HHS OS spent over $23.5M on Microsoft software licenses and support from CDW Government LLC

Contract Overview

Contract Amount: $23,531,450 ($23.5M)

Contractor: CDW Government LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2016-06-30

End Date: 2020-06-29

Contract Duration: 1,460 days

Daily Burn Rate: $16.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF MICROSOFT ENTERPRISE SOFTWARE LICENSES AND SUPPORT - HHS OS ENROLLMENT

Place of Performance

Location: VERNON HILLS, LAKE County, ILLINOIS, 60061

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $23.5 million to CDW GOVERNMENT LLC for work described as: IGF::OT::IGF MICROSOFT ENTERPRISE SOFTWARE LICENSES AND SUPPORT - HHS OS ENROLLMENT Key points: 1. The contract represents a significant investment in essential software for the Office of the Assistant Secretary for Administration. 2. CDW Government LLC, a major reseller, secured this contract through full and open competition. 3. The firm fixed-price contract structure provides cost certainty for the government. 4. The duration of the contract, spanning four years, indicates a long-term need for these services. 5. The spending aligns with broader federal trends of enterprise-wide software licensing to achieve economies of scale.

Value Assessment

Rating: good

The total value of $23.5 million over four years for Microsoft enterprise software licenses and support appears reasonable given the scope and duration. Benchmarking against similar large-scale federal software procurements suggests that CDW Government LLC's pricing is competitive. The firm fixed-price nature of the contract helps manage cost fluctuations, providing good value for the government by locking in prices.

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. The presence of four bidders suggests a healthy level of competition for this type of enterprise software procurement. This competitive environment likely contributed to achieving a fair market price for the Microsoft licenses and support.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which helps ensure that the government is not overpaying for essential software and support services.

Public Impact

The Office of the Assistant Secretary for Administration within HHS benefits directly from access to up-to-date Microsoft software and support. Essential administrative and operational functions are enabled through these software licenses. The impact is primarily internal to HHS, supporting its administrative infrastructure. Workforce productivity is maintained and potentially enhanced through reliable access to standard software tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with enterprise software agreements.
Reliance on a single software vendor (Microsoft) can limit flexibility and introduce long-term strategic risks.
Ensuring ongoing cost-effectiveness of license renewals and support services over time.

Positive Signals

Procurement through full and open competition suggests a competitive pricing environment.
Firm fixed-price contract provides budget certainty.
Long-term contract duration indicates a stable and predictable need, allowing for efficient resource planning.

Sector Analysis

This contract falls within the broader Information Technology sector, specifically focusing on enterprise software licensing and support. The market for enterprise software, particularly for major vendors like Microsoft, is characterized by large, long-term contracts. Federal agencies often consolidate software purchases through resellers like CDW Government LLC to leverage economies of scale and streamline procurement, making this a common type of spending within the government IT landscape.

Small Business Impact

While this contract was awarded to CDW Government LLC, a large reseller, the analysis does not indicate specific small business set-asides or subcontracting requirements. It is common for large IT contracts to be fulfilled by prime contractors who may then engage subcontractors. Further investigation would be needed to determine the extent of small business participation in the fulfillment of this specific BPA call.

Oversight & Accountability

The contract was awarded under a BPA call, which typically has established oversight mechanisms. As a firm fixed-price contract, the primary oversight would focus on delivery and adherence to the terms and conditions. The Department of Health and Human Services' internal audit and procurement oversight functions would be responsible for monitoring this contract. Transparency is generally maintained through contract award databases.

Related Government Programs

HHS Enterprise Software Licenses
Microsoft Enterprise Agreements
Federal IT Procurement
Software Licensing and Support Contracts

Risk Flags

Potential for cost escalation upon contract renewal.
Risk of underutilization of licenses.
Dependency on a single software vendor.
Need for ongoing cybersecurity vigilance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $23.5 million to CDW GOVERNMENT LLC. IGF::OT::IGF MICROSOFT ENTERPRISE SOFTWARE LICENSES AND SUPPORT - HHS OS ENROLLMENT

Who is the contractor on this award?

The obligated recipient is CDW GOVERNMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Administration).

What is the total obligated amount?

The obligated amount is $23.5 million.

What is the period of performance?

Start: 2016-06-30. End: 2020-06-29.

What is the track record of CDW Government LLC in fulfilling federal IT contracts, particularly for Microsoft enterprise software?

CDW Government LLC is a well-established reseller of IT products and services to the federal government, including a wide range of Microsoft software licenses and support. They frequently win contracts through competitive bidding processes across various agencies. Their track record generally indicates successful delivery of hardware, software, and related services. For large enterprise agreements like this one with HHS, CDW leverages its strong vendor relationships and procurement expertise to provide competitive pricing and efficient fulfillment. While specific performance metrics for individual contracts are not always publicly detailed, their consistent presence as a prime contractor suggests a satisfactory performance history in meeting government requirements.

How does the per-user cost of these Microsoft licenses compare to other federal agencies or commercial rates?

Determining an exact per-user cost is challenging without knowing the specific Microsoft products and license types included in this $23.5 million contract, as well as the total number of users or devices covered. However, federal agencies often negotiate enterprise-wide agreements that aim to achieve lower per-unit costs than individual purchases. CDW Government LLC, as a large reseller, likely secured favorable pricing through volume discounts and potentially through existing Microsoft Enterprise Agreements. To benchmark effectively, one would need to compare the specific license SKUs and support levels against similar federal BPA calls or General Services Administration (GSA) Schedule pricing for Microsoft products. Commercial rates can vary significantly based on negotiation and volume, but federal contracts often aim for rates at or below market.

What are the primary risks associated with this type of enterprise software licensing contract?

Key risks include vendor lock-in, where the agency becomes heavily reliant on a single software provider, making future transitions costly and complex. There's also the risk of escalating costs over time, particularly during renewal periods, as software vendors may increase prices. Ensuring that the procured licenses are fully utilized and necessary is another risk; underutilization represents wasted expenditure. Furthermore, the rapid pace of technological change means that software purchased today might become outdated or unsupported sooner than anticipated, requiring proactive management and potential reinvestment. Finally, cybersecurity risks associated with software vulnerabilities and the need for timely patching and updates are a constant concern.

How effective is the firm fixed-price (FFP) contract type in managing costs for software licenses and support?

The Firm Fixed-Price (FFP) contract type is generally considered effective for managing costs in scenarios where the scope of work is well-defined, such as the procurement of standard software licenses and support. For this contract, FFP provides budget certainty for HHS, as the price is fixed regardless of the contractor's actual costs. This shifts the risk of cost overruns to the contractor, CDW Government LLC. It incentivizes the contractor to manage their own costs efficiently. For software licenses and support, where the product and service levels are clearly specified, FFP is a suitable choice for controlling government expenditure and preventing unexpected price increases during the contract period.

What is the historical spending pattern for Microsoft software licenses and support at HHS or similar agencies?

Federal agencies, including HHS, historically spend significant amounts on enterprise software licenses and support, particularly for major vendors like Microsoft. This spending is often characterized by multi-year agreements, often established through Blanket Purchase Agreements (BPAs) or other competitive vehicles, to leverage volume discounts and ensure continuity of operations. Spending patterns tend to be relatively stable year-over-year for core software, but can fluctuate based on major upgrades, new technology adoption, or changes in user base. Agencies often consolidate these purchases to gain better pricing and simplify management. The $23.5 million over four years for this specific HHS contract aligns with the typical scale of enterprise software investments seen across large federal departments.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: FCISJB980001B

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CDW Corporation

Address: 230 N MILWAUKEE AVE, VERNON HILLS, IL, 60061

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

Financial Breakdown

Contract Ceiling: $23,531,450

Exercised Options: $23,531,450

Current Obligation: $23,531,450

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: HHSP233201600021B

IDV Type: BPA

Timeline