DHS awarded $11.18M for Microsoft software, raising questions about value and competition

Contract Overview

Contract Amount: $11,182,414 ($11.2M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2006-09-30

End Date: 2008-03-15

Contract Duration: 532 days

Daily Burn Rate: $21.0K/day

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MICROSOFT SOFTWARE

Place of Performance

Location: SPRINGFIELD, FAIRFAX County, VIRGINIA, 22153

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $11.2 million to MICROSOFT CORPORATION for work described as: MICROSOFT SOFTWARE Key points: 1. The contract's value appears high for a two-year software acquisition, necessitating a closer look at pricing benchmarks. 2. Limited competition is indicated, suggesting potential for inflated costs and reduced taxpayer value. 3. The duration of the contract and its delivery order nature warrant scrutiny regarding long-term software needs. 4. Performance context is minimal, making it difficult to assess the effectiveness of the software procured. 5. This contract falls within the broader IT sector, specifically software licensing and support.

Value Assessment

Rating: questionable

Benchmarking the $11.18 million cost for Microsoft software over approximately 1.5 years is challenging without specific product details. However, given the duration and the nature of software licensing, this amount could represent a significant investment. Comparing it to similar large-scale Microsoft enterprise agreements or specific product licenses would be necessary to determine if the pricing is competitive. The lack of detailed justification for the cost raises concerns about whether the government secured the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

The provided data does not specify the competition level for this contract. If it was competed, the number of bidders and the process would be crucial. If it was sole-source or limited, it could explain higher costs and reduced innovation. Understanding the procurement strategy is key to assessing whether the agency explored all available options to secure competitive pricing and optimal solutions for its software needs.

Taxpayer Impact: If competition was limited, taxpayers may have paid a premium for the software. A more competitive process could have driven down costs and potentially led to better terms or alternative solutions.

Public Impact

U.S. Customs and Border Protection officers and personnel benefit from access to essential Microsoft software. The software likely supports critical border security and operational functions within CBP. The geographic impact is national, supporting CBP operations across various locations. Workforce implications include enabling employees to perform their duties efficiently with standard software tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpayment due to lack of clear competition.
Risk of vendor lock-in with Microsoft software.
Uncertainty regarding the necessity and scope of the software purchased.
Lack of transparency on specific software products and licensing terms.

Positive Signals

Procurement of essential software for a critical government agency.
Potential for standardized IT infrastructure across CBP.
Long-term relationship with a major software provider can ensure stability.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically software publishers and licensing. The market for enterprise software, particularly from major vendors like Microsoft, is substantial. Government spending on software is a significant portion of overall IT expenditures, often driven by the need for standardized operating systems, productivity suites, and specialized applications. Benchmarking this contract would involve comparing it to other large federal software procurements or commercial enterprise agreements for similar Microsoft products.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from this specific award. The focus appears to be on a direct acquisition from a large software vendor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Homeland Security's internal procurement review processes and potentially the U.S. Customs and Border Protection's program management. Transparency is limited by the available data, as details on the specific software, justification for the award, and competition level are not fully disclosed. Inspector General oversight could be triggered if specific concerns regarding waste, fraud, or abuse arise.

Related Government Programs

Microsoft Enterprise Agreements
Federal Civilian IT Procurement
Software Licensing and Maintenance
Department of Homeland Security IT Spending

Risk Flags

Potential for non-competitive award.
Lack of detailed justification for cost.
Unclear scope of software procured.
High dollar value for a relatively short period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $11.2 million to MICROSOFT CORPORATION. MICROSOFT SOFTWARE

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $11.2 million.

What is the period of performance?

Start: 2006-09-30. End: 2008-03-15.

What specific Microsoft software products and licenses were acquired under this contract?

The provided data does not specify the exact Microsoft software products or the type of licenses procured. It only indicates 'MICROSOFT SOFTWARE' as the description. This lack of specificity makes it difficult to assess the value proposition or compare costs effectively. Federal agencies typically procure a range of software, including operating systems (e.g., Windows), productivity suites (e.g., Microsoft Office/365), server software, and specialized applications. Understanding the precise software suite is crucial for determining if the $11.18 million expenditure was justified and aligned with the agency's operational needs.

How does the $11.18 million cost compare to market rates for similar Microsoft software over the contract period?

Directly comparing the $11.18 million cost to market rates is challenging without knowing the specific software and license types. However, for a contract spanning approximately 1.5 years (September 30, 2006, to March 15, 2008), this represents a substantial investment. Large enterprise agreements with Microsoft can vary significantly in price based on volume, specific products, support levels, and negotiated discounts. To assess value, this cost should be benchmarked against publicly available pricing for similar enterprise licenses, or against other federal agency procurements of comparable Microsoft software suites. The absence of detailed pricing justification in the provided data suggests a potential for the government not securing the most cost-effective solution.

What was the procurement process, and what level of competition was involved?

The provided data does not explicitly state the procurement method or the level of competition. The contract type is 'FIRM FIXED PRICE' and the award type is 'DELIVERY ORDER', suggesting it might be part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a pre-negotiated agreement. Without knowing if this was a sole-source award, a limited competition, or a full and open competition, it's impossible to assess the impact on price discovery and taxpayer value. A competitive process typically leads to better pricing and terms for the government. If this was not competed, it raises questions about whether the agency explored all avenues to obtain the best value.

What is the track record of Microsoft Corporation as a federal contractor, particularly for software?

Microsoft Corporation is a long-standing and major provider of software to the U.S. federal government, with a vast history of contracts across numerous agencies. They are a primary vendor for operating systems, productivity software, and server technologies. Their track record generally involves providing widely adopted and standardized software solutions. While they are a dominant player, their pricing and contract terms are often subject to scrutiny due to their market position. Federal agencies frequently rely on Microsoft products, making them a consistent, albeit sometimes costly, supplier. Past performance reviews and specific contract audits would provide a more granular view of their federal contracting history.

How does this contract fit into the broader IT spending patterns of the Department of Homeland Security?

This $11.18 million contract for Microsoft software represents a component of the Department of Homeland Security's (DHS) overall IT budget. DHS, like many large federal agencies, relies heavily on commercial off-the-shelf (COTS) software for its diverse operations, including cybersecurity, border management, and intelligence. Spending on software licenses and support is a significant and recurring expense. This particular contract, awarded to U.S. Customs and Border Protection (CBP), likely supported essential functions within that agency. Analyzing this contract in isolation provides limited insight, but viewed within the context of DHS's total IT spending, it highlights the agency's dependence on major software vendors and the associated financial commitments.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Contractor Details

Address: ONE MICROSOFT WAY, REDMOND, WA, 98052

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,080,264

Exercised Options: $15,080,264

Current Obligation: $11,182,414

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HSBP1006D01352

IDV Type: IDC

Timeline