DoD's $28.8M Microsoft Consulting Services contract awarded to Microsoft Corporation shows limited competition

Contract Overview

Contract Amount: $28,860,921 ($28.9M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2018-06-08

End Date: 2023-06-07

Contract Duration: 1,825 days

Daily Burn Rate: $15.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF MICROSOFT CONSULTING SERVICE LABOR

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92152

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $28.9 million to MICROSOFT CORPORATION for work described as: IGF::OT::IGF MICROSOFT CONSULTING SERVICE LABOR Key points: 1. Contract awarded on a sole-source basis, raising questions about price competitiveness. 2. Significant duration of 5 years suggests a long-term reliance on Microsoft's expertise. 3. Focus on Computer Systems Design Services indicates a need for specialized IT support. 4. Awarded by the Department of Defense, highlighting critical national security implications. 5. California location for service delivery may point to specific regional IT infrastructure needs. 6. Firm Fixed Price contract type offers cost certainty but may limit flexibility.

Value Assessment

Rating: questionable

The contract's value of $28.8 million over five years for Microsoft consulting services warrants scrutiny due to the sole-source award. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition suggests potential overpayment or a missed opportunity to secure more favorable terms. Further analysis would be needed to determine if the services provided align with industry standards for similar engagements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Microsoft Corporation, was considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple vendors. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also reduces transparency and accountability in the procurement process.

Public Impact

The Department of Defense benefits from specialized IT consulting services to maintain and enhance its complex systems. Services delivered likely include system design, implementation, and support for Microsoft-based technologies within DoD infrastructure. Geographic impact is centered in California, suggesting support for regional DoD IT operations or facilities. Workforce implications may involve augmenting existing DoD IT staff with external Microsoft expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long contract duration (5 years) may indicate a lack of viable alternatives or strategic vendor lock-in.
Lack of competition raises concerns about the government's ability to negotiate favorable terms and conditions.
Absence of small business participation noted, potentially missing opportunities to support smaller IT firms.

Positive Signals

Award to a single, established vendor like Microsoft may ensure access to critical expertise and support.
Firm Fixed Price contract provides budget certainty for the Department of Defense.
The contract addresses a specific need for Computer Systems Design Services, indicating a focused requirement.

Sector Analysis

This contract falls within the IT services sector, specifically Computer Systems Design Services. The market for such services is vast, with significant government spending directed towards IT modernization and support. Benchmarking this contract's value is challenging without competitive data, but it represents a portion of the overall IT spending within the defense sector, which is a major consumer of these services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The sole-source nature of the award further suggests that opportunities for small businesses to participate as prime contractors or even subcontractors may have been limited. This could represent a missed opportunity to foster small business growth within the federal IT contracting ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management offices. The Defense Contract Management Agency (DCMA) may also play a role in monitoring performance and compliance. Transparency is limited due to the sole-source nature, and specific Inspector General jurisdiction would depend on the nature of any potential issues investigated.

Related Government Programs

Microsoft Enterprise Agreements
DoD IT Modernization Programs
Computer Systems Design Services Contracts
Defense Information Technology Support

Risk Flags

Sole-source award
Lack of competition
Potential for overpayment
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.9 million to MICROSOFT CORPORATION. IGF::OT::IGF MICROSOFT CONSULTING SERVICE 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 $28.9 million.

What is the period of performance?

Start: 2018-06-08. End: 2023-06-07.

What is the historical spending pattern for Microsoft consulting services within the Department of Defense?

Analyzing historical spending on Microsoft consulting services within the DoD is crucial for context. While this specific contract is for $28.8 million over five years, understanding previous awards for similar services, whether sole-source or competed, can reveal trends. For instance, has the DoD consistently relied on sole-source awards for Microsoft services, or are there instances of competitive bidding? Examining the total expenditure on Microsoft-related IT services over the past decade would provide a clearer picture of the government's investment and identify potential areas for cost savings or improved procurement strategies. Without access to broader historical data, it's difficult to ascertain if this $28.8 million represents an anomaly or a standard expenditure.

How does the pricing of this contract compare to similar IT consulting services awarded competitively?

Directly comparing the pricing of this sole-source Microsoft consulting contract to competitively awarded IT services is challenging due to the lack of a competitive benchmark. Typically, competitive bidding allows agencies to secure lower prices through market forces. If similar Computer Systems Design Services were procured through full and open competition, the number of bidders and the resulting price spread would offer valuable insights. Without this comparison, it's difficult to definitively assess if the $28.8 million represents fair market value. Further investigation into the specific services rendered and their market rates would be necessary to provide a more robust value-for-money assessment.

What are the specific risks associated with awarding a large IT services contract on a sole-source basis?

Awarding a significant IT services contract like this one ($28.8 million) on a sole-source basis carries several risks. Primarily, it eliminates the potential for cost savings that competition typically provides, potentially leading to overpayment. It also reduces transparency in the procurement process, making it harder to justify the expenditure. Furthermore, sole-source awards can foster vendor lock-in, making it difficult and costly to switch providers in the future. There's also a risk that the government may not receive the most innovative solutions available in the market, as competition often drives creativity and efficiency. Finally, it can create perceptions of favoritism or a lack of due diligence in seeking the best value for taxpayer dollars.

What is the track record of Microsoft Corporation as a federal contractor, particularly in IT services?

Microsoft Corporation has a long and extensive track record as a federal contractor, providing a wide array of IT products and services to various government agencies. They are a dominant player in the software and cloud computing markets, and their engagement with the federal government spans decades. Historically, Microsoft has secured numerous large contracts for software licenses, cloud services (like Azure), and IT consulting. While their track record is generally strong in terms of delivering products and services, the nature of their contracts, including sole-source awards for specialized services, often raises questions about pricing and competition, similar to this contract. Their ability to secure significant sole-source awards suggests a deep integration with government IT infrastructure and a recognized expertise in their domain.

What is the justification provided for awarding this contract as sole-source?

The provided data does not include the specific justification for awarding this contract as sole-source. Typically, sole-source awards require a formal justification citing reasons such as unique capabilities, urgent needs, or the unavailability of other sources. For a company like Microsoft, justifications often revolve around the need for specialized expertise directly related to their proprietary software and systems, where no other vendor can provide the required support or integration services. Without the official justification document, it is impossible to definitively state the rationale behind this specific award, but it likely centers on Microsoft's unique position as the developer and provider of the technology requiring support.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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: $28,860,921

Exercised Options: $28,860,921

Current Obligation: $28,860,921

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102817D0001

IDV Type: IDC

Timeline