VA awards $33.5M for Splunk software and maintenance, with ongoing license purchases in option periods

Contract Overview

Contract Amount: $33,506,959 ($33.5M)

Contractor: Thundercat Technology, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2018-12-10

End Date: 2021-12-21

Contract Duration: 1,107 days

Daily Burn Rate: $30.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF THIS CONTRACT IS FOR ONE BRAND NAME SPLUNK PERPETUAL SOFTWARE LICENSE AND ASSOCIATED MAINTENANCE SUPPORT. ADDITIONALLY, MAINTENANCE SUPPORT IS REQUIRED FOR FOUR EXISTING VA-OWNED SPLUNK PERPETUAL LICENSES AND AN ADDITIONAL SPLUNK PERPETUAL SOFTWARE LICENSE WITH ASSOCIATED SOFTWARE MAINTENANCE SUPPORT WILL BE PURCHASED IN EACH OPTION PERIOD.

Place of Performance

Location: AUSTIN, TRAVIS County, TEXAS, 78772

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $33.5 million to THUNDERCAT TECHNOLOGY, LLC for work described as: IGF::OT::IGF THIS CONTRACT IS FOR ONE BRAND NAME SPLUNK PERPETUAL SOFTWARE LICENSE AND ASSOCIATED MAINTENANCE SUPPORT. ADDITIONALLY, MAINTENANCE SUPPORT IS REQUIRED FOR FOUR EXISTING VA-OWNED SPLUNK PERPETUAL LICENSES AND AN ADDITIONAL SPLUNK PERPETUAL SOFTWARE LICENSE WITH ASS… Key points: 1. Value for money is assessed through the lens of perpetual licensing and ongoing maintenance, which can represent a significant long-term cost. 2. Competition dynamics indicate a full and open competition, suggesting a robust market for Splunk software and support. 3. Risk indicators include the reliance on a single vendor's software and the potential for escalating maintenance costs over time. 4. Performance context is tied to the delivery of essential IT infrastructure support for the Department of Veterans Affairs. 5. Sector positioning places this contract within the broader IT services and software procurement landscape for federal agencies.

Value Assessment

Rating: fair

The total award amount of $33.5 million over the contract's life suggests a substantial investment in Splunk software and maintenance. Benchmarking this against similar federal procurements for enterprise software licenses and support is crucial. Without specific per-unit license costs or detailed maintenance breakdowns, a precise value-for-money assessment is challenging. However, the perpetual licensing model implies a significant upfront or amortized cost, with ongoing maintenance representing a recurring expense that needs careful management to ensure it aligns with market rates and actual support needs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating that multiple vendors were likely solicited and allowed to bid. The presence of two bidders suggests a competitive environment, which generally favors price discovery and potentially better terms for the government. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: A full and open competition, even with only two bidders, generally provides a better opportunity for taxpayers to receive competitive pricing compared to sole-source or limited competition scenarios.

Public Impact

The primary beneficiaries are the IT departments within the Department of Veterans Affairs, who will utilize the Splunk software for data analysis and operational intelligence. The services delivered include the provision of perpetual software licenses and essential maintenance support, ensuring the continued functionality and updates of the Splunk platform. The geographic impact is nationwide, supporting VA operations across all its facilities and systems. Workforce implications include enabling IT staff to leverage advanced data analytics tools for improved system management and decision-making.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to reliance on a specific software platform.
Escalating costs of annual maintenance and support for perpetual licenses over the contract duration.
Need for ongoing internal expertise to manage and optimize the Splunk environment.

Positive Signals

Procurement through full and open competition suggests a competitive market for the software and support.
The contract provides essential tools for data analysis, potentially improving operational efficiency for the VA.
Clear contract structure with defined periods for software and maintenance.

Sector Analysis

This contract falls within the broader Information Technology (IT) sector, specifically focusing on software licensing and maintenance. The market for data analytics and security information and event management (SIEM) software, like Splunk, is substantial and highly competitive within the federal government. Agencies increasingly rely on such platforms for cybersecurity, operational monitoring, and data-driven decision-making. Comparable spending benchmarks would involve analyzing other large federal contracts for enterprise software suites and their associated support agreements.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a software license and maintenance agreement, it is likely that the primary awardee is a large business or a reseller. Subcontracting opportunities for small businesses might exist in areas such as implementation, training, or specialized support services, but these are not explicitly detailed in the award information. The overall impact on the small business ecosystem would depend on whether subcontracting goals were established and met.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract type, requiring delivery of specified software and maintenance. Transparency is generally provided through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or reported.

Related Government Programs

Federal IT Software Procurement
Enterprise Software Licensing
Cybersecurity Software and Services
Data Analytics Platforms
Department of Veterans Affairs IT Modernization

Risk Flags

Potential for escalating maintenance costs.
Risk of vendor lock-in with perpetual licensing.
Need for ongoing market analysis to ensure competitive pricing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $33.5 million to THUNDERCAT TECHNOLOGY, LLC. IGF::OT::IGF THIS CONTRACT IS FOR ONE BRAND NAME SPLUNK PERPETUAL SOFTWARE LICENSE AND ASSOCIATED MAINTENANCE SUPPORT. ADDITIONALLY, MAINTENANCE SUPPORT IS REQUIRED FOR FOUR EXISTING VA-OWNED SPLUNK PERPETUAL LICENSES AND AN ADDITIONAL SPLUNK PERPETUAL SOFTWARE LICENSE WITH ASSOCIATED SOFTWARE MAINTENANCE SUPPORT WILL BE PURCHASED IN EACH OPTION PERIOD.

Who is the contractor on this award?

The obligated recipient is THUNDERCAT TECHNOLOGY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $33.5 million.

What is the period of performance?

Start: 2018-12-10. End: 2021-12-21.

What is the historical spending trend for Splunk software and maintenance within the Department of Veterans Affairs?

Analyzing historical spending data for Splunk at the VA is crucial for understanding the long-term financial commitment. This involves examining previous contracts, delivery orders, and task orders specifically for Splunk licenses and maintenance. A trend analysis would reveal whether spending has been consistent, increasing, or decreasing over time. For instance, if spending has steadily climbed, it might indicate growing reliance on the platform or rising maintenance costs. Conversely, a decrease could suggest consolidation, migration to alternative solutions, or successful cost-containment efforts. Without access to detailed historical procurement records for Splunk at the VA, it's difficult to provide specific figures, but such an analysis would inform future budgeting and strategic sourcing decisions.

How does the per-unit cost of Splunk licenses and maintenance in this contract compare to market rates or other federal agencies?

Benchmarking the per-unit cost of Splunk licenses and maintenance against market rates and other federal agencies is essential for assessing value for money. This involves obtaining detailed pricing information from the contract, including the number of licenses purchased and the cost of maintenance per license or per instance. This data can then be compared to publicly available pricing from Splunk's commercial price list, reseller quotes, or data from similar federal contracts awarded to other agencies. Significant deviations from market or peer agency rates could indicate either a favorable negotiated price or potential overpayment. Factors like volume discounts, contract duration, and specific support levels can influence these comparisons, necessitating a nuanced analysis.

What are the specific performance metrics or service level agreements (SLAs) associated with the maintenance support for Splunk?

The effectiveness and value of the maintenance support are directly tied to the performance metrics and Service Level Agreements (SLAs) established within the contract. These SLAs typically define response times for technical support, resolution times for critical issues, availability of software updates and patches, and potentially uptime guarantees for any associated cloud services. A thorough review of the contract's performance work statement (PWS) or statement of work (SOW) would detail these requirements. Evaluating the contractor's historical performance against these SLAs, perhaps through past performance reviews or user feedback, is critical to understanding if the VA is receiving the expected level of service for its investment in maintenance.

What is the potential risk of vendor lock-in with this perpetual license model, and what mitigation strategies are in place?

The perpetual license model for software like Splunk inherently carries a risk of vendor lock-in. Once an organization invests heavily in licenses and builds its infrastructure and workflows around a specific platform, migrating to a different vendor can become technically complex, costly, and disruptive. This contract, by purchasing perpetual licenses, increases this risk. Mitigation strategies could include negotiating favorable contract terms that allow for easier data export, ensuring interoperability with other systems, or actively exploring alternative solutions during the contract period. The VA should also consider its long-term IT strategy to assess if continued reliance on Splunk aligns with its future technology roadmap and if competitive pressures are being maintained through ongoing market research.

How does the total contract value of $33.5 million compare to the VA's overall IT spending or similar software procurements?

Placing the $33.5 million contract value into context requires comparing it against the Department of Veterans Affairs' total IT budget and its spending on similar enterprise software solutions. If the VA's annual IT budget is in the billions, this contract represents a specific allocation within that larger sum. Comparing it to other federal agencies' procurements of comparable software (e.g., SIEM, data analytics platforms) from vendors like Splunk, Palantir, or IBM would provide a benchmark. For instance, if similar-sized agencies are spending significantly less or more on comparable solutions, it warrants further investigation into the reasons, such as differences in scope, user base, or negotiated pricing. This comparative analysis helps determine if the VA is achieving competitive pricing and efficient resource allocation.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1925 ISAAC NEWTON SQ STE 180, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $33,506,959

Exercised Options: $33,506,959

Current Obligation: $33,506,959

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG15SD26B

IDV Type: GWAC

Timeline