Air Force Spends $274M on Microsoft Licenses via Dell, Raising Value Concerns
Contract Overview
Contract Amount: $273,899,152 ($273.9M)
Contractor: Dell Marketing L.P.
Awarding Agency: Department of Defense
Start Date: 2010-06-30
End Date: 2012-10-31
Contract Duration: 854 days
Daily Burn Rate: $320.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: AIR FORCE MICROSOFT ENTERPRISE LICENSE AGREEMENT
Place of Performance
Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $273.9 million to DELL MARKETING L.P. for work described as: AIR FORCE MICROSOFT ENTERPRISE LICENSE AGREEMENT Key points: 1. Significant expenditure on software licenses highlights reliance on Microsoft. 2. Dell secured the contract, but competition details are limited. 3. Potential for overspending exists given the large contract value. 4. IT sector spending on enterprise software is substantial government-wide.
Value Assessment
Rating: questionable
The $274 million spent on Microsoft licenses over approximately two years is substantial. Without detailed pricing breakdowns or comparisons to similar agreements, it's difficult to assess if this represents a fair market value for the software and support provided.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. However, the specific pricing strategies and how they were evaluated to arrive at the final $274 million are not detailed, impacting the transparency of price discovery.
Taxpayer Impact: Taxpayers funded a significant enterprise software agreement. The effectiveness of the competition in securing the best possible price for this large sum is a key consideration for fiscal responsibility.
Public Impact
Air Force operations rely heavily on Microsoft software, impacting productivity and continuity. The large sum allocated could have been used for other critical defense needs. Transparency in software licensing costs is crucial for public trust and accountability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of detailed pricing justification
- Potential for vendor lock-in with Microsoft products
- Limited insight into actual software utilization vs. cost
Positive Signals
- Awarded through full and open competition
- Firm fixed price contract provides cost certainty
Sector Analysis
This contract falls within the Information Technology sector, specifically enterprise software licensing. Government-wide IT spending is a major component of federal budgets, with significant portions dedicated to software and cloud services.
Small Business Impact
While Dell Marketing L.P. is a large business, the contract details do not indicate any specific provisions or set-asides for small businesses. The focus appears to be on acquiring enterprise-level software solutions.
Oversight & Accountability
The award process and contract management by the Department of the Air Force are subject to standard federal procurement oversight. However, the value and duration warrant scrutiny to ensure efficient use of funds.
Related Government Programs
- Electronic Computer Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- High contract value
- Potential for unutilized licenses
- Lack of detailed cost-benefit analysis provided
- Long-term reliance on a single software vendor
Tags
electronic-computer-manufacturing, department-of-defense, tx, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $273.9 million to DELL MARKETING L.P.. AIR FORCE MICROSOFT ENTERPRISE LICENSE AGREEMENT
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 $273.9 million.
What is the period of performance?
Start: 2010-06-30. End: 2012-10-31.
Was the $274 million expenditure the most cost-effective way to acquire the necessary Microsoft licenses for the Air Force?
Determining cost-effectiveness requires a deeper analysis of the specific licenses procured, the duration of the agreement, and comparisons to alternative licensing models or competitive bids. Without this granular data, it's challenging to definitively state if this was the most economical approach. The firm fixed price offers certainty but doesn't inherently guarantee the lowest possible cost.
What are the primary risks associated with such a large, long-term software licensing agreement for the Air Force?
Key risks include potential overpayment if software utilization is lower than anticipated, vendor lock-in making future transitions difficult and costly, and the risk of obsolescence if technology evolves rapidly. There's also the risk of security vulnerabilities if licenses are not properly managed and updated, impacting mission readiness.
How effectively did the 'full and open competition' process ensure value for taxpayer money in this Microsoft licensing deal?
While 'full and open competition' theoretically promotes competitive pricing, its effectiveness hinges on the specific requirements and evaluation criteria used. If the solicitation was narrowly defined or if evaluation focused heavily on factors other than pure price, the competitive advantage might be diminished. Further details on the bidding process and award rationale are needed to assess true value realization.
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: 4
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
Financial Breakdown
Contract Ceiling: $545,756,903
Exercised Options: $273,899,152
Current Obligation: $273,899,152
Parent Contract
Parent Award PIID: GS35F4076D
IDV Type: FSS
Timeline
Start Date: 2010-06-30
Current End Date: 2012-10-31
Potential End Date: 2013-06-29 00:00:00
Last Modified: 2014-05-22
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