Microsoft Corporation awarded $31.9M for DISA unified support, a sole-source contract for computer systems design

Contract Overview

Contract Amount: $31,936,627 ($31.9M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2022-11-01

End Date: 2026-10-31

Contract Duration: 1,460 days

Daily Burn Rate: $21.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: UNIFIED SUPPORT FOR DISA ORGANIZATIONS (DOD) AND DISA CUSTOMERS

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $31.9 million to MICROSOFT CORPORATION for work described as: UNIFIED SUPPORT FOR DISA ORGANIZATIONS (DOD) AND DISA CUSTOMERS Key points: 1. Contract awarded to a single vendor, limiting potential cost savings from competition. 2. Pricing appears to be a firm fixed price, offering predictability but potentially less flexibility. 3. The contract duration extends over four years, indicating a long-term need for these services. 4. This award represents a significant investment in supporting Defense Information Systems Agency (DISA) operations. 5. The services fall under computer systems design, a critical area for defense information infrastructure.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. The award amount of $31.9 million over four years suggests a substantial investment in IT support for DISA. Without comparable contracts or market data for similar sole-source procurements, it's difficult to definitively assess if the pricing represents excellent value. However, the firm fixed-price structure provides cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means that the government did not explore offers from multiple potential providers, which could limit price discovery and potentially lead to higher costs than a competitive process.

Taxpayer Impact: Taxpayers may not benefit from the cost efficiencies typically achieved through competitive bidding. The absence of multiple offers means there was no direct pressure on pricing from market forces.

Public Impact

The primary beneficiaries are the Defense Information Systems Agency (DISA) and its associated organizations, receiving essential IT support. Services delivered include computer systems design and unified support, crucial for maintaining defense information infrastructure. The geographic impact is centered around DISA operations, likely supporting military and government personnel nationwide. Workforce implications include the continued employment of personnel by Microsoft to fulfill this contract, supporting IT functions within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in due to the long-term nature of the contract.

Positive Signals

Firm fixed-price contract provides cost certainty.
Long-term duration indicates a stable and ongoing need for services.
Award to a major IT provider suggests access to established expertise.

Sector Analysis

The IT services sector, particularly within defense, is characterized by complex requirements and significant government spending. This contract for computer systems design and unified support for DISA falls within the broader category of IT professional services. The market for such services is large, with numerous providers, but specialized defense needs often lead to specific vendor selections. Benchmarking against similar IT support contracts within the Department of Defense would provide further context on the scale and nature of this award.

Small Business Impact

This contract was awarded to Microsoft Corporation and does not appear to have a small business set-aside component. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, as it is a direct award to a large prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Information Systems Agency (DISA) and the Department of Defense's contracting and financial management offices. Accountability measures are inherent in the firm fixed-price structure, requiring delivery of specified services. Transparency is limited due to the sole-source nature of the award, with justifications for such awards usually available through official channels. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Information Systems Agency (DISA) Operations Support
Department of Defense IT Services
Computer Systems Design Services
Unified Support Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for higher costs due to no competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.9 million to MICROSOFT CORPORATION. UNIFIED SUPPORT FOR DISA ORGANIZATIONS (DOD) AND DISA CUSTOMERS

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 $31.9 million.

What is the period of performance?

Start: 2022-11-01. End: 2026-10-31.

What is the track record of Microsoft Corporation in fulfilling similar IT support contracts for the Department of Defense?

Microsoft Corporation has a long-standing and extensive track record of providing a wide array of IT products and services to the Department of Defense (DoD) and other federal agencies. This includes software licensing, cloud services (Azure Government), cybersecurity solutions, and various IT support and professional services. Their experience spans numerous large-scale, complex contracts, demonstrating a capacity to manage significant IT requirements. For DISA specifically, Microsoft has been a key provider of foundational technologies and support, underpinning many of its critical information systems. The company's deep integration with government IT infrastructure and its ability to scale resources make it a frequent choice for defense-related IT procurements, including those requiring specialized support and system design.

How does the value of this contract compare to other IT support contracts awarded by DISA or the DoD?

The $31.9 million award for unified support and computer systems design over four years positions this contract as a moderately sized IT services procurement within the Department of Defense (DoD). DISA, in particular, manages a vast portfolio of IT contracts, many of which are significantly larger, often in the hundreds of millions or even billions of dollars, especially for major system development, sustainment, or large-scale cloud migrations. However, compared to smaller, task-order-based IT support contracts, this award represents a substantial, long-term commitment. Without specific benchmarks for 'unified support' contracts, direct comparison is difficult, but it aligns with the typical investment level for dedicated, comprehensive IT support services for a critical agency like DISA.

What are the primary risks associated with a sole-source award for critical IT support?

The primary risks associated with a sole-source award for critical IT support, such as this contract for DISA, revolve around cost, innovation, and vendor dependency. Without competition, there is a reduced incentive for the contractor to offer the most competitive pricing, potentially leading to higher costs for the government and taxpayers. The lack of multiple bidders also means the government foregoes the opportunity to explore diverse technical solutions or innovative approaches that other vendors might offer. Furthermore, a sole-source award can lead to vendor lock-in, making it difficult and costly to switch providers in the future, especially if the incumbent becomes deeply integrated into the agency's systems and processes. This dependency can reduce the government's leverage in future negotiations.

How effective is the firm fixed-price contract type in managing IT support services for DISA?

The firm fixed-price (FFP) contract type is generally considered effective for managing IT support services when the scope of work is well-defined and unlikely to change significantly. For DISA's unified support and computer systems design, an FFP contract provides cost certainty for the government, as the contractor assumes the risk of cost overruns. This structure incentivizes the contractor to perform efficiently to maximize profit. It is effective in controlling budget expenditures and simplifying financial administration. However, if unforeseen technical challenges arise or requirements evolve substantially, an FFP contract can become rigid, potentially leading to change order negotiations or a need for contract modifications, which can add complexity and cost.

What are the historical spending patterns for computer systems design services at DISA?

Historical spending patterns for computer systems design services at DISA indicate a consistent and significant investment in maintaining and evolving its complex IT infrastructure. DISA, as the primary IT provider for the DoD, relies heavily on external expertise for system design, integration, and modernization. Spending in this category typically fluctuates based on major modernization initiatives, cybersecurity upgrades, and the adoption of new technologies like cloud computing. While specific historical figures for 'computer systems design' alone are not readily available without deeper database access, DISA's overall IT budget runs into billions annually, with a substantial portion allocated to services that encompass system design, development, and integration. Awards like this $31.9M contract are indicative of ongoing, substantial investments in these critical capabilities.

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: $33,321,876

Exercised Options: $33,321,876

Current Obligation: $31,936,627

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102817D0001

IDV Type: IDC

Timeline