Air Force spent $57.8M on ERP licenses over 5 years, with V3Gate LLC awarded the contract

Contract Overview

Contract Amount: $57,824,134 ($57.8M)

Contractor: V3gate, LLC

Awarding Agency: Department of Defense

Start Date: 2018-05-25

End Date: 2023-05-24

Contract Duration: 1,825 days

Daily Burn Rate: $31.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: AIR FORCE STANDARD ENTERPRISE RESOURCE PLANNING (ERP) LICENSE (AFSEL) ENTERPRISE LICENSE AGREEMENT (ELA)

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $57.8 million to V3GATE, LLC for work described as: AIR FORCE STANDARD ENTERPRISE RESOURCE PLANNING (ERP) LICENSE (AFSEL) ENTERPRISE LICENSE AGREEMENT (ELA) Key points: 1. The contract represents a significant investment in enterprise resource planning software for the Air Force. 2. Competition was conducted under a full and open process after exclusion of sources, indicating a specific justification for the approach. 3. The contract duration of 1825 days (5 years) suggests a long-term need for these ERP licenses. 4. The fixed-price contract type aims to provide cost certainty for the government. 5. The award to V3Gate, LLC warrants further examination of their performance and pricing in relation to market standards. 6. The absence of small business set-aside flags suggests this contract was not specifically targeted for small business participation.

Value Assessment

Rating: fair

The total value of $57.8 million over five years for ERP licenses appears substantial. Benchmarking this against similar enterprise-wide software license agreements for large federal agencies is crucial. Without specific per-user or per-module cost data, a precise value-for-money assessment is difficult. However, the scale of the investment suggests a need for robust justification and comparison to alternative solutions or consolidated enterprise agreements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This designation implies that while the competition was intended to be open, specific sources were excluded, likely due to prior contract arrangements or unique capabilities. The number of bidders (3) is relatively low for a full and open competition of this magnitude, which could suggest barriers to entry or a highly specialized market.

Taxpayer Impact: A limited number of bidders in a full and open competition may lead to less aggressive pricing than a broader competition. Taxpayers benefit from the competition that did occur, but the exclusion of sources might have limited the potential for greater cost savings.

Public Impact

The primary beneficiaries are the Department of the Air Force personnel who rely on the ERP system for managing resources and operations. The services delivered are the provision of enterprise resource planning software licenses, crucial for financial management, logistics, and personnel administration. The geographic impact is likely nationwide, supporting Air Force operations across various bases and installations. Workforce implications include enabling efficient data management and operational processes for Air Force staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in a full and open competition warrants scrutiny to ensure it was justified and did not unduly restrict competition.
The relatively low number of bidders (3) for a contract of this size could indicate potential market concentration or barriers to entry.
The total contract value of $57.8 million requires careful monitoring to ensure continued value for money throughout the performance period.

Positive Signals

The use of a Firm Fixed Price contract provides cost predictability for the government.
The contract duration of five years indicates a stable, long-term requirement for these ERP capabilities.
The award was made to V3Gate, LLC, suggesting they met the government's requirements for this critical system.

Sector Analysis

Enterprise Resource Planning (ERP) systems are foundational software solutions for large organizations, integrating core business processes. The federal government, particularly large agencies like the Department of the Air Force, relies heavily on ERPs for efficient management of finances, human resources, logistics, and procurement. The market for enterprise software licenses is competitive, but large-scale government contracts often involve specialized requirements and procurement processes. This contract fits within the broader IT services sector, specifically focusing on software licensing and maintenance for critical business systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). The award went to V3Gate, LLC, which is not explicitly identified as a small business in the provided data. This suggests that the procurement was likely aimed at larger, established vendors capable of meeting the extensive requirements of an enterprise-wide ERP system. There is no direct information on subcontracting plans for small businesses within this specific award notice.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The contract type (Firm Fixed Price) provides some cost control. Transparency is facilitated by contract award databases, but detailed performance metrics and spending breakdowns may be internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Enterprise Resource Planning Systems
Air Force IT Modernization Programs
Federal Software Licensing Agreements
Large-Scale Enterprise Software Procurements

Risk Flags

Potential for reduced competition due to source exclusion.
Risk of paying a fixed price that becomes uncompetitive over 5 years.
Need for clear justification for excluding specific sources.
Limited number of bidders may impact price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.8 million to V3GATE, LLC. AIR FORCE STANDARD ENTERPRISE RESOURCE PLANNING (ERP) LICENSE (AFSEL) ENTERPRISE LICENSE AGREEMENT (ELA)

Who is the contractor on this award?

The obligated recipient is V3GATE, LLC.

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 $57.8 million.

What is the period of performance?

Start: 2018-05-25. End: 2023-05-24.

What specific ERP modules or functionalities does this $57.8 million contract cover for the Air Force?

The provided data does not specify the exact ERP modules or functionalities covered by the $57.8 million contract awarded to V3Gate, LLC. Enterprise Resource Planning (ERP) systems are comprehensive software suites that typically integrate various business processes such as financial management, human resources, logistics, supply chain management, procurement, and project management. Given the scale and duration of the contract, it is highly probable that it encompasses core modules essential for the Air Force's operational and administrative functions. Further details would likely be found in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not included in the summary data. Understanding the specific modules is crucial for assessing the contract's alignment with Air Force needs and for benchmarking costs against similar module-specific procurements.

How does the per-year cost of this contract compare to other federal agencies' ERP license spending?

The contract's total value is $57.8 million over 1825 days (5 years), averaging approximately $11.56 million per year. Comparing this to other federal agencies' ERP license spending requires access to a broader dataset of similar contracts. However, for a large agency like the Air Force, this annual expenditure for enterprise-wide ERP licenses is not unusual. Agencies like the Army or Navy also invest heavily in their ERP systems. Factors influencing cost include the number of users, the specific modules licensed, the vendor, and the level of customization. Without direct comparable data points for agencies of similar size and complexity, it's difficult to definitively state if this represents excellent, fair, or concerning value. However, it falls within the expected range for such a significant undertaking.

What is V3Gate, LLC's track record with large federal IT contracts, particularly ERP systems?

Information regarding V3Gate, LLC's specific track record with large federal IT contracts, especially ERP systems, is not detailed in the provided summary data. The data only indicates that V3Gate, LLC was awarded this specific contract. To assess their track record, one would need to examine their past performance on similar contracts, including client satisfaction, adherence to schedule and budget, and technical execution. Resources like the Federal Procurement Data System (FPDS) or contractor performance databases (e.g., CPARS) would be necessary to conduct a thorough review of V3Gate, LLC's history with the government, particularly concerning complex ERP implementations or large-scale software licensing agreements.

What are the potential risks associated with a 5-year fixed-price contract for ERP licenses?

A 5-year fixed-price contract for ERP licenses carries several potential risks. For the government, the primary risk is paying a fixed price that may become uncompetitive if market prices for similar licenses decrease significantly over the contract period, or if the actual usage or need for certain features diminishes. Conversely, the contractor (V3Gate, LLC) bears the risk of cost overruns if their internal costs for supporting or providing these licenses increase unexpectedly. Scope creep, where the government requests additional features or services beyond the original agreement without a corresponding price adjustment, can also be a risk if not managed carefully through contract modifications. Furthermore, vendor lock-in can become a concern, making it difficult and costly to switch to a different ERP system or vendor at the end of the contract term.

How does the 'exclusion of sources' clause impact the fairness and transparency of this competition?

The 'exclusion of sources' clause in a 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation introduces a layer of complexity regarding fairness and transparency. While the competition is intended to be open to all responsible sources, the explicit exclusion of certain entities suggests a pre-determined rationale, such as leveraging existing infrastructure, proprietary technology, or specific contractual obligations. This exclusion can limit the pool of potential bidders, potentially reducing the intensity of competition and potentially leading to higher prices than if all sources were allowed to compete. Transparency is impacted because the justification for excluding specific sources is not always readily apparent in summary data. A thorough review of the contract's Justification and Approval (J&A) document would be necessary to understand the specific reasons for exclusion and to assess whether the competition remained fair and provided the best value to the government.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 555 MIDDLE CREEK PKWY STE 120, COLORADO SPRINGS, CO, 80921

Business Categories: Category Business, Hispanic American Owned Business, Limited Liability Corporation, Minority Owned Business, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $62,252,585

Exercised Options: $57,824,134

Current Obligation: $57,824,134

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SD27B

IDV Type: GWAC

Timeline