DoD's $16.87M ServiceNow Contract with Carahsoft Faces Scrutiny Over Competition and Value
Contract Overview
Contract Amount: $16,868,726 ($16.9M)
Contractor: Carahsoft Technology Corp
Awarding Agency: Department of Defense
Start Date: 2022-09-12
End Date: 2025-12-21
Contract Duration: 1,196 days
Daily Burn Rate: $14.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: INFORMATION TECHNOLOGY MANAGEMENT SOLUTION (ITSM) SERVICENOW TERM LICENSES AND SOFTWARE SUBSCRIPTION SERVICES.
Place of Performance
Location: SAN ANTONIO, BEXAR County, TEXAS, 78243
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $16.9 million to CARAHSOFT TECHNOLOGY CORP for work described as: INFORMATION TECHNOLOGY MANAGEMENT SOLUTION (ITSM) SERVICENOW TERM LICENSES AND SOFTWARE SUBSCRIPTION SERVICES. Key points: 1. The contract for ServiceNow licenses and subscriptions represents a significant investment in IT infrastructure. 2. Carahsoft Technology Corp, a reseller, holds the contract, raising questions about direct vendor competition. 3. The firm fixed-price contract type provides cost certainty but may limit negotiation flexibility. 4. The 'Software Publishers' NAICS code suggests a focus on commercial off-the-shelf software, common in IT spending.
Value Assessment
Rating: questionable
The $16.87 million price for ServiceNow licenses and subscriptions needs benchmarking against similar government or commercial contracts. Without direct comparisons, assessing if this price reflects fair market value is difficult, especially given the reseller model.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While advertised as full and open competition, the award was a BPA Call to Carahsoft Technology Corp. This suggests the competition may have occurred at the BPA level, potentially limiting broader vendor participation at the call order stage and impacting price discovery.
Taxpayer Impact: The effectiveness of the competition method directly impacts taxpayer value. If competition was limited in practice, taxpayers may be overpaying for these essential IT services.
Public Impact
Essential IT services for the Air Force are secured through this contract. Taxpayers are funding significant software licensing and subscription costs. The reliance on a specific software platform like ServiceNow impacts interoperability and future IT modernization efforts.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential lack of direct vendor competition
- Reseller model may inflate costs
- Limited transparency on price justification
Positive Signals
- Secures critical IT management software
- Firm fixed-price contract offers budget predictability
Sector Analysis
This contract falls within the Information Technology sector, specifically software licensing and subscription services. Government IT spending benchmarks often show significant variation, but large enterprise software deals require careful cost analysis to ensure value.
Small Business Impact
The contract was awarded to Carahsoft Technology Corp, a reseller. Analysis is needed to determine if small businesses were involved in the supply chain or if opportunities were missed due to the reseller model.
Oversight & Accountability
Oversight is crucial to ensure the Air Force is receiving competitive pricing and that the full and open competition was genuinely effective. Regular reviews of usage and pricing against market rates are recommended.
Related Government Programs
- Software Publishers
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential for inflated costs due to reseller model
- Limited visibility into direct vendor pricing
- Effectiveness of 'full and open' competition at BPA call level unclear
- Risk of vendor lock-in with specialized software
Tags
software-publishers, department-of-defense, tx, bpa-call, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $16.9 million to CARAHSOFT TECHNOLOGY CORP. INFORMATION TECHNOLOGY MANAGEMENT SOLUTION (ITSM) SERVICENOW TERM LICENSES AND SOFTWARE SUBSCRIPTION SERVICES.
Who is the contractor on this award?
The obligated recipient is CARAHSOFT TECHNOLOGY CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $16.9 million.
What is the period of performance?
Start: 2022-09-12. End: 2025-12-21.
What is the specific justification for using Carahsoft as a reseller instead of contracting directly with ServiceNow or other authorized resellers?
The justification likely relates to existing Blanket Purchase Agreements (BPAs) or contract vehicles that streamline procurement. However, using a reseller can sometimes add markups, potentially increasing the overall cost to the government compared to direct procurement. Further analysis would be needed to quantify this impact.
How was the pricing validated to ensure it represents fair and reasonable value, given the reseller model?
Validation typically involves comparing proposed prices against historical data, commercial price lists, or other government contracts. For reseller contracts, agencies often rely on the reseller's ability to provide competitive pricing based on their established vendor relationships. However, the absence of direct vendor quotes can obscure true market value.
What mechanisms are in place to ensure ongoing cost-effectiveness and prevent price creep throughout the contract's duration?
Mechanisms may include periodic price reviews, contract clauses allowing for adjustments based on market changes, and performance metrics tied to cost efficiency. The firm fixed-price nature provides some initial cost control, but vigilance is needed to manage potential escalations in subscription fees or support costs.
Industry Classification
NAICS: Information › Software Publishers › Software Publishers
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS
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: 11493 SUNSET HILLS RD, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $24,364,314
Exercised Options: $16,868,726
Current Obligation: $16,868,726
Actual Outlays: $3,489,877
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: N6600119A0120
IDV Type: BPA
Timeline
Start Date: 2022-09-12
Current End Date: 2025-12-21
Potential End Date: 2026-12-21 00:00:00
Last Modified: 2026-01-22
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