity of its IT systems. The contract provides essential maintenance and support for BMC software, crucial for agency operations. The geographic impact is national, supporting the SSA's nationwide service delivery. Workforce implications include ensuring IT staff have the necessary tools and support to maintain the software.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to long-term renewal of specialized software maintenance.
Lack of specific bid count makes it difficult to confirm optimal price discovery.
High total contract value requires ongoing vigilance to ensure continued value for money.
Reliance on a single vendor for critical software maintenance could pose risks if the vendor's support or product strategy changes.

Positive Signals

Awarded under full and open competition, allowing for broad market participation.
Firm-fixed-price contract structure provides cost certainty for the agency.
Long contract duration (base + 6 option years) offers stability for critical IT infrastructure.

Sector Analysis

This contract falls within the Information Technology sector, specifically software maintenance and support. The market for enterprise software maintenance is often dominated by a few key vendors, including BMC Software. The total value of this contract is significant, reflecting the critical nature of the software to the agency's operations. Comparable spending benchmarks would involve analyzing other large federal contracts for similar enterprise software maintenance agreements, considering factors like software type, vendor, and duration.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the primary focus is on large business competition. There is no explicit information on subcontracting opportunities for small businesses within this delivery order. The impact on the small business ecosystem is likely minimal unless BMC Software engages small businesses for support services not covered by this direct contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Social Security Administration's contracting and program management offices. The firm-fixed-price nature provides a degree of accountability by fixing the cost. Transparency is facilitated by the contract's public availability, though detailed performance metrics and cost breakdowns may be internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Information Technology Acquisition Reform Act (FITARA) related spending
General Services Administration (GSA) Federal Supply Schedule (FSS) contracts
Software Licensing and Maintenance Contracts
IT Infrastructure Modernization Programs

Risk Flags

High contract value requires ongoing scrutiny for cost-effectiveness.
Lack of specific bid count limits assessment of competition's impact on price.
Long contract duration may lead to vendor lock-in or technological obsolescence.

Frequently Asked Questions

What is this federal contract paying for?

Social Security Administration awarded $180.1 million to BMC SOFTWARE, INC.. GSA FSS DELIVERY ORDER FOR RENEWAL OF BMC SOFTWARE MAINTENANCE. POP: 12/01/2019 - 11/30/2026 (BASE + 6 OPTION YEARS)

Who is the contractor on this award?

The obligated recipient is BMC SOFTWARE, INC..

Which agency awarded this contract?

Awarding agency: Social Security Administration (Social Security Administration).

What is the total obligated amount?

The obligated amount is $180.1 million.

What is the period of performance?

Start: 2019-12-31. End: 2026-11-30.

What specific BMC software products are covered under this maintenance contract, and what are their criticality to SSA operations?

The provided data does not specify the exact BMC software products covered by this maintenance contract. BMC offers a wide range of solutions, including IT Service Management (ITSM), IT Operations Management (ITOM), and security software. Given the Social Security Administration's mission, it is highly probable that the covered software relates to critical IT infrastructure management, service desk operations, or data center management. Understanding the specific products would allow for a more precise assessment of their criticality and the necessity of the maintenance agreement. Without this detail, we assume the software supports essential agency functions, justifying the significant expenditure.

How does the per-year cost of this contract compare to industry benchmarks for similar enterprise software maintenance agreements?

The total contract value is approximately $180 million over roughly seven years (December 1, 2019, to November 30, 2026). This averages to about $25.7 million per year. Benchmarking this requires detailed knowledge of the specific BMC software modules, the number of users or instances supported, and the level of support provided (e.g., 24/7, standard business hours). Enterprise software maintenance costs typically range from 15% to 25% of the initial software license cost annually. Without knowing the original license cost or the specific modules, a direct comparison is difficult. However, for large-scale enterprise deployments, annual maintenance costs in the tens of millions are not uncommon, but the value-for-money depends heavily on the specific software's utility and the negotiated terms.

What was the number of bids received during the full and open competition for this contract?

The contract was awarded under 'FULL AND OPEN COMPETITION,' which signifies that the solicitation was made available to all responsible sources. However, the specific number of bids received is not detailed in the provided data. This metric is crucial for assessing the robustness of the competition. A higher number of bids generally indicates greater market interest and a stronger likelihood that the government received competitive pricing. If only one or two bids were received, it might suggest limited market availability for the required services or potential issues with the solicitation process, which could impact the final price achieved for taxpayers.

What are the potential risks associated with a long-term renewal (base + 6 option years) for software maintenance?

Long-term renewals for software maintenance, such as this 7-year contract, carry several potential risks. Firstly, there's the risk of vendor lock-in, where the agency becomes heavily reliant on a specific vendor's ecosystem, making it difficult and costly to switch to alternative solutions in the future. Secondly, technology evolves rapidly; the software being maintained might become outdated or less efficient compared to newer market offerings, yet the agency remains committed to the existing solution. Thirdly, the cost of maintenance might escalate over time beyond what is justified by the software's utility or market alternatives. Finally, the vendor's own product roadmap or support strategy could change, potentially impacting the level or quality of service provided to the agency.

How does the Social Security Administration manage performance and ensure value for money throughout the duration of this contract?

The Social Security Administration (SSA) would typically manage performance and ensure value for money through several mechanisms. As this is a firm-fixed-price contract, the primary focus is on ensuring the contractor delivers the agreed-upon maintenance services as specified in the contract. This involves establishing clear performance standards and metrics, conducting regular performance reviews, and potentially utilizing contract clauses that allow for remedies if performance falls short. For value for money, the SSA would likely conduct periodic market research to stay aware of alternative solutions and pricing trends. They would also monitor the software's utilization and effectiveness to ensure it continues to meet the agency's needs and justify the ongoing expenditure.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

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

Solicitation ID: 28321320Q00000069

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2103 CITYWEST BLVD # 1833B, HOUSTON, TX, 77042

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $180,070,190

Exercised Options: $180,070,190

Current Obligation: $180,070,190

Actual Outlays: $180,070,190

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS35F0340W

IDV Type: FSS

Timeline