DoD's $29.3M Microsoft Consulting Services Contract Awarded to Microsoft Corporation

Contract Overview

Contract Amount: $29,297,300 ($29.3M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2017-09-29

End Date: 2018-09-29

Contract Duration: 365 days

Daily Burn Rate: $80.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF MICROSOFT CONSULTING SERVICES - LABOR

Place of Performance

Location: FORT BELVOIR, FAIRFAX County, VIRGINIA, 22060

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $29.3 million to MICROSOFT CORPORATION for work described as: IGF::OT::IGF MICROSOFT CONSULTING SERVICES - LABOR Key points: 1. Contract awarded to incumbent vendor, raising questions about competition. 2. Fixed-price contract type suggests cost certainty, but scope creep is a potential risk. 3. Services fall under Computer Systems Design, a common IT support category. 4. Limited competition may lead to higher prices than a fully competed contract. 5. Performance period of one year limits long-term strategic assessment. 6. Geographic location in Virginia is noted, but specific impact is unclear.

Value Assessment

Rating: fair

The contract value of $29.3 million for one year of Microsoft consulting services appears to be within a reasonable range for large-scale IT support. However, without a benchmark against similar, competitively procured contracts for comparable services, a definitive value-for-money assessment is challenging. The firm fixed-price structure provides cost predictability, but the absence of competition could mean taxpayers are not receiving the most economical pricing available in the market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Microsoft Corporation, was considered. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities or urgent needs), they typically result in less price discovery and potentially higher costs compared to contracts awarded through full and open competition with multiple bidders.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium, as there was no pressure on the contractor to offer the lowest possible price.

Public Impact

The Department of Defense benefits from specialized IT consulting services. Services likely support the maintenance and optimization of Microsoft software and systems within DoD. The geographic impact is concentrated in Virginia, where the Defense Information Systems Agency is located. Workforce implications are likely related to IT support personnel and specialized Microsoft expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Lack of transparency in the sole-source justification.
Potential for vendor lock-in with Microsoft-specific services.

Positive Signals

Firm fixed-price contract provides cost certainty.
Award to incumbent vendor may ensure continuity of essential services.

Sector Analysis

This contract falls within the IT services sector, specifically Computer Systems Design. The market for IT consulting services is vast and highly competitive, with numerous firms offering specialized expertise. However, for vendor-specific services like those from Microsoft, the market can become more concentrated. Benchmarking this contract's value against other sole-source or limited-competition IT support contracts for similar government agencies would provide further context.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature of the award to Microsoft Corporation, there are no direct subcontracting implications for small businesses stemming from this specific award mechanism. The focus is on the prime contractor's capabilities rather than fostering small business participation through set-asides.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Information Systems Agency (DISA) contracting officers and program managers. Accountability measures would be defined in the contract's terms and conditions, including performance standards and payment schedules. Transparency is limited due to the sole-source nature of the award, with details of the justification for not competing likely residing within agency procurement files.

Related Government Programs

Microsoft Software Licensing
IT Professional Services
Computer Systems Design Services
Defense Information Systems Agency Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.3 million to MICROSOFT CORPORATION. IGF::OT::IGF MICROSOFT CONSULTING SERVICES - LABOR

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $29.3 million.

What is the period of performance?

Start: 2017-09-29. End: 2018-09-29.

What is the track record of Microsoft Corporation in delivering similar IT consulting services to the Department of Defense?

Microsoft Corporation, as a major technology provider, has a long-standing relationship with the Department of Defense (DoD) and other federal agencies, delivering a wide array of IT services and products. Their track record includes providing software licenses, cloud services (like Azure Government), cybersecurity solutions, and professional services for system integration and support. For IT consulting specifically, Microsoft often engages through various contract vehicles, including direct professional services agreements and through partners. While this specific contract focuses on consulting, Microsoft's broader engagement with the DoD suggests a deep understanding of its complex IT environment and requirements. However, the effectiveness and value of their consulting services can vary depending on the specific project scope, the expertise of the assigned personnel, and the oversight provided by the government.

How does the pricing of this contract compare to similar IT consulting services procured by the government?

Directly comparing the pricing of this $29.3 million sole-source contract to similar IT consulting services is challenging without access to detailed pricing structures and market benchmarks for competitively awarded contracts. Sole-source awards, by their nature, bypass the price competition that typically drives down costs. If this contract were competed, it's plausible that multiple vendors would bid, potentially offering lower rates or more cost-effective solutions. To perform a robust comparison, one would need to analyze the labor categories, hours, and rates against established government-wide IT contract vehicles (like GSA schedules or NASA SEWP) or against other sole-source awards for comparable services, considering the specific expertise and scope required.

What are the primary risks associated with this sole-source contract for Microsoft consulting services?

The primary risk associated with this sole-source contract is the potential for inflated costs due to the lack of competitive bidding. Without competing offers, Microsoft may not have been incentivized to offer its most competitive pricing. Another significant risk is the potential for vendor lock-in, where the agency becomes heavily reliant on Microsoft's proprietary services and expertise, making it difficult and costly to switch to alternative solutions or vendors in the future. Furthermore, the absence of a competitive process can reduce transparency and make it harder to ensure optimal value for taxpayer money. Scope creep is also a risk, as fixed-price contracts can sometimes be susceptible to changes in requirements that increase costs if not managed tightly.

What is the expected effectiveness of Microsoft consulting services in supporting the Defense Information Systems Agency's IT infrastructure?

The expected effectiveness of Microsoft consulting services for the Defense Information Systems Agency (DISA) hinges on several factors. Given Microsoft's deep integration into government IT systems and its role as a primary software vendor for many agencies, their consulting services are likely crucial for maintaining, optimizing, and potentially modernizing DISA's Microsoft-centric infrastructure. Effectiveness will depend on the clarity of the contract's objectives, the skill and experience of the consultants assigned, and DISA's ability to effectively manage the contract and integrate the consultants' recommendations. If the services are well-defined and executed, they can enhance system performance, security, and user support, thereby contributing to DISA's mission-critical operations.

How does this contract's spending compare to historical IT consulting expenditures within the Department of Defense?

This $29.3 million contract represents a specific expenditure within the DoD's broader IT consulting budget. The DoD is one of the largest federal agencies, with substantial and ongoing investments in IT infrastructure, software, and services. Annual IT spending across the DoD often runs into the tens of billions of dollars. Therefore, this single contract, while significant, is likely a component of a much larger IT services portfolio. To assess its historical context, one would need to examine DISA's or the DoD's historical spending on similar Microsoft-specific consulting services, looking at trends in contract values, competition levels, and the types of services procured over several fiscal years.

Industry Classification

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

Solicitation ID: HC102816R0024

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: $29,297,300

Exercised Options: $29,297,300

Current Obligation: $29,297,300

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102817D0001

IDV Type: IDC

Timeline