DoD's $42M software purchase from Carahsoft Technology Corp. shows fair value despite limited competition

Contract Overview

Contract Amount: $41,961,600 ($42.0M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of Defense

Start Date: 2020-08-31

End Date: 2021-08-30

Contract Duration: 364 days

Daily Burn Rate: $115.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SOFTWARE

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $42.0 million to CARAHSOFT TECHNOLOGY CORP for work described as: SOFTWARE Key points: 1. Value for money appears reasonable given the market for enterprise software licenses. 2. Competition dynamics indicate a limited but potentially effective bidding process. 3. Risk indicators are moderate, with a focus on contract performance and delivery. 4. Performance context suggests a need for ongoing monitoring of software utility and support. 5. Sector positioning places this contract within the broader IT and software procurement landscape.

Value Assessment

Rating: good

The contract's total value of approximately $42 million for software licenses and support appears to be within a reasonable range for enterprise-level solutions. Benchmarking against similar large-scale software procurements by federal agencies suggests that the pricing is competitive, especially considering the vendor's role as a reseller and the established pricing agreements. The firm fixed-price nature of the contract provides cost certainty, and the value is further assessed by the breadth of software covered and the duration of the agreement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. While the data shows 3 bids were received, the specific details of the bidding process and the number of potential bidders are not fully elaborated. The presence of multiple bids suggests a degree of price discovery and potential for competitive pricing, although the final selection would depend on technical merit and other evaluation factors.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging a wider range of offers and potentially driving down prices through market forces.

Public Impact

The Department of Defense is the primary beneficiary, acquiring essential software for its operations. The services delivered include software licenses and potentially associated maintenance and support. The geographic impact is likely nationwide, supporting DoD operations across various locations. Workforce implications may involve the use of this software by military and civilian personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specific software becomes deeply integrated.
Reliance on a single vendor for a broad range of software could pose supply chain risks.
Ensuring continued software updates and security patches are critical for operational effectiveness.

Positive Signals

Awarded through full and open competition, suggesting a fair process.
Firm fixed-price contract provides budget predictability.
The vendor, Carahsoft, is a well-established government IT reseller with existing contract vehicles.

Sector Analysis

This contract falls within the Software Publishers industry (NAICS 511210), a significant segment of the broader Information Technology sector. The federal government is a major consumer of software, with spending encompassing operating systems, productivity suites, specialized defense applications, and cybersecurity tools. This procurement represents a typical large-scale acquisition of commercial off-the-shelf (COTS) software, reflecting the government's reliance on industry solutions. Comparable spending benchmarks in this area are difficult to pinpoint without specific software details, but multi-million dollar software deals are common across federal agencies.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses, nor does it explicitly detail subcontracting requirements for small businesses. Carahsoft Technology Corp. is a large business. While large resellers often have programs to engage small businesses as subcontractors, the direct impact on the small business ecosystem from this specific award is not immediately clear without further subcontracting plan details.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Information Systems Agency (DISA) contracting officers and program managers. Accountability measures would be tied to the terms of the firm fixed-price contract, including delivery schedules and software functionality. Transparency is facilitated through federal procurement databases like FPDS, which record contract actions. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

General Services Administration (GSA) Schedules
Defense Information Technology Contracting Organization (DITCO) contracts
Enterprise Software Agreements (ESAs)
Commercial Off-The-Shelf (COTS) Software Procurement

Risk Flags

Potential for limited competition despite full and open award.
Reliance on a reseller may obscure direct manufacturer pricing.
Need for ongoing monitoring of software utility and support effectiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.0 million to CARAHSOFT TECHNOLOGY CORP. SOFTWARE

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $42.0 million.

What is the period of performance?

Start: 2020-08-31. End: 2021-08-30.

What is Carahsoft Technology Corp.'s track record with federal software contracts?

Carahsoft Technology Corp. is a prominent government IT reseller with a substantial track record of serving federal agencies. They frequently win contracts for software licenses, maintenance, and support across various departments, including the Department of Defense. Their business model often involves leveraging existing government-wide acquisition contracts (GWACs) and indefinite-delivery/indefinite-quantity (IDIQ) vehicles to provide a wide range of software products from numerous manufacturers. Their extensive experience suggests a familiarity with federal procurement regulations and agency needs, positioning them as a reliable, albeit large, supplier in the federal IT landscape. Analyzing their past performance on similar large-scale software awards would provide further insight into their delivery capabilities and customer satisfaction.

How does the value of this contract compare to similar software procurements by the DoD?

The $42 million value for this software contract is significant but not unusual for large enterprise software procurements within the Department of Defense. The DoD often procures software in bulk to standardize systems across its vast network or to acquire specialized capabilities. Comparing this contract's value requires knowledge of the specific software titles, quantities, and support levels. However, based on general market trends for enterprise software licenses (e.g., operating systems, productivity suites, cybersecurity tools), a multi-million dollar expenditure is typical for such large organizations. The firm fixed-price nature also suggests a defined scope, making direct value comparisons with cost-plus contracts less meaningful. Further analysis would involve benchmarking against other DoD contracts for similar software categories or against commercial enterprise deals of comparable scale.

What are the primary risks associated with this type of software procurement?

The primary risks associated with this type of software procurement include vendor lock-in, where the agency becomes heavily reliant on a specific vendor's ecosystem, making future transitions costly and complex. There's also the risk of obsolescence, as software technology evolves rapidly, potentially rendering purchased licenses outdated before their full lifecycle value is realized. Cybersecurity vulnerabilities within the software itself pose a significant risk, requiring diligent patch management and security monitoring. Furthermore, the effectiveness and adoption of the software by end-users can be a risk; if the software is not user-friendly or doesn't meet operational needs, the return on investment diminishes. Finally, the reliance on a single reseller, even if they offer multiple products, can introduce supply chain risks if that reseller faces financial or operational difficulties.

How effective is full and open competition in ensuring competitive pricing for software?

Full and open competition is generally the most effective method for ensuring competitive pricing for software, as it allows any interested and capable vendor to submit a bid. This broad participation maximizes the potential for multiple offers, which in turn drives down prices through market forces and encourages vendors to offer their best terms. However, the effectiveness can be influenced by factors such as the complexity of the software requirements, the number of vendors capable of meeting those requirements, and the specific evaluation criteria used in the selection process. In cases where the software market is dominated by a few key players or where specialized knowledge is required, even full and open competition might result in a limited number of competitive bids. For this specific contract, while awarded under full and open competition, only three bids were received, suggesting that the market for this particular software solution might not be as broad as initially anticipated.

What is the typical spending pattern for software within the Defense Information Systems Agency (DISA)?

The Defense Information Systems Agency (DISA) is a major consumer of software, reflecting its role in providing IT services and infrastructure to the Department of Defense. DISA's spending patterns typically involve large-scale procurements of enterprise software, including operating systems, network management tools, cybersecurity solutions, collaboration platforms, and specialized mission-critical applications. They often utilize various contract vehicles, such as GSA Schedules, IDIQ contracts, and BPA calls, to acquire these software licenses and associated support services. Spending can fluctuate based on modernization initiatives, cybersecurity threats, and evolving technological requirements. Analyzing DISA's historical spending data reveals a consistent demand for COTS software, alongside custom development and sustainment services, often involving significant multi-year commitments to ensure operational continuity and technological advancement across the DoD.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11493 SUNSET HILLS RD, RESTON, VA, 20190

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,961,600

Exercised Options: $41,961,600

Current Obligation: $41,961,600

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6600118A0005

IDV Type: BPA

Timeline