DHS renews Microsoft Enterprise License for $83.8M, raising questions on value and competition

Contract Overview

Contract Amount: $83,791,047 ($83.8M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Homeland Security

Start Date: 2016-06-24

End Date: 2017-06-26

Contract Duration: 367 days

Daily Burn Rate: $228.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF MICROSOFT ENTERPRISE LICENSE RENEWAL

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20528

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $83.8 million to DELL FEDERAL SYSTEMS L.P for work described as: IGF::OT::IGF MICROSOFT ENTERPRISE LICENSE RENEWAL Key points: 1. The contract represents a significant expenditure for enterprise software licensing. 2. Competition dynamics for this renewal warrant closer examination given the nature of enterprise agreements. 3. Potential risks include vendor lock-in and the need for ongoing cost optimization. 4. Performance context is limited without specific service level agreements or usage metrics. 5. This spending falls within the broader IT services sector, specifically software licensing and maintenance.

Value Assessment

Rating: fair

The $83.8 million price tag for a one-year Microsoft enterprise license renewal appears substantial. Benchmarking against similar large-scale government software agreements is crucial to determine if this represents a fair market price. Without detailed breakdowns of included software, user counts, and support levels, a precise value-for-money assessment is challenging. However, the absence of significant price fluctuations from previous periods suggests a stable, albeit high, cost structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. However, the specific nature of enterprise software licensing, particularly for established platforms like Microsoft, can sometimes limit the practical number of competitive bids. It is important to understand how many bids were received and whether the competition effectively drove down costs or ensured the best possible terms for the government.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it promotes a competitive environment that can lead to better pricing and terms. However, the effectiveness of this competition for enterprise software renewals depends on the specific market dynamics and the number of viable bidders.

Public Impact

Federal employees within the Department of Homeland Security benefit from access to essential Microsoft software and services. The contract ensures continuity of IT operations and productivity across various DHS components. The geographic impact is nationwide, supporting DHS operations across all its locations. Workforce implications include enabling employees to utilize standard productivity tools for their daily tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep in subsequent renewals if not actively managed.
Risk of vendor lock-in with proprietary Microsoft software and services.
Dependence on a single vendor for critical enterprise software infrastructure.

Positive Signals

Ensures continuity of essential IT services for a major federal agency.
Awarded through full and open competition, suggesting a degree of market validation.
Provides access to updated software versions and security patches.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on enterprise software licensing and maintenance. The market for enterprise software, particularly from major vendors like Microsoft, is characterized by high switching costs and established vendor relationships. Government spending in this area is substantial, reflecting the critical role of software in enabling agency operations. Comparable spending benchmarks would involve analyzing other large federal agencies' software licensing agreements.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the prime contractor. The focus is on a large enterprise-level agreement likely managed by a major IT solutions provider.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Homeland Security's internal procurement and IT governance structures. Accountability measures would be tied to the terms and conditions of the contract, including service level agreements and delivery schedules. Transparency is facilitated through contract award databases, though detailed usage and cost-efficiency reports may not always be publicly available.

Related Government Programs

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

Risk Flags

High contract value
Potential for vendor lock-in
Limited visibility into specific software components and pricing breakdown

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $83.8 million to DELL FEDERAL SYSTEMS L.P. IGF::OT::IGF MICROSOFT ENTERPRISE LICENSE RENEWAL

Who is the contractor on this award?

The obligated recipient is DELL FEDERAL SYSTEMS L.P.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $83.8 million.

What is the period of performance?

Start: 2016-06-24. End: 2017-06-26.

What specific Microsoft products and services are included in this $83.8 million enterprise license renewal, and how does this compare to the previous year's offering?

The provided data does not specify the exact suite of Microsoft products and services covered under this $83.8 million renewal. Enterprise agreements typically include operating systems, productivity software (like Office 365), server licenses, and potentially cloud services. To assess value, a detailed breakdown of included components and a comparison to the prior year's offering are necessary. Changes in included services, user counts, or licensing models could significantly impact the perceived value and justify any price adjustments. Without this granular detail, it's difficult to determine if the renewal represents an equitable exchange for the services rendered.

How many bids were received for this full and open competition, and what was the range of proposed prices?

The data indicates the contract was awarded under 'FULL AND OPEN COMPETITION,' but it does not specify the number of bids received or the price range. For enterprise software renewals, especially for dominant platforms like Microsoft, the number of truly competitive bids can be limited due to specialized knowledge requirements and existing vendor relationships. Understanding the competitive landscape—how many vendors submitted proposals and their respective pricing—is crucial for assessing whether the competition effectively drove down costs and secured favorable terms for the Department of Homeland Security. A low number of bids might suggest potential market concentration or barriers to entry for other vendors.

What is the historical spending trend for Microsoft enterprise licenses at DHS, and does this $83.8 million renewal represent an increase or decrease?

The provided data only details this specific contract award from June 2016 to June 2017 for $83.8 million. To establish a historical spending trend, data from previous years' renewals of Microsoft enterprise licenses at DHS would be required. Without this historical context, it is impossible to determine if the $83.8 million figure represents an increase, decrease, or stable spending level compared to prior agreements. Analyzing past spending patterns is essential for identifying potential cost escalations, negotiating leverage, and understanding the long-term financial commitment to this software.

Are there any performance metrics or service level agreements (SLAs) associated with this contract that can be used to evaluate the contractor's performance?

The provided data does not include information on specific performance metrics or Service Level Agreements (SLAs) tied to this Microsoft enterprise license renewal. While the contract type is 'FIRM FIXED PRICE,' which generally implies a defined scope and cost, the actual performance of the licensing and support services is critical. Evaluating the contractor's effectiveness would require access to SLAs related to uptime, support response times, and software availability. Without such metrics, it is challenging to quantitatively assess whether the government is receiving adequate value and service for the $83.8 million expenditure.

What is the potential impact of this contract on small business participation within the DHS IT ecosystem?

Based on the provided data, this contract is a direct award to DELL FEDERAL SYSTEMS L.P. for Microsoft enterprise licenses. There is no explicit indication of small business set-asides or significant subcontracting requirements mentioned. Large enterprise software agreements like this often involve direct licensing from the software vendor or through major resellers, potentially limiting direct opportunities for small businesses as prime contractors. While the prime contractor might engage small businesses for related IT services, the core of this specific contract appears focused on the software itself, suggesting a limited direct impact on the small business ecosystem unless specific subcontracting plans are in place and detailed.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Dell Technologies Inc.

Address: 1 DELL WAY, ROUND ROCK, TX, 78682

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

Financial Breakdown

Contract Ceiling: $83,791,047

Exercised Options: $83,791,047

Current Obligation: $83,791,047

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HSHQDC15A00017

IDV Type: BPA

Timeline