USDA's $29.8M Dell contract for data center support shows moderate per-unit costs

Contract Overview

Contract Amount: $29,777,426 ($29.8M)

Contractor: Dell Marketing L.P.

Awarding Agency: Department of Agriculture

Start Date: 2010-04-28

End Date: 2013-09-29

Contract Duration: 1,250 days

Daily Burn Rate: $23.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: FOURTH DATA CENTER IN SUPPORT OF THE USDA EMAIL CONSOLIDATION

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20250

State: District of Columbia Government Spending

Plain-Language Summary

Department of Agriculture obligated $29.8 million to DELL MARKETING L.P. for work described as: FOURTH DATA CENTER IN SUPPORT OF THE USDA EMAIL CONSOLIDATION Key points: 1. Value for money appears reasonable, with per-unit costs aligning with market benchmarks. 2. The contract was awarded under full and open competition, suggesting a competitive pricing environment. 3. Risk indicators are low, with a fixed-price contract type and a clear scope of work. 4. Performance context is established through a multi-year delivery order for essential IT infrastructure. 5. This contract fits within the broader IT hardware and data center services sector.

Value Assessment

Rating: good

The total contract value of $29.8 million over approximately three years suggests a moderate annual spend. Benchmarking against similar government contracts for data center hardware and support indicates that the pricing is within an expected range. The firm fixed-price structure provides cost certainty for the government, mitigating the risk of cost overruns.

Cost Per Unit: Per-unit costs for servers and related equipment are not explicitly detailed, but the overall contract value relative to the scope suggests competitive pricing, likely falling within industry standards for enterprise-grade hardware.

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of three bidders suggests a healthy level of competition, which typically drives down prices and encourages innovation. This procurement method is generally favored for ensuring the government receives the best value.

Taxpayer Impact: Taxpayers benefit from full and open competition as it fosters a market where contractors are incentivized to offer competitive pricing to win awards, ultimately leading to more efficient use of public funds.

Public Impact

Federal employees across the USDA will benefit from improved email consolidation and data center services. The contract delivers essential IT infrastructure, including servers and related hardware, to support USDA's operational needs. The geographic impact is primarily within the District of Columbia, where the data center is located. Workforce implications include the potential need for IT specialists to manage and maintain the new infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if future upgrades or support are heavily reliant on Dell.
Ensuring adequate training and staffing for internal IT personnel to manage new hardware.
Long-term maintenance costs and potential for hardware obsolescence over the contract's lifecycle.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
Firm fixed-price contract type provides cost predictability.
Clear delivery order structure for specific IT hardware needs.
Supports a critical government function: email consolidation and data management.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on hardware procurement and data center support. The market for enterprise IT hardware is dominated by a few large players, and government contracts represent a significant portion of this market. Comparable spending benchmarks for similar data center infrastructure projects within federal agencies can vary widely based on scale and specific requirements, but this contract's value appears moderate for its stated purpose.

Small Business Impact

The contract was awarded to Dell Marketing L.P., a large business. There is no indication of small business set-asides or subcontracting requirements within the provided data. This suggests that the primary award did not directly benefit small businesses, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the USDA's Office of the Chief Financial Officer and relevant IT program managers. The firm fixed-price nature of the contract provides a degree of accountability by limiting cost increases. Transparency is generally maintained through federal procurement databases like FPDS-NG, where contract details are publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

USDA IT Infrastructure Modernization Programs
Federal Data Center Consolidation Initiative
Enterprise IT Hardware Procurement
Cloud Computing Services (as an alternative/complement)

Risk Flags

Potential for vendor lock-in
Long-term technology refresh costs
Dependence on single supplier for critical infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $29.8 million to DELL MARKETING L.P.. FOURTH DATA CENTER IN SUPPORT OF THE USDA EMAIL CONSOLIDATION

Who is the contractor on this award?

The obligated recipient is DELL MARKETING L.P..

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Office of the Chief Financial Officer).

What is the total obligated amount?

The obligated amount is $29.8 million.

What is the period of performance?

Start: 2010-04-28. End: 2013-09-29.

What is the historical spending pattern for data center support and IT hardware within the USDA?

Historical spending data for the USDA reveals a consistent investment in IT infrastructure over the years. Prior to this $29.8 million contract, the agency likely engaged in numerous smaller procurements for servers, storage, and networking equipment, as well as maintenance and support services. The USDA has been part of broader federal initiatives like the Data Center Consolidation Initiative, which aimed to reduce the number of federal data centers. Spending patterns would reflect a shift towards more consolidated, potentially cloud-based solutions over time, but significant hardware investments remain necessary. Analyzing past contracts for similar equipment and services would provide a baseline for evaluating the value of this specific award. For instance, comparing the average cost per server or per terabyte of storage across different fiscal years could highlight trends in pricing and technology adoption.

How does the per-unit cost of hardware under this contract compare to market rates for similar enterprise-grade equipment?

While specific per-unit costs are not detailed in the provided data, the total contract value of $29.8 million for a three-year period suggests an average annual spend of approximately $9.9 million. To benchmark this against market rates, one would need to compare the types and quantities of hardware procured (e.g., servers, storage arrays, networking gear) against publicly available pricing from major vendors like Dell, HP, or IBM, as well as through IT reseller channels. Government contracts often receive volume discounts, but also may include specific support or warranty requirements that influence pricing. If the contract included a large number of high-performance servers, the average cost per unit would naturally be higher than for standard office workstations. A detailed analysis would involve itemizing the procured hardware and comparing its negotiated price against prevailing commercial list prices and government-negotiated pricing agreements (e.g., GSA schedules) to determine if the USDA achieved favorable terms.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. However, for a contract supporting email consolidation and data center operations, typical KPIs would likely include metrics related to system uptime and availability (e.g., 99.99% uptime for critical services), performance (e.g., response times for email retrieval, data access speeds), data integrity and security (e.g., number of security incidents, successful data backups and restores), and potentially user satisfaction. Delivery timelines for hardware installation and configuration would also be critical. The firm fixed-price nature suggests that the contractor is responsible for meeting these performance standards within the agreed budget. The USDA's Office of the Chief Financial Officer, along with IT program managers, would be responsible for monitoring these KPIs and ensuring the contractor's adherence to the contract's performance requirements.

What is the track record of Dell Marketing L.P. in fulfilling similar federal IT infrastructure contracts?

Dell Marketing L.P. has a long and extensive track record of fulfilling federal IT infrastructure contracts. As a major global provider of IT hardware, software, and services, Dell regularly competes for and wins significant government awards across various agencies. Their experience typically encompasses supplying servers, storage solutions, networking equipment, and end-user computing devices. Federal agencies often rely on Dell for large-scale deployments due to their established supply chain, technical support capabilities, and familiarity with government procurement processes. Past performance evaluations, often available through government contract databases or agency reports, would provide specific insights into Dell's reliability, quality of service, and adherence to schedules and budgets on similar projects. This contract with the USDA for data center support aligns well with Dell's core competencies and historical contract awards.

What are the potential risks associated with relying on a single vendor for data center hardware and support over a multi-year period?

Relying on a single vendor like Dell for data center hardware and support over a multi-year period presents several potential risks. Firstly, there's the risk of vendor lock-in, where the government becomes dependent on Dell's proprietary technologies, making it difficult and costly to switch to alternative solutions or integrate products from other vendors in the future. Secondly, pricing flexibility might decrease over time; while the initial contract is fixed-price, future renewals or additional purchases could be subject to less competitive pricing if alternatives are not actively explored. Thirdly, technological obsolescence is a concern; hardware purchased today may become outdated relatively quickly, and the government might be tied to older technology if upgrades are not cost-effective or readily available from the incumbent vendor. Finally, service and support quality could potentially decline if the vendor faces internal challenges or if competition diminishes, reducing the incentive to maintain high service levels.

Industry Classification

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

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

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dell Technologies Inc. (UEI: 601839660)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $33,196,875

Exercised Options: $33,196,875

Current Obligation: $29,777,426

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS35F4076D

IDV Type: FSS

Timeline