Navy Awards $119.5M to Microsoft for Digital Services, Underscoring Sole-Source Concerns
Contract Overview
Contract Amount: $119,542,514 ($119.5M)
Contractor: Microsoft Corporation
Awarding Agency: Department of Defense
Start Date: 2024-06-01
End Date: 2026-05-31
Contract Duration: 729 days
Daily Burn Rate: $164.0K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: MICROSOFT CONSULTING SERVICES (MCS) AND UNIFIED SUPPORT FOR THE U.S. NAVY / PROGRAM EXECUTIVE OFFICE DIGITAL AND ENTERPRISE SERVICES (PEO) DIGITAL
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92110
Plain-Language Summary
Department of Defense obligated $119.5 million to MICROSOFT CORPORATION for work described as: MICROSOFT CONSULTING SERVICES (MCS) AND UNIFIED SUPPORT FOR THE U.S. NAVY / PROGRAM EXECUTIVE OFFICE DIGITAL AND ENTERPRISE SERVICES (PEO) DIGITAL Key points: 1. Significant contract value highlights reliance on a single vendor. 2. Lack of competition raises questions about price optimization. 3. Potential risks include vendor lock-in and limited innovation. 4. IT services sector sees substantial investment in enterprise solutions.
Value Assessment
Rating: questionable
The $119.5 million award for Microsoft Consulting Services and Unified Support is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar enterprise support contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Microsoft Corporation. This limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these essential digital services.
Public Impact
The U.S. Navy is investing heavily in enterprise digital services. This award could impact the market for similar IT support services. Reliance on a single vendor for critical infrastructure poses a risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential vendor lock-in
Positive Signals
- Essential digital services for the Navy
- Long-term support agreement
Sector Analysis
This contract falls within the IT services sector, specifically computer systems design. The $119.5 million award is significant and reflects the growing demand for integrated enterprise solutions within government agencies.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as Microsoft Corporation is a large, established vendor. There is no indication of subcontracting opportunities for small businesses in this award.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government is receiving the best possible value and that justifications for non-competition are robust.
Related Government Programs
- Computer Systems Design Services
- Department of Defense Contracting
- Defense Information Systems Agency Programs
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for overpayment
- Vendor lock-in risk
- Limited innovation opportunities
Tags
computer-systems-design-services, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $119.5 million to MICROSOFT CORPORATION. MICROSOFT CONSULTING SERVICES (MCS) AND UNIFIED SUPPORT FOR THE U.S. NAVY / PROGRAM EXECUTIVE OFFICE DIGITAL AND ENTERPRISE SERVICES (PEO) DIGITAL
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 $119.5 million.
What is the period of performance?
Start: 2024-06-01. End: 2026-05-31.
What is the justification for awarding this contract on a sole-source basis?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or a lack of available alternatives that meet the specific requirements. Without further details, it's presumed that Microsoft's integrated ecosystem of products and services, coupled with their existing infrastructure within the Navy, made them the only viable option for this particular requirement.
What are the long-term risks associated with this sole-source contract for the Navy?
The primary long-term risks include vendor lock-in, where the Navy becomes heavily dependent on Microsoft's ecosystem, making future transitions difficult and costly. It also limits the ability to leverage competitive pricing for upgrades or alternative solutions, potentially leading to inflated costs over time and reduced flexibility in adopting new technologies.
How does this contract ensure the effectiveness of the Navy's digital and enterprise services?
The effectiveness is presumed to stem from the continuity of service and support provided by a known vendor with established expertise in the Navy's existing systems. Unified support aims to streamline problem resolution and maintenance, ensuring operational readiness. However, the lack of competition means effectiveness cannot be benchmarked against alternative service providers.
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: $119,542,514
Exercised Options: $119,542,514
Current Obligation: $119,542,514
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HC102817D0001
IDV Type: IDC
Timeline
Start Date: 2024-06-01
Current End Date: 2026-05-31
Potential End Date: 2026-05-31 00:00:00
Last Modified: 2025-11-25
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