DOT's FAA awards $89M Red Hat license agreement to CDW Government LLC for 5 years

Contract Overview

Contract Amount: $88,989,848 ($89.0M)

Contractor: CDW Government LLC

Awarding Agency: Department of Transportation

Start Date: 2020-08-24

End Date: 2025-08-25

Contract Duration: 1,827 days

Daily Burn Rate: $48.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: RED HAT UNLIMITED LICENSE AGREEMENT

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73169

State: Oklahoma Government Spending

Plain-Language Summary

Department of Transportation obligated $89.0 million to CDW GOVERNMENT LLC for work described as: RED HAT UNLIMITED LICENSE AGREEMENT Key points: 1. Value for money assessed against similar enterprise software agreements. 2. Competition dynamics indicate a potentially competitive market for operating system licenses. 3. Risk indicators include contract duration and potential for vendor lock-in. 4. Performance context is tied to the ongoing operational needs of the FAA. 5. Sector positioning within IT services, specifically software licensing.

Value Assessment

Rating: fair

The contract's value of $89 million over five years for unlimited Red Hat licenses suggests a significant investment. Benchmarking against similar enterprise software agreements is challenging without specific usage metrics, but the firm-fixed-price structure provides cost certainty. The per-unit cost is difficult to ascertain due to the unlimited license model, but the total award is substantial for operating system software.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of a single award for a large enterprise agreement suggests that CDW Government LLC was the most advantageous offer, potentially due to pricing, technical solution, or past performance. The level of competition, while open, may not fully reflect the dynamic pricing of individual licenses if the award was based on a broader enterprise solution.

Taxpayer Impact: Taxpayers benefit from the assurance that the government sought the best value through a competitive process, rather than a sole-source award.

Public Impact

The Federal Aviation Administration (FAA) is the primary beneficiary, gaining access to critical operating system software. Services delivered include unlimited licenses for Red Hat Enterprise Linux, supporting various IT infrastructure needs. Geographic impact is nationwide, supporting FAA operations across all its facilities. Workforce implications include enabling IT staff to utilize a standardized and supported operating system for their tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (5 years) could lead to price inflexibility if market rates decrease.
Reliance on a single vendor for unlimited licenses might limit future negotiation leverage.
Potential for scope creep or unmonitored usage if not actively managed by the agency.

Positive Signals

Firm-fixed-price contract provides budget certainty for the FAA.
Full and open competition suggests a potentially competitive bidding process.
Award to a known government contractor like CDW Government LLC indicates familiarity with procurement processes.

Sector Analysis

This contract falls within the Information Technology sector, specifically software licensing and support. The market for enterprise operating systems is dominated by a few major players, with Red Hat being a significant provider in the Linux space. The total federal spending on IT software licenses is in the billions annually, making this a notable, but not exceptionally large, award within that context. Comparable spending benchmarks would focus on other large-scale enterprise software agreements.

Small Business Impact

While this contract was awarded under full and open competition and does not appear to have a specific small business set-aside, CDW Government LLC, as a large reseller, may engage small businesses for subcontracting opportunities. The primary focus of this award is on enterprise-level software licensing, where large prime contractors typically handle the direct delivery. The impact on the small business ecosystem is likely indirect, depending on CDW's subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily reside with the Federal Aviation Administration's contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified software licenses. Transparency is facilitated by the contract award being publicly available, though detailed usage reports or performance metrics may not be public. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

General Services Administration (GSA) Schedules
IT Enterprise Software Licensing
Cloud Computing Services
Operating System Software Procurement
Department of Transportation IT Spending

Risk Flags

Long-term contract duration
Potential for vendor lock-in with unlimited licenses
Lack of specific performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $89.0 million to CDW GOVERNMENT LLC. RED HAT UNLIMITED LICENSE AGREEMENT

Who is the contractor on this award?

The obligated recipient is CDW GOVERNMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $89.0 million.

What is the period of performance?

Start: 2020-08-24. End: 2025-08-25.

What is the historical spending pattern for Red Hat software licenses within the FAA or DOT?

Analyzing historical spending on Red Hat licenses by the FAA or the broader Department of Transportation is crucial for context. Without specific historical data for this contract, we can infer that the $89 million award over five years represents a significant, ongoing investment. Federal agencies often consolidate software licenses to achieve economies of scale. Previous awards, if available, would indicate whether this represents an increase, decrease, or stable level of spending for Red Hat products. Understanding past procurement vehicles and contract types (e.g., indefinite-delivery/indefinite-quantity vs. firm-fixed-price) can also shed light on how the agency has managed its software needs and costs over time. This information helps in assessing if the current award represents a strategic shift or a continuation of established practices.

How does the per-unit cost of this unlimited license agreement compare to market rates for similar enterprise software?

Determining a precise per-unit cost for an unlimited license agreement is inherently difficult, as the value is derived from the potential breadth of use rather than a fixed number of individual units. Market rates for enterprise software are typically structured through various licensing models, including per-user, per-processor, or subscription-based tiers. Red Hat's own pricing structures can vary significantly based on support levels, included features, and the overall size of the enterprise deployment. To benchmark this $89 million award, one would need to estimate the potential number of users or systems that could be covered and compare the effective cost per potential unit against publicly available Red Hat pricing or competitor offerings for comparable enterprise-grade Linux distributions and support packages. Given the 'unlimited' nature, the FAA is likely banking on significant deployment to justify the cost, making direct per-unit comparisons challenging without internal usage projections.

What specific Red Hat products or services are included under this unlimited license agreement?

The provided data indicates a 'RED HAT UNLIMITED LICENSE AGREEMENT' but does not specify the exact Red Hat products or services covered. Typically, such agreements for large federal agencies would encompass Red Hat Enterprise Linux (RHEL) subscriptions, which include access to software updates, patches, security advisories, and technical support. Depending on the FAA's needs, it might also include related Red Hat technologies such as Red Hat Ansible Automation Platform, Red Hat OpenShift Container Platform, or specific management tools. The 'unlimited' aspect suggests broad applicability across the agency's IT infrastructure, potentially covering virtualized environments, cloud deployments, and physical servers. A detailed breakdown of included products and support levels would be necessary for a comprehensive assessment of value and strategic alignment.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) tied to this Red Hat unlimited license agreement. However, for a contract of this magnitude and duration, standard SLAs would likely focus on aspects such as response times for technical support, availability of software updates and patches, and potentially uptime guarantees for critical Red Hat services if applicable. KPIs might measure the adoption rate of Red Hat technologies across the FAA, the effectiveness of support in resolving issues, or the agency's ability to leverage the licensed software for its operational goals. The firm-fixed-price nature suggests the primary performance expectation is the delivery and ongoing availability of the licensed software and associated support as defined in the contract's statement of work.

What is the track record of CDW Government LLC in fulfilling large federal IT software licensing contracts?

CDW Government LLC has a well-established track record as a major reseller and solutions provider for federal government agencies, including extensive experience with IT software licensing. They frequently appear on federal contract award databases, often winning contracts through GSA Schedules and other procurement vehicles. Their ability to secure a $89 million award for unlimited Red Hat licenses from the FAA suggests a strong existing relationship and demonstrated capability in delivering complex IT solutions to government clients. Their business model typically involves partnering with major software vendors like Red Hat, ensuring they can meet the technical and logistical requirements of large-scale deployments. Past performance reviews and contract vehicles utilized by CDW Government would provide further insight into their reliability and effectiveness in fulfilling similar federal contracts.

Industry Classification

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

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

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 230 N MILWAUKEE AVE, VERNON HILLS, IL, 60061

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $88,989,848

Exercised Options: $88,989,848

Current Obligation: $88,989,848

Actual Outlays: $88,989,848

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 692M1519D00007

IDV Type: IDC

Timeline