DoD's $47.2M Palo Alto Networks contract awarded to CDW Government LLC shows fair value with 4 bidders

Contract Overview

Contract Amount: $47,224,996 ($47.2M)

Contractor: CDW Government LLC

Awarding Agency: Department of Defense

Start Date: 2016-06-29

End Date: 2019-07-31

Contract Duration: 1,127 days

Daily Burn Rate: $41.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PALO ALTO NETWORKS VM-300

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $47.2 million to CDW GOVERNMENT LLC for work described as: PALO ALTO NETWORKS VM-300 Key points: 1. Value appears reasonable given the specialized nature of cybersecurity hardware and software. 2. Competition was robust with four bidders, suggesting a healthy market for these solutions. 3. Risk indicators are low, with a firm fixed-price contract and established vendor. 4. Performance context is within a critical defense information infrastructure. 5. Sector positioning is within the IT services and cybersecurity domain.

Value Assessment

Rating: good

The contract value of $47.2 million for Palo Alto Networks VM-300 security appliances appears to be within a reasonable range for enterprise-level cybersecurity solutions. Benchmarking against similar large-scale procurements for advanced network security hardware and associated support services suggests that the pricing is competitive. The firm fixed-price nature of the contract provides cost certainty for the government, mitigating the risk of cost overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with four distinct bidders vying for the award. The presence of multiple bidders indicates a competitive marketplace for these types of cybersecurity solutions. This level of competition generally leads to better price discovery and ensures that the government receives a fair market price for the goods and services procured.

Taxpayer Impact: The robust competition ensures that taxpayer dollars are used efficiently, as multiple vendors were incentivized to offer their best pricing and terms to secure this significant contract.

Public Impact

The Department of Defense benefits from enhanced cybersecurity capabilities to protect critical information infrastructure. Services delivered include the provision of advanced network security appliances and potentially related support. The geographic impact is likely concentrated within DoD facilities, particularly those managed by the Defense Information Systems Agency. Workforce implications may involve IT security personnel managing and operating the new hardware.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with specialized hardware.
Reliance on a single vendor's product line for critical security functions.

Positive Signals

Awarded through full and open competition.
Firm fixed-price contract provides cost predictability.
CDW Government LLC is an established government contractor.
Palo Alto Networks is a recognized leader in cybersecurity.

Sector Analysis

The cybersecurity market is a rapidly growing segment of the IT sector, driven by increasing digital threats. This contract fits within the broader IT services and hardware procurement category, specifically focusing on network security solutions. Comparable spending benchmarks in this area often involve multi-million dollar investments for enterprise-grade security platforms, reflecting the high cost of advanced technology and the critical need for robust defense.

Small Business Impact

This contract was not specifically set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The award to CDW Government LLC, a large reseller, suggests that the primary focus was on fulfilling the DoD's specific hardware needs rather than promoting small business participation through this particular vehicle.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the contracting officer's representative (COR) within the Defense Information Systems Agency (DISA). Transparency is facilitated through contract award databases like FPDS. Accountability measures are inherent in the firm fixed-price structure, requiring the contractor to deliver specified goods within the agreed budget.

Related Government Programs

DoD Cybersecurity Modernization Programs
Defense Information Systems Agency (DISA) Network Infrastructure
Next Generation Firewalls
Network Security Appliances Procurement

Risk Flags

Potential for vendor lock-in
Technological obsolescence risk
Reliance on specific vendor's security architecture

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.2 million to CDW GOVERNMENT LLC. PALO ALTO NETWORKS VM-300

Who is the contractor on this award?

The obligated recipient is CDW GOVERNMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $47.2 million.

What is the period of performance?

Start: 2016-06-29. End: 2019-07-31.

What is the track record of CDW Government LLC in fulfilling large federal IT contracts?

CDW Government LLC has a substantial track record of fulfilling federal IT contracts, often acting as a reseller and integrator for a wide range of technology solutions. They are a frequent awardee across various federal agencies, including the Department of Defense, for hardware, software, and related services. Their experience typically involves managing complex supply chains and ensuring timely delivery of IT equipment. While specific performance metrics for individual contracts are not publicly detailed, their consistent presence in federal procurement indicates a capacity to meet government requirements. The firm fixed-price nature of this particular contract suggests a focus on delivering defined products, where CDW's role would be to procure and deliver the specified Palo Alto Networks hardware efficiently.

How does the pricing of this contract compare to similar cybersecurity hardware procurements?

Direct, granular pricing comparisons for specific hardware models like the Palo Alto Networks VM-300 are challenging due to variations in configurations, support packages, and volume discounts negotiated in different contracts. However, the total contract value of $47.2 million over its duration, awarded under full and open competition with four bidders, suggests competitive pricing. Enterprise-grade cybersecurity appliances from leading vendors are inherently expensive, reflecting advanced technology and research and development costs. The presence of multiple bidders indicates that CDW Government LLC's pricing was competitive against other potential suppliers, implying a fair market value was achieved for the DoD at the time of award.

What are the primary risks associated with this type of cybersecurity hardware contract?

The primary risks associated with this type of cybersecurity hardware contract include potential vendor lock-in, where the agency becomes heavily reliant on a single vendor's ecosystem, making future transitions difficult and potentially costly. There's also a risk of technological obsolescence; cybersecurity threats evolve rapidly, and hardware procured today might become less effective or outdated over its lifecycle. Ensuring adequate technical support and maintenance services are included and performant is another key risk area. Finally, integration challenges with existing IT infrastructure can pose risks if not properly managed during deployment. The firm fixed-price nature mitigates financial risk but places the onus on the contractor to manage technical execution risks.

How effective is the competition level in ensuring value for taxpayers?

The competition level, with four bidders participating in this full and open solicitation, is generally effective in ensuring value for taxpayers. When multiple qualified vendors compete, they are incentivized to offer their most competitive pricing and terms to win the contract. This process helps prevent inflated pricing and encourages efficiency. The presence of four bidders suggests a healthy market for these specific cybersecurity solutions, indicating that the government is likely receiving a fair market price. Without this competition, a sole-source or limited-source award could result in higher costs for the taxpayer.

What is the historical spending pattern for similar cybersecurity solutions by the DoD?

The Department of Defense historically represents one of the largest government spenders on cybersecurity solutions, driven by the critical need to protect national security information and infrastructure. Spending in this area encompasses a wide range of products and services, including network security hardware (firewalls, intrusion detection systems), software solutions (antivirus, endpoint protection), cybersecurity services (threat intelligence, incident response), and personnel training. Annual spending often runs into the billions of dollars across various agencies and programs. Contracts for advanced hardware like Palo Alto Networks appliances are common, reflecting the ongoing investment in maintaining a strong cyber defense posture against sophisticated adversaries.

What are the implications of this contract being a Delivery Order under a larger contract vehicle?

This contract being a Delivery Order (DO) implies it was issued under a pre-existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract or similar multiple-award contract vehicle. This approach allows agencies to procure goods and services efficiently without needing to conduct a full, separate competition for each individual purchase. The initial competition occurred when the parent IDIQ contract was awarded. For this specific DO, the competition level (full and open) indicates that multiple vendors on that IDIQ were likely solicited, or it was competed broadly if the parent contract allowed. This method streamlines procurement, potentially reduces administrative burden, and can offer better pricing through pre-negotiated terms, benefiting taxpayers by leveraging established agreements.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CDW Corporation (UEI: 808068253)

Address: 230 N MILWAUKEE AVE, VERNON HILLS, IL, 60061

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $56,299,996

Exercised Options: $47,224,996

Current Obligation: $47,224,996

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: NNG15SC28B

IDV Type: GWAC

Timeline