DOJ's $20.18M Microsoft Software License Renewal with CDW Government LLC shows fair value but limited competition

Contract Overview

Contract Amount: $20,179,605 ($20.2M)

Contractor: CDW Government LLC

Awarding Agency: Department of Justice

Start Date: 2009-06-15

End Date: 2011-06-29

Contract Duration: 744 days

Daily Burn Rate: $27.1K/day

Competition Type: FULL AND OPEN COMPETITION

Sector: IT

Official Description: MICROSOFT SOFTWARE LICENSE RENEWAL

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20530, UNITED STATES OF AMERICA

State: District of Columbia Government Spending

Plain-Language Summary

Department of Justice obligated $20.2 million to CDW GOVERNMENT LLC for work described as: MICROSOFT SOFTWARE LICENSE RENEWAL Key points: 1. The contract's value appears reasonable given the software licensing market, but the competition level warrants scrutiny. 2. CDW Government LLC, a reseller, secured this contract, indicating a reliance on established vendors for software. 3. The contract duration of approximately two years suggests a need for ongoing software support and updates. 4. Performance context is limited without specific usage metrics or user feedback on the software's impact. 5. This spending falls within the broader category of IT software procurement for federal agencies. 6. The absence of small business set-aside flags potential missed opportunities for smaller vendors.

Value Assessment

Rating: fair

The contract value of $20.18 million for Microsoft software licenses over approximately two years appears within a reasonable range for enterprise-level software agreements. Benchmarking against similar large-scale software renewals for federal agencies suggests that pricing is generally competitive, especially considering the volume and scope of licenses typically involved. However, without detailed breakdowns of specific software products and license types, a precise value-for-money assessment is challenging. The reliance on a single vendor for renewal may also limit opportunities for aggressive price negotiation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for price discovery. However, the data does not specify the number of bids received or the nature of the competition. It is possible that while the competition was open, only a limited number of qualified resellers or direct vendors were able to bid effectively on this specific type of software license renewal. The presence of a reseller like CDW Government LLC suggests that the competition might have been more focused on established channels rather than direct manufacturer engagement.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple vendors to offer their best pricing, potentially leading to cost savings. However, the actual savings depend on the number and competitiveness of the bids received.

Public Impact

The Department of Justice (DOJ) benefits from this contract by ensuring continued access to essential Microsoft software for its operations. The services delivered include the provision of software licenses, likely supporting a wide range of administrative, legal, and operational functions within the DOJ. The geographic impact is primarily within the District of Columbia, where the Offices, Boards and Divisions are located. Workforce implications include enabling DOJ employees to utilize standard productivity and specialized software, maintaining operational continuity.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the number of bids received under 'full and open competition' makes it difficult to assess the true level of market interest and potential for price optimization.
The contract is with a reseller (CDW Government LLC), which may introduce a margin compared to direct purchasing, although this is common for software procurement.
The absence of small business participation or set-aside requirements could mean that smaller, specialized software vendors were not actively included in this procurement process.

Positive Signals

The contract was awarded through 'full and open competition,' indicating an effort to solicit offers from a broad range of potential suppliers.
The use of a Blanket Purchase Agreement (BPA) suggests a streamlined procurement process for recurring needs, potentially leading to administrative efficiencies.
The contract duration is defined, providing clarity on the period of performance for software licensing.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically software licensing and procurement. The federal government is a significant consumer of software, with substantial annual spending on operating systems, productivity suites, and specialized applications. The market for enterprise software licenses is dominated by a few major vendors, with procurement often occurring through authorized resellers or value-added resellers (VARs). Comparable spending benchmarks for similar large-scale software renewals across federal agencies would typically be in the multi-million dollar range, depending on the agency's size and software needs.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. The award to CDW Government LLC, a large reseller, suggests that the primary competition was likely among larger entities capable of fulfilling enterprise-level software licensing requirements. While CDW may have its own subcontracting plans, the lack of a direct small business set-aside means that opportunities for small businesses to directly supply these Microsoft licenses were not explicitly prioritized in this specific award. This could limit the direct economic benefit to the small business ecosystem for this particular procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Justice's internal procurement and financial management offices. Accountability measures are inherent in the contract terms and conditions, requiring CDW Government LLC to deliver the specified software licenses. Transparency is facilitated by the Federal Procurement Data System (FPDS), which records contract actions. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to this contract were suspected.

Related Government Programs

Microsoft Software Licenses
IT Software Procurement
Federal Software Contracts
Department of Justice IT Spending
Blanket Purchase Agreements (BPAs)

Risk Flags

Potential for limited price competition despite 'full and open' award.
Reliance on a reseller may impact direct cost savings.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $20.2 million to CDW GOVERNMENT LLC. MICROSOFT SOFTWARE LICENSE RENEWAL

Who is the contractor on this award?

The obligated recipient is CDW GOVERNMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of Justice (Offices, Boards and Divisions).

What is the total obligated amount?

The obligated amount is $20.2 million.

What is the period of performance?

Start: 2009-06-15. End: 2011-06-29.

What specific Microsoft software products and versions were included in this $20.18 million renewal, and how does their pricing compare to current market rates for similar enterprise licenses?

The provided data does not specify the exact Microsoft software products and versions covered by this $20.18 million renewal. This lack of detail makes a precise comparison to current market rates challenging. Generally, enterprise agreements for Microsoft software can include a wide array of products such as Windows operating systems, Office 365/Microsoft 365 suites, server licenses (e.g., Windows Server, SQL Server), and various development tools. Pricing for these licenses varies significantly based on the product, edition (e.g., Standard vs. Enterprise), licensing model (per user, per device, per core), and any associated support or subscription services. Without a detailed product list and license count, it's difficult to benchmark against publicly available pricing or other federal contracts. However, renewals often aim to maintain existing pricing or achieve modest discounts through volume commitments, while new versions or expanded features may come at a higher cost.

How many bids were received for this contract, and what was the nature of the competition among the bidders?

The contract was awarded under 'FULL AND OPEN COMPETITION,' which theoretically allows any responsible source to submit a bid. However, the specific number of bids received is not detailed in the provided data. For large enterprise software renewals, the competition might be limited by factors such as the need for specific reseller authorizations, existing relationships, or the complexity of the licensing requirements. CDW Government LLC is a major reseller of IT products, suggesting they were well-positioned to compete. The absence of information on the number of bidders makes it difficult to definitively assess the competitiveness of the bidding process and its impact on the final price.

What is CDW Government LLC's track record in fulfilling federal software licensing contracts, particularly for Microsoft products?

CDW Government LLC is a significant federal contractor and a major reseller of IT products, including Microsoft software. They have a substantial history of winning contracts across various federal agencies for hardware, software, and related services. Their experience typically involves managing complex licensing agreements, providing procurement vehicles like Blanket Purchase Agreements (BPAs), and ensuring timely delivery of software and support. For Microsoft products specifically, CDW is an authorized reseller and often partners with agencies to navigate Microsoft's licensing programs. Their extensive experience suggests a capability to meet the demands of large federal software renewals, although the specific performance metrics for this particular DOJ contract would require further investigation beyond the basic award data.

How does the total spending of $20.18 million on Microsoft software licenses compare to historical spending patterns for the Department of Justice or similar agencies?

The provided data indicates a single contract award of $20.18 million for Microsoft software licenses. To compare this to historical spending patterns, one would need access to broader historical procurement data for the Department of Justice (DOJ) and potentially other agencies of similar size and mission (e.g., other large law enforcement or justice-related federal bodies). Analyzing historical data would involve looking at the total annual IT software expenditure, the proportion allocated to Microsoft products, and the number and value of previous Microsoft license renewals or new procurements. Without this broader context, it's difficult to determine if $20.18 million represents an increase, decrease, or stable level of spending. However, given the scale of the DOJ, multi-million dollar software renewals are not uncommon for enterprise-wide licensing.

What are the potential risks associated with relying on a single vendor like CDW Government LLC for a significant software renewal, even under full and open competition?

Even under full and open competition, relying on a single vendor like CDW Government LLC for a significant software renewal carries potential risks. One primary risk is vendor lock-in, where the agency becomes heavily dependent on the vendor's offerings, pricing, and support structure, making it difficult or costly to switch to alternatives in the future. Another risk relates to price escalation; while the initial contract might be competitively priced, future renewals could see price increases if market conditions or vendor strategies change, and the agency has limited leverage due to established reliance. Furthermore, the quality of support and responsiveness can vary between vendors, and a single vendor may not always provide the optimal level of service across all aspects of the software lifecycle. Finally, if the vendor faces financial instability or changes its business model, it could disrupt the agency's access to critical software and support.

Are there opportunities for cost savings or improved value through alternative procurement strategies or by directly engaging with Microsoft for future software needs?

Future cost savings and improved value could potentially be realized through alternative procurement strategies. While CDW Government LLC is an authorized reseller, directly engaging with Microsoft, especially for larger enterprise agreements, might offer more favorable pricing by eliminating reseller margins. Exploring different Microsoft licensing models (e.g., Enterprise Agreements vs. specific product licenses, subscription vs. perpetual) could also yield savings. Additionally, conducting a more robust competition that specifically encourages direct bids from software publishers or a wider range of value-added resellers could foster greater price discovery. A thorough needs assessment to ensure the agency is only licensing necessary software and features, and optimizing usage, can also lead to significant cost reductions.

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: NEGOTIATED PROPOSAL/QUOTE

Evaluated Preference: NONE

Contractor Details

Parent Company: CDW Corporation (UEI: 808068253)

Address: 200 N MILWAUKEE AVE, VERNON HILLS, IL, 60061

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: DJJ08F1710

IDV Type: BPA

Timeline