DoD's $42.8M Microsoft Consulting Contract Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $42,803,657 ($42.8M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2017-01-01

End Date: 2020-12-31

Contract Duration: 1,460 days

Daily Burn Rate: $29.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF MICROSOFT CONSULTING SUPPORT SERVICE

Place of Performance

Location: REDMOND, KING County, WASHINGTON, 98052

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $42.8 million to MICROSOFT CORPORATION for work described as: IGF::CT::IGF MICROSOFT CONSULTING SUPPORT SERVICE Key points: 1. Significant spending on a single vendor for IT support services. 2. Lack of competition suggests potential for overpayment and limited innovation. 3. Contract duration and firm fixed-price structure may not align with evolving IT needs. 4. Focus on IT services highlights a critical area for federal spending oversight.

Value Assessment

Rating: questionable

The contract value of $42.8M over three years for Microsoft consulting services appears high, especially given the lack of competitive bidding. Benchmarking against similar IT support contracts is difficult without more data, but the absence of competition is a red flag for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This significantly limits price discovery and potentially leads to higher costs for taxpayers. The justification for sole-source is not provided but is a key area for scrutiny.

Taxpayer Impact: The lack of competition likely results in a higher cost to taxpayers than if the contract had been competitively bid.

Public Impact

Taxpayers may be overpaying for IT consulting services due to the absence of competition. The Department of Defense's reliance on a single vendor for critical IT support could pose a risk if that vendor's services or pricing change unfavorably. Limited visibility into the specific services provided and their effectiveness hinders public assessment of value for money.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value for IT services
Potential for overpayment

Positive Signals

Firm fixed-price contract structure
Defined contract period

Sector Analysis

The IT services sector is a significant area of federal spending. Benchmarks for IT consulting services vary widely, but competitive bidding typically drives down costs and improves service quality. This contract's sole-source nature is unusual for a service of this scale.

Small Business Impact

The contract was awarded to Microsoft Corporation, a large business. There is no indication that small businesses were involved in this specific contract, either as prime contractors or subcontractors.

Oversight & Accountability

Oversight of sole-source contracts is crucial to ensure fair pricing and effective service delivery. The lack of competition necessitates a higher degree of scrutiny from agencies and oversight bodies to confirm the government is receiving good value.

Related Government Programs

Computer Facilities Management Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award lacks transparency and competitive pricing.
Potential for inflated costs due to absence of competition.
Risk of vendor lock-in and limited innovation.
Insufficient information on service specifics and performance metrics.
High value contract in a critical IT sector warrants closer scrutiny.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.8 million to MICROSOFT CORPORATION. IGF::CT::IGF MICROSOFT CONSULTING SUPPORT SERVICE

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 $42.8 million.

What is the period of performance?

Start: 2017-01-01. End: 2020-12-31.

What was the justification for awarding this significant Microsoft consulting contract on a sole-source basis, and how was the price determined to be fair and reasonable without competition?

The justification for a sole-source award is critical for understanding the necessity and fairness of the pricing. Without a competitive process, agencies must rely on detailed market research and cost analyses to ensure the price is reasonable. The absence of this justification raises questions about whether the government secured the best possible value and if alternative solutions were adequately explored.

What specific IT consulting services were provided under this $42.8M contract, and how did they contribute to the Department of the Air Force's mission objectives?

Understanding the specific services rendered is key to assessing the contract's effectiveness and value. Were these services for infrastructure management, software development, cybersecurity, or strategic IT planning? Clarity on the deliverables and their alignment with mission goals would allow for a more informed evaluation of the $42.8M expenditure.

Given the contract's duration and sole-source nature, what mechanisms were in place to ensure the services remained relevant and cost-effective as technology evolved over the three-year period?

Long-term, non-competed contracts, especially in the rapidly changing IT sector, pose a risk of becoming outdated or overpriced. Robust contract management, including regular performance reviews and potential price adjustments based on market shifts, would be essential. The lack of competition makes it harder to ensure continuous improvement and cost efficiency.

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: $42,803,657

Exercised Options: $42,803,657

Current Obligation: $42,803,657

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline