HHS awards $26M for Microsoft Azure cloud services to Dell Federal Systems, highlighting software licensing needs

Contract Overview

Contract Amount: $26,088,296 ($26.1M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Health and Human Services

Start Date: 2025-04-01

End Date: 2026-03-31

Contract Duration: 364 days

Daily Burn Rate: $71.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THE PURPOSE OF THIS REQUIREMENT IS TO PROCURE MICROSOFT AZURE CLOUD PRODUCTS/LICENSES - AZUREMNTRYCMMTMNT SHRDSVR ALNG SUBSVL MVL CMMT (PART NUMBER AAA-35418).

Place of Performance

Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78664

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $26.1 million to DELL FEDERAL SYSTEMS L.P for work described as: THE PURPOSE OF THIS REQUIREMENT IS TO PROCURE MICROSOFT AZURE CLOUD PRODUCTS/LICENSES - AZUREMNTRYCMMTMNT SHRDSVR ALNG SUBSVL MVL CMMT (PART NUMBER AAA-35418). Key points: 1. The contract focuses on essential Microsoft Azure cloud products and licenses, indicating a reliance on established cloud infrastructure. 2. A firm-fixed-price structure suggests predictable costs for the government over the contract's duration. 3. The award to Dell Federal Systems indicates a significant vendor relationship for cloud software procurement. 4. The duration of one year points to a tactical approach to cloud service acquisition rather than a long-term strategic commitment. 5. The absence of small business set-aside flags suggests this procurement did not prioritize small business participation directly. 6. The North American Industry Classification System (NAICS) code 511210 points to the software publishing industry as the primary sector.

Value Assessment

Rating: good

The total award of $26,088,296 for a one-year term for Microsoft Azure cloud products appears to be within a reasonable range for enterprise-level cloud licensing. Benchmarking specific Azure services and license types would provide a more precise value assessment. However, given the scale and nature of cloud subscriptions, this amount is not immediately indicative of overspending, especially considering the breadth of services typically covered by such agreements. The firm-fixed-price nature helps manage cost predictability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but the competitive process aims to ensure fair pricing and access to a range of solutions. A full and open competition generally leads to better price discovery and encourages vendors to offer their most competitive terms.

Taxpayer Impact: Taxpayers benefit from a competitive process that is designed to secure the best possible pricing for essential cloud software and services, preventing potential price gouging and ensuring value for money.

Public Impact

Federal agencies, specifically within the Department of Health and Human Services (HHS) and its Centers for Disease Control and Prevention (CDC), will benefit from access to critical Microsoft Azure cloud services. The services delivered will support various IT operations, data storage, processing, and application hosting needs essential for public health initiatives. The geographic impact is primarily within Texas, where the contractor Dell Federal Systems L.P. is located, but the cloud services themselves will support nationwide CDC operations. Workforce implications include enabling IT professionals within HHS/CDC to leverage cloud-based tools for enhanced productivity and service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a specific cloud provider's ecosystem.
Reliance on a single vendor for critical cloud infrastructure could pose supply chain risks.
The contract duration is short, potentially leading to frequent re-procurement efforts and associated administrative overhead.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Firm-fixed-price contract provides cost certainty for the duration of the agreement.
Procurement of established Microsoft Azure services suggests utilization of reliable and widely-supported cloud technology.

Sector Analysis

The procurement falls within the broader Information Technology sector, specifically focusing on cloud computing services and software licensing. The market for cloud services is highly competitive, dominated by major providers like Microsoft Azure, Amazon Web Services, and Google Cloud. This contract represents a specific instance of a government agency leveraging these commercial cloud offerings to meet its operational needs. Spending benchmarks for similar cloud service procurements vary widely based on the scope of services, but enterprise-level agreements for major cloud platforms can run into tens or hundreds of millions of dollars annually.

Small Business Impact

This contract does not appear to include a specific small business set-aside. The award to Dell Federal Systems L.P., a large business, suggests that the primary focus was on meeting the technical requirements for Microsoft Azure cloud products. There is no explicit mention of subcontracting requirements for small businesses within the provided data. This means that opportunities for small businesses to participate in fulfilling this specific contract may be limited unless Dell Federal Systems L.P. voluntarily engages them.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officers and program managers within the Centers for Disease Control and Prevention (CDC) and the Department of Health and Human Services (HHS). Accountability measures are inherent in the firm-fixed-price contract type, requiring the delivery of specified services and licenses. Transparency is facilitated through public contract databases where such awards are reported. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Cloud Computing Services
Software Licenses
Microsoft Azure
IT Infrastructure Services
Enterprise Software Agreements

Risk Flags

Reliance on a single vendor for critical cloud services.
Potential security risks associated with cloud data storage and processing.
Ensuring compliance with federal data protection regulations (e.g., HIPAA).

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $26.1 million to DELL FEDERAL SYSTEMS L.P. THE PURPOSE OF THIS REQUIREMENT IS TO PROCURE MICROSOFT AZURE CLOUD PRODUCTS/LICENSES - AZUREMNTRYCMMTMNT SHRDSVR ALNG SUBSVL MVL CMMT (PART NUMBER AAA-35418).

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 Health and Human Services (Centers for Disease Control and Prevention).

What is the total obligated amount?

The obligated amount is $26.1 million.

What is the period of performance?

Start: 2025-04-01. End: 2026-03-31.

What is the historical spending pattern for Microsoft Azure cloud products by the Department of Health and Human Services (HHS) or the Centers for Disease Control and Prevention (CDC)?

Analyzing historical spending data for HHS and CDC on Microsoft Azure cloud products is crucial for contextualizing the current $26 million award. Without specific historical data, it's difficult to determine if this represents an increase, decrease, or stable level of investment. Agencies often increase cloud spending as they migrate more services or expand their use of cloud-native applications. Conversely, spending might stabilize or decrease if optimizations are achieved or if alternative solutions are adopted. A trend analysis over the past 3-5 years would reveal whether this award aligns with established procurement patterns or signifies a shift in strategy. Understanding past contract values, durations, and the specific Azure services procured historically would provide a baseline against which the current award's value and scope can be more accurately assessed.

How does the pricing of these Microsoft Azure cloud products compare to other federal agencies or commercial entities purchasing similar licenses?

Benchmarking the pricing of these Microsoft Azure cloud products against similar federal contracts or commercial rates is essential for assessing value for money. Federal agencies often benefit from negotiated enterprise license agreements (ELAs) or specific government discount programs that can lead to lower per-unit costs compared to commercial entities. However, the exact pricing depends heavily on the specific Azure services, license types (e.g., server licenses, user licenses, consumption-based services), and the volume commitments. If this contract was awarded under full and open competition, the pricing should reflect market competitiveness. A detailed comparison would require access to the specific part numbers and quantities procured, allowing for a direct price-per-unit analysis against publicly available government contract data or commercial price lists, adjusted for any applicable government discounts.

What are the specific Microsoft Azure services and licenses included in this contract, and what is their criticality to CDC operations?

The provided data indicates the procurement of 'MICROSOFT AZURE CLOUD PRODUCTS/LICENSES - AZUREMNTRYCMMTMNT SHRDSVR ALNG SUBSVL MVL CMMT (PART NUMBER AAA-35418)'. This suggests a commitment to Azure services, likely encompassing core infrastructure (like virtual machines, storage, networking) and potentially platform services or specific software subscriptions. The criticality to CDC operations is presumed to be high, as cloud services are fundamental for modern IT infrastructure, enabling data analytics, research support, disease surveillance systems, and operational continuity. Without a detailed breakdown of the specific Azure components covered by AAA-35418, it's challenging to pinpoint exact functionalities. However, given the agency (CDC), these services likely support mission-critical public health functions, data management, and potentially advanced analytics for epidemiological studies and response efforts.

What is Dell Federal Systems L.P.'s track record in delivering Microsoft Azure cloud services to federal agencies, particularly within the health sector?

Dell Federal Systems L.P. has a significant track record as a major IT vendor serving the federal government, including extensive experience with cloud solutions and Microsoft products. Their role often involves reselling and integrating hardware, software, and cloud services. For Microsoft Azure, Dell typically acts as a reseller and systems integrator, helping agencies procure licenses and implement cloud solutions. Their experience within the health sector, specifically with agencies like HHS and CDC, is likely substantial, given the government's reliance on established vendors for critical IT procurements. Assessing their specific performance on similar Azure contracts would involve reviewing past performance evaluations, contract awards, and any publicly available information on their project successes and challenges in delivering cloud services to federal health organizations.

Are there any identified risks associated with this contract, such as performance issues, security vulnerabilities, or contractor non-compliance?

The primary risks associated with this contract, typical for cloud service procurements, revolve around performance, security, and compliance. Performance risks include potential service disruptions, latency issues, or unmet service level agreements (SLAs) from Microsoft Azure, which Dell Federal Systems is facilitating. Security risks are paramount, especially for a health agency like the CDC; ensuring that data stored and processed in Azure meets stringent federal security standards (e.g., FedRAMP authorization, HIPAA compliance) is critical. Contractor non-compliance could relate to billing accuracy, adherence to contract terms, or proper reporting. While the contract is firm-fixed-price, which mitigates cost overrun risks, the underlying performance and security rely heavily on Microsoft's infrastructure and Dell's role as a facilitator and integrator. Proactive monitoring, regular security audits, and clear communication channels are essential to manage these risks.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: IT AND TELECOM - SECURITY AND COMPLIANCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Francisco Partners Management, L.P.

Address: 1 DELL WAY, ROUND ROCK, TX, 78682

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $26,088,296

Exercised Options: $26,088,296

Current Obligation: $26,088,296

Actual Outlays: $19,942,630

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCA22A0004

IDV Type: BPA

Timeline