DoD's $1.14B Dell contract for ADP software saw 2 bids, awarded under full and open competition

Contract Overview

Contract Amount: $471,268,503 ($471.3M)

Contractor: Dell Marketing L.P.

Awarding Agency: Department of Defense

Start Date: 2004-06-30

End Date: 2010-06-30

Contract Duration: 2,191 days

Daily Burn Rate: $215.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200410!000781!5700!GV90 !SSG/PK !GS35F4076D !C!N! !N!FA877104F8320! !20040630!20040709!114315195!114315195!114315195!N!DELL MARKETING L P !ONE DELL WAY !ROUND ROCK !TX!78682!63500!491!48!ROUND ROCK !WILLIAMSON !TEXAS !+000012313462!N!N!000000000000!7030!ADP SOFTWARE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !511210!E! !6! ! ! ! ! !99990909!B!A!Y! ! !A! ! ! !000! ! ! ! ! ! ! ! !C!N! ! ! ! ! ! ! !00 ! ! ! ! ! ! ! ! ! !0001! !

Place of Performance

Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $471.3 million to DELL MARKETING L.P. for work described as: 200410!000781!5700!GV90 !SSG/PK !GS35F4076D !C!N! !N!FA877104F8320! !20040630!20040709!114315195!114315195!114315195!N!DELL MARKETING L P !ONE DELL WAY !ROUND ROCK !TX!78682!63500!491!48!ROUND ROCK !WILL… Key points: 1. The contract represents a significant investment in IT infrastructure for the Department of Defense. 2. Competition was robust with two bidders, suggesting a healthy market for this type of software. 3. The firm fixed-price structure shifts risk to the contractor, potentially benefiting the government. 4. Awarded in 2004, the contract's performance context is historical, requiring comparison to contemporary IT procurements. 5. This spending falls within the broader IT sector, specifically supporting administrative and data processing functions.

Value Assessment

Rating: fair

The total contract value of approximately $1.14 billion over six years is substantial. Benchmarking this against similar large-scale IT procurements from the early 2000s is crucial. Without specific per-unit data or detailed service breakdowns, a precise value-for-money assessment is challenging. However, the existence of two bidders suggests some level of competitive pricing was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a competitive environment, though the exact number of interested parties and the reasons for only two submitting offers would provide further insight into the level of competition.

Taxpayer Impact: Full and open competition generally leads to better price discovery and potentially lower costs for taxpayers, as contractors vie to offer the most competitive terms.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, receiving essential ADP software. Services delivered include the provision and potential maintenance of administrative and data processing software. The geographic impact is national, supporting DoD operations across its various installations. Workforce implications may include IT support roles for the implementation and management of the software.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in given the long duration and significant investment.
Risk of technological obsolescence over the contract's six-year term.
Dependence on a single vendor for critical ADP software could pose a disruption risk.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Awarded under full and open competition, suggesting a competitive process.
Long-term contract allows for sustained IT support and development.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on Administrative,الدفاع, and Data Processing (ADP) software. In the early 2000s, large government IT procurements were common as agencies modernized their systems. Comparable spending benchmarks would involve looking at other multi-year software licenses and IT infrastructure contracts awarded by large federal agencies during that period.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. Given the scale and nature of ADP software procurement, it is likely that large prime contractors were the primary participants. Subcontracting opportunities for small businesses may have existed, but this would depend on the specific terms negotiated by Dell.

Oversight & Accountability

Oversight would typically be managed by the contracting officer and the relevant program management office within the Department of Defense. Accountability measures would be defined in the contract's terms and conditions, including performance metrics and delivery schedules. Transparency is generally facilitated through contract award databases, though detailed performance data may be less accessible.

Related Government Programs

Defense Information Systems Agency (DISA) IT contracts
General Services Administration (GSA) IT Schedule contracts
Department of Defense Enterprise Software Agreements

Risk Flags

Long contract duration increases risk of technological obsolescence.
Potential for vendor lock-in with a single provider for critical software.
Firm fixed-price contracts require careful monitoring to ensure adequate performance.
Limited competition (two bidders) may impact price optimization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $471.3 million to DELL MARKETING L.P.. 200410!000781!5700!GV90 !SSG/PK !GS35F4076D !C!N! !N!FA877104F8320! !20040630!20040709!114315195!114315195!114315195!N!DELL MARKETING L P !ONE DELL WAY !ROUND ROCK !TX!78682!63500!491!48!ROUND ROCK !WILLIAMSON !TEXAS !+000012313462!N!N!000000000000!7030!ADP SOFTWARE !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !511210!E! !6! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is DELL MARKETING L.P..

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 $471.3 million.

What is the period of performance?

Start: 2004-06-30. End: 2010-06-30.

What was Dell's track record with large federal IT contracts prior to and during this period?

Prior to and during the early 2000s, Dell was a significant player in the IT hardware market and was increasingly expanding its enterprise solutions and services. The company had established relationships with various government agencies, including the Department of Defense, for supplying computers and related IT infrastructure. Large software and services contracts like this one represented a strategic growth area for Dell as it aimed to compete beyond hardware. Assessing their performance on this specific contract would require reviewing performance reports, any contract modifications, and potential disputes or claims filed during its execution. Historical data from contract award databases and government accountability reports would be the primary sources for this analysis.

How does the $1.14 billion value compare to similar DoD IT procurements in the early 2000s?

The $1.14 billion value for this six-year ADP software contract awarded in 2004 is substantial, reflecting the significant IT modernization efforts underway in the Department of Defense at the time. During the early 2000s, large-scale IT procurements were common as agencies sought to upgrade legacy systems, enhance cybersecurity, and improve data management capabilities. Contracts of this magnitude were often for enterprise-wide solutions, encompassing software licenses, hardware, implementation services, and ongoing support. To benchmark this value, one would compare it against other major software and IT services contracts awarded by DoD components like the Defense Information Systems Agency (DISA) or individual service branches during the same period. Factors such as contract duration, scope of services, and the specific technologies involved would be critical for a meaningful comparison.

What were the primary risks associated with a contract of this size and duration for ADP software?

A contract of this magnitude ($1.14 billion over six years) for Administrative and Data Processing (ADP) software carried several inherent risks. Technological obsolescence was a significant concern; software developed or procured in 2004 could be outdated by 2010, potentially diminishing its value and effectiveness. Vendor lock-in was another risk, as the DoD would become heavily reliant on Dell for critical software, making transitions to alternative solutions difficult and costly. Performance risks included potential delays in delivery, integration issues with existing DoD systems, and inadequate support, which could disrupt essential operations. Furthermore, the firm fixed-price nature, while offering cost certainty, could lead to contractor underperformance if not managed diligently, as Dell might be incentivized to cut corners to maximize profit. Cybersecurity vulnerabilities within the software itself also posed a substantial risk to sensitive defense data.

How effective was the 'full and open competition' strategy in ensuring value for this specific contract?

The 'full and open competition' strategy for this $1.14 billion Dell contract aimed to maximize value by allowing all eligible sources to bid. The fact that two bids were received suggests that the market was sufficiently competitive to attract multiple vendors. However, the effectiveness in ensuring optimal value depends on several factors not immediately apparent from the data. If the two bidders were highly qualified and their proposals were rigorously evaluated based on technical merit and price, then the competition likely drove a reasonable price. Conversely, if the market for such specialized ADP software was limited, or if only two vendors could realistically meet the stringent requirements, the competition might have been less robust than ideal. A deeper analysis would involve examining the bid proposals, the evaluation criteria, and any post-award performance data to ascertain if the chosen solution represented the best overall value for the DoD.

What was the historical spending trend for ADP software within the Department of Defense around 2004-2010?

During the period of 2004-2010, the Department of Defense was undergoing significant IT modernization and consolidation efforts. Spending on Administrative and Data Processing (ADP) software was substantial as the DoD sought to integrate disparate systems, improve information sharing, and enhance operational efficiency across its global operations. This era saw increased investment in enterprise resource planning (ERP) systems, data management solutions, and communication platforms. The $1.14 billion awarded to Dell for ADP software is indicative of this larger trend. DoD's overall IT budget during these years was in the tens of billions of dollars annually, with a significant portion allocated to software acquisition, development, and maintenance. This contract likely represented a key component of the Air Force's strategy to standardize or upgrade its ADP capabilities.

Industry Classification

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

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dell Computer Corporation (UEI: 114315195)

Address: ONE DELL WAY, ROUND ROCK, TX, 90

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: GS35F4076D

IDV Type: FSS

Timeline