Department of Education's $21.5M Oracle software licensing agreement shows significant long-term value potential

Contract Overview

Contract Amount: $21,500,120 ($21.5M)

Contractor: Mythics, LLC

Awarding Agency: Department of Education

Start Date: 2013-08-30

End Date: 2018-02-27

Contract Duration: 1,642 days

Daily Burn Rate: $13.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THE DEPARTMENT USES NUMEROUS ORACLE PRODUCTS. THIS ORDER CONTAINS AN UNLIMITED LICENSING AGREEMENT FOR PRODUCTS FOR WHICH THE DEPARTMENT ANTICIPATES GROWTH AND MAINTENANCE FOR ALL OTHER ORACLE PRODUCTS WHICH IT CURRENTLY LICENSES.

Place of Performance

Location: VIRGINIA BEACH, VIRGINIA BEACH CITY County, VIRGINIA, 23454

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $21.5 million to MYTHICS, LLC for work described as: THE DEPARTMENT USES NUMEROUS ORACLE PRODUCTS. THIS ORDER CONTAINS AN UNLIMITED LICENSING AGREEMENT FOR PRODUCTS FOR WHICH THE DEPARTMENT ANTICIPATES GROWTH AND MAINTENANCE FOR ALL OTHER ORACLE PRODUCTS WHICH IT CURRENTLY LICENSES. Key points: 1. The contract provides unlimited licensing for anticipated growth and maintenance of Oracle products, suggesting a strategic investment in ongoing IT infrastructure. 2. A firm-fixed-price structure offers cost predictability for the Department of Education over the contract's duration. 3. The use of a single, established vendor like Oracle indicates a reliance on existing, integrated systems rather than introducing new technologies. 4. The contract's duration of over 1600 days points to a long-term commitment to the licensed software. 5. While specific performance metrics are not detailed, the unlimited licensing suggests a focus on broad access and utility across the department.

Value Assessment

Rating: good

This contract's value is difficult to benchmark precisely due to the unlimited licensing nature for anticipated growth and maintenance. However, securing unlimited licenses for a suite of Oracle products for over four years at a fixed price suggests a potentially favorable arrangement for the Department of Education, especially if their Oracle usage significantly expands. Compared to per-user or per-instance licensing models, this approach could offer substantial savings if usage scales as anticipated. The absence of detailed usage data makes a direct comparison to similar contracts challenging, but the fixed price provides a degree of cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but the competitive process suggests that the pricing reflects market conditions. This approach is generally favorable for ensuring fair pricing and access to a range of solutions.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for the government's investment in software licensing.

Public Impact

The primary beneficiaries are the various departments and personnel within the Department of Education who rely on Oracle software for their daily operations and data management. The contract delivers access to a comprehensive suite of Oracle software products, supporting a wide range of administrative, financial, and educational data functions. The geographic impact is national, as the Department of Education operates across the United States. The contract supports the IT workforce within the Department of Education by providing the necessary tools and licenses for their roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to reliance on a single provider for critical software infrastructure.
Risk of over-licensing if anticipated growth in Oracle product usage does not materialize, leading to unused capacity.
The long-term nature of the contract may limit flexibility to adopt newer, potentially more cost-effective technologies in the future.

Positive Signals

Unlimited licensing provides flexibility and scalability for the Department's evolving IT needs.
The firm-fixed-price contract offers budget certainty and protects against price increases for the licensed software.
Leveraging existing Oracle infrastructure likely ensures a smoother integration and reduced training overhead for staff.

Sector Analysis

This contract falls within the Software Publishers industry, a significant segment of the broader IT sector. The market for enterprise software, particularly database and application platforms like Oracle's, is characterized by high switching costs and long-term customer relationships. The Department of Education's spending aligns with typical government agency investments in robust, scalable software solutions to manage complex data and operations. Comparable spending benchmarks would involve analyzing other large federal IT procurements for enterprise software licenses, often running into tens or hundreds of millions of dollars over several years.

Small Business Impact

There is no indication that this contract included small business set-asides. As a large software licensing agreement, it is unlikely to be directly subcontracted to small businesses in a significant way, though the primary contractor may engage small businesses for support services not specified here. The focus is on enterprise-level software provision rather than services that typically involve smaller firms.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Education's contracting officers and program managers responsible for IT procurement and management. Accountability is maintained through contract performance reviews and adherence to the terms of the unlimited licensing agreement. Transparency is facilitated by the contract's public availability, allowing for scrutiny of its terms and value.

Related Government Programs

Oracle Database Licenses
Enterprise Resource Planning (ERP) Software
Software Maintenance Agreements
Cloud Computing Services (if applicable to Oracle products)
IT Infrastructure Modernization

Risk Flags

Potential for vendor lock-in
Risk of over-licensing
Long-term commitment may reduce flexibility

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $21.5 million to MYTHICS, LLC. THE DEPARTMENT USES NUMEROUS ORACLE PRODUCTS. THIS ORDER CONTAINS AN UNLIMITED LICENSING AGREEMENT FOR PRODUCTS FOR WHICH THE DEPARTMENT ANTICIPATES GROWTH AND MAINTENANCE FOR ALL OTHER ORACLE PRODUCTS WHICH IT CURRENTLY LICENSES.

Who is the contractor on this award?

The obligated recipient is MYTHICS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Education (Department of Education).

What is the total obligated amount?

The obligated amount is $21.5 million.

What is the period of performance?

Start: 2013-08-30. End: 2018-02-27.

What is the historical spending trend for Oracle products within the Department of Education prior to this contract?

Analyzing historical spending on Oracle products by the Department of Education prior to August 2013 would provide crucial context for this $21.5 million contract. Without specific prior data, it's difficult to ascertain if this represents an increase, decrease, or stable level of investment. If prior spending was significantly lower, it might indicate a substantial expansion of Oracle's role within the department's IT infrastructure. Conversely, if previous spending was comparable or higher, this contract could represent a continuation or renewal of an established relationship. Understanding the historical trajectory helps assess whether the current unlimited licensing agreement is a strategic shift or an evolution of existing practices, and whether the $21.5 million is justified by past usage and anticipated future needs.

How does the per-unit cost of this Oracle licensing agreement compare to other federal agencies or similar large enterprise software contracts?

Benchmarking the per-unit cost of this Oracle licensing agreement against similar contracts across federal agencies or the private sector is challenging due to the 'unlimited licensing' clause for anticipated growth and maintenance. Standard metrics like cost per user, cost per processor, or cost per instance are not directly applicable without knowing the actual deployment scale. However, the total value of $21.5 million over approximately 4.5 years suggests an average annual spend of around $4.78 million. If the Department of Education has a large number of users or instances, this could represent good value. Conversely, if usage is relatively low, it might indicate a premium paid for flexibility. A detailed analysis would require access to usage data and comparisons with contracts that have similar 'unlimited' or 'enterprise-wide' licensing structures, which are often negotiated individually and vary significantly based on vendor, product suite, and negotiation leverage.

What specific Oracle products are covered under this unlimited licensing agreement, and what is their criticality to the Department's operations?

The provided data indicates the contract covers 'numerous Oracle products' and includes an 'unlimited licensing agreement for products for which the Department anticipates growth and maintenance for all other Oracle products which it currently licenses.' This suggests a broad scope, likely encompassing core database technologies (e.g., Oracle Database), middleware, and potentially application suites (e.g., PeopleSoft, E-Business Suite, or cloud-based applications like Oracle Cloud Infrastructure services). The criticality of these products to the Department of Education's operations is presumed to be high, given the investment and the 'unlimited' nature of the license, implying they are foundational for administrative, financial, student data management, or other key functions. Without a detailed product list, assessing specific risks or benefits is difficult, but the reliance on a single vendor for such a broad range of 'unlimited' licenses points to a significant dependency.

What are the potential risks associated with relying on a single vendor (Oracle) for such a broad range of software, especially with unlimited licensing?

Relying on a single vendor like Oracle for a broad range of software, particularly under an unlimited licensing model, presents several risks. Firstly, there's the risk of vendor lock-in, making it difficult and costly to switch to alternative solutions in the future, even if better or cheaper options emerge. Secondly, the 'unlimited' aspect, while offering flexibility, carries the risk of over-procurement if anticipated growth doesn't materialize, leading to wasted expenditure on unused licenses. Thirdly, vendor-specific pricing strategies and future price increases can become a significant concern, as the Department has less leverage once deeply integrated. Lastly, dependence on Oracle's product roadmap and support lifecycle means the Department is subject to Oracle's strategic decisions, potentially impacting the availability of features or long-term support for specific products.

How does the duration of this contract (over 4 years) align with typical IT software licensing cycles and the pace of technological change?

A contract duration of over 1600 days (approximately 4.4 years) for enterprise software licensing is relatively standard, particularly for foundational technologies like Oracle databases and applications where implementation and integration cycles are lengthy. This duration allows the Department of Education to realize the benefits of their investment without the constant overhead of frequent re-procurement. However, the rapid pace of technological change in the IT sector, especially concerning cloud computing, AI, and data analytics, means that a 4+ year commitment could potentially lead to the Department being on older technology if Oracle's own innovation or the broader market shifts significantly. The 'unlimited' licensing might mitigate some of this by allowing access to newer versions or services, but the core agreement's structure might not be optimized for rapid adoption of entirely new paradigms outside the Oracle ecosystem.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4525 MAIN ST STE 1500, VIRGINIA BEACH, VA, 23462

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $21,500,120

Exercised Options: $21,500,120

Current Obligation: $21,500,120

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F0153M

IDV Type: FSS

Timeline