DoD's $25.2M Microsoft consulting contract awarded without competition, raising value-for-money questions

Contract Overview

Contract Amount: $25,237,586 ($25.2M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2013-08-01

End Date: 2017-03-27

Contract Duration: 1,334 days

Daily Burn Rate: $18.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF MICROSOFT CONSULTANT SERVICES

Place of Performance

Location: REDMOND, KING County, WASHINGTON, 98052

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $25.2 million to MICROSOFT CORPORATION for work described as: IGF::CT::IGF MICROSOFT CONSULTANT SERVICES Key points: 1. The contract's lack of competition suggests potential overpayment and limited price discovery. 2. Awarded to Microsoft Corporation, the sole vendor, raises concerns about market alternatives. 3. The firm fixed-price structure offers some cost certainty but doesn't guarantee optimal value. 4. Performance occurred over nearly four years, indicating a long-term reliance on this vendor. 5. The contract falls under IT services, specifically computer facilities management. 6. No small business set-aside was applied, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source award. Without competitive bids, it's difficult to ascertain if the $25.2 million spent represents a fair market price for Microsoft consulting services. The firm fixed-price nature provides some cost control, but the absence of competition means the government may not have secured the best possible terms or rates. Comparing this to similar sole-source IT consulting contracts would be necessary for a more robust assessment, but the lack of competitive data inherently limits the ability to confirm value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Microsoft Corporation, meaning it was not competed. This approach bypasses the standard procurement process designed to solicit offers from multiple vendors. The lack of competition means there was no opportunity for other qualified companies to bid, potentially limiting the government's ability to leverage market forces to achieve lower prices or better service terms. This raises questions about whether the government adequately explored competitive options before resorting to a sole-source award.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government lacks the leverage that competition provides. It also limits the opportunity for new or smaller businesses to gain a foothold with the agency.

Public Impact

The Department of the Air Force benefited from specialized Microsoft consulting services. Services likely supported the maintenance and management of IT infrastructure. The contract's geographic impact is centered in Washington, D.C., where the agency is located. The contract supported the federal IT workforce by engaging a major technology provider.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in inflated costs for taxpayers.
Sole-source awards can stifle innovation by not engaging a broader market.
Limited transparency into the justification for sole-source award.
Potential for vendor lock-in with a single provider for critical services.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a well-established vendor like Microsoft suggests access to expertise.
Contract duration indicates a sustained need for the services provided.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer facilities management services. The IT services market is vast and highly competitive, with numerous firms offering specialized consulting. However, for specific vendor-centric services like those related to Microsoft products, the market can become more concentrated. The $25.2 million awarded is a moderate sum within the context of large federal IT spending, but the sole-source nature warrants scrutiny against benchmarks for competitively procured similar services.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have involved significant subcontracting opportunities for them, as indicated by the 'sb:false' flag. The award to a large corporation like Microsoft Corporation means that the direct economic benefit for small businesses in this instance is likely minimal. This approach may limit the government's ability to meet small business contracting goals and could reduce opportunities for smaller, specialized IT firms to participate in federal contracts.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The firm fixed-price nature provides some level of financial oversight by fixing the total cost. However, the lack of competition limits the scope for robust oversight related to price reasonableness. Transparency regarding the justification for the sole-source award and the specific deliverables would be key areas for accountability assessment. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Microsoft Enterprise Agreements
IT Professional Services
Cloud Computing Services
Software Licensing and Support
Department of Defense IT Modernization

Risk Flags

Sole-source award lacks competitive justification.
Potential for non-competitive pricing.
Limited transparency on performance metrics.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.2 million to MICROSOFT CORPORATION. IGF::CT::IGF MICROSOFT CONSULTANT SERVICES

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

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 $25.2 million.

What is the period of performance?

Start: 2013-08-01. End: 2017-03-27.

What was the specific justification provided for awarding this contract on a sole-source basis to Microsoft Corporation?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as urgent and compelling needs, unique capabilities of a single source, or when only one responsible source can provide the required supplies or services. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to verify the rationale. This lack of transparency is a common concern with sole-source procurements, as it prevents public scrutiny of whether competitive options were truly unavailable or inadequate.

How does the $25.2 million contract value compare to similar IT consulting services procured competitively by the Department of Defense?

Direct comparison to competitively procured contracts is difficult without knowing the specific services rendered and their scope. However, $25.2 million over approximately 3.5 years (1334 days) for specialized IT consulting suggests a significant investment. Competitively bid contracts for similar IT facilities management or consulting services often yield lower per-unit costs or more favorable terms due to market pressures. The absence of competition here means this figure cannot be definitively benchmarked against market rates achieved through bidding, raising potential concerns about cost-effectiveness.

What were the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not specify the key performance indicators (KPIs) or service level agreements (SLAs) for this contract. For a firm fixed-price contract, the focus is often on the delivery of defined services or products within the agreed-upon price. However, the effectiveness and quality of those services would ideally be measured against specific metrics. Without this information, it's challenging to assess the contractor's performance beyond fulfilling the contractual obligations. Future analysis would benefit from reviewing the contract's statement of work and any associated performance metrics.

What is Microsoft Corporation's track record with the Department of Defense for similar IT consulting services?

Microsoft Corporation is a major technology provider and a frequent contractor for the Department of Defense (DoD), often securing large contracts for software, cloud services, and related support. Their track record with the DoD is extensive, encompassing a wide range of IT needs. However, the nature of these contracts varies significantly, with many being competitively awarded while others, like this one, are sole-source. A comprehensive review of Microsoft's overall performance and pricing across all its DoD contracts would be necessary to fully assess its track record beyond this specific engagement.

Were there any risks identified during the contract performance period, and how were they mitigated?

The provided data does not contain information about specific risks identified during the contract performance period or the mitigation strategies employed. Risk management is a crucial aspect of contract oversight. For a contract of this size and duration, potential risks could include scope creep, performance deficiencies, security vulnerabilities, or vendor dependency. Effective mitigation would involve proactive monitoring, clear communication channels, and adherence to contractual terms. Without specific details, assessing the risk management effectiveness is not possible.

How does this contract's spending pattern compare to historical IT spending by the Air Force for Microsoft-related services?

The data indicates this contract spanned from August 2013 to March 2017, totaling approximately $25.2 million. To compare historical spending patterns, one would need data on prior and subsequent contracts for similar Microsoft consulting services awarded by the Air Force. Analyzing trends in contract value, duration, and competition levels over time would reveal whether this specific contract represents a typical expenditure or an outlier. The sole-source nature of this award might deviate from more competitively sourced historical spending.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ONE MICROSOFT WAY, REDMOND, WA, 98052

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $25,237,586

Exercised Options: $25,237,586

Current Obligation: $25,237,586

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline