DHA awards $13.2M for Red Hat subscriptions and support, impacting network management

Contract Overview

Contract Amount: $13,187,574 ($13.2M)

Contractor: Sterling Computers Corporation

Awarding Agency: Department of Defense

Start Date: 2022-03-28

End Date: 2026-03-28

Contract Duration: 1,461 days

Daily Burn Rate: $9.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 15

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DHA REQUIRES THE PROCUREMENT OF RED HAT SUBSCRIPTION AND SUPPORT FOR THE SYSTEM MANAGEMENT AND NETWORK/SERVER MONITORING ON DHA'S NETWORK.

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78254

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $13.2 million to STERLING COMPUTERS CORPORATION for work described as: DHA REQUIRES THE PROCUREMENT OF RED HAT SUBSCRIPTION AND SUPPORT FOR THE SYSTEM MANAGEMENT AND NETWORK/SERVER MONITORING ON DHA'S NETWORK. Key points: 1. Value for money assessed through comparison with similar support contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include contract duration and reliance on a single vendor for critical support. 4. Performance context is tied to maintaining DHA's network and server monitoring capabilities. 5. Sector positioning within IT infrastructure and cybersecurity support services. 6. The contract's fixed-price nature provides cost certainty for the government.

Value Assessment

Rating: good

The contract value of $13.2 million over approximately four years for Red Hat subscriptions and support appears reasonable when benchmarked against similar enterprise software support agreements. While specific per-unit costs are not detailed, the overall award amount suggests a strategic investment in maintaining critical IT infrastructure. The fixed-price structure helps manage budget predictability. Further analysis would require comparing the scope of services and the number of subscriptions to industry averages for comparable government or commercial entities.

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 15 bids suggests a healthy level of interest and competition for this requirement. A competitive bidding process generally leads to better price discovery and ensures that the government receives offers from a range of qualified suppliers, potentially resulting in more favorable terms and pricing.

Taxpayer Impact: The full and open competition likely resulted in a more cost-effective outcome for taxpayers by driving down prices through market forces. It also ensures that the government is not limited to a single provider, fostering a more dynamic and responsive market.

Public Impact

The Defense Health Agency (DHA) benefits directly through enhanced system management and network/server monitoring capabilities. Services delivered include crucial Red Hat subscription and support, ensuring the stability and security of DHA's IT infrastructure. The geographic impact is primarily within DHA facilities and networks, supporting military health system operations. Workforce implications may involve IT personnel responsible for managing and maintaining the Red Hat environment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Reliance on a single vendor for critical operating system support could pose a risk if the vendor faces disruptions.
The multi-year duration of the contract requires careful monitoring to ensure continued value and performance.
Potential for vendor lock-in if alternative solutions are not considered during the contract period.

Positive Signals

Awarded through full and open competition, indicating a competitive marketplace.
Fixed-price contract provides cost certainty and budget predictability.
The contract supports essential IT infrastructure for a critical government agency.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on enterprise software subscriptions and support. The market for operating system support, particularly for Linux distributions like Red Hat, is robust, with several major players and numerous support providers. The Defense Health Agency's spending on such services is typical for large federal organizations aiming to maintain secure and efficient IT operations. Comparable spending benchmarks would involve analyzing other agencies' IT infrastructure support contracts.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, and there is no explicit mention of subcontracting goals for small businesses. Given the nature of enterprise software subscriptions and support, it's possible that larger IT service providers or resellers were the primary bidders. Further investigation into the awardee's subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the Defense Health Agency's program management office. Accountability measures are embedded in the contract terms, including performance standards and delivery schedules. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Health Agency IT Modernization Programs
DoD Enterprise Software Licensing
Federal Civilian Health IT Infrastructure
Network Operations and Security Contracts

Risk Flags

Contract duration
Single vendor reliance for critical support
Potential for future cost increases upon renewal

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.2 million to STERLING COMPUTERS CORPORATION. DHA REQUIRES THE PROCUREMENT OF RED HAT SUBSCRIPTION AND SUPPORT FOR THE SYSTEM MANAGEMENT AND NETWORK/SERVER MONITORING ON DHA'S NETWORK.

Who is the contractor on this award?

The obligated recipient is STERLING COMPUTERS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $13.2 million.

What is the period of performance?

Start: 2022-03-28. End: 2026-03-28.

What is the historical spending pattern for Red Hat subscriptions and support within the Defense Health Agency?

Analyzing historical spending for Red Hat subscriptions and support within the Defense Health Agency (DHA) requires access to detailed procurement data over several fiscal years. Typically, federal agencies procure such services through a combination of direct purchases, indefinite-delivery indefinite-quantity (IDIQ) contracts, or task orders under larger IT support vehicles. Spending patterns can fluctuate based on system upgrades, expansion of services, and changes in licensing models. For instance, a significant increase in spending might correlate with a major network overhaul or the adoption of new cloud-based services requiring robust underlying operating system support. Conversely, a decrease could indicate consolidation of licenses, migration to alternative solutions, or a shift in IT strategy. Without specific historical data for DHA's Red Hat procurements, it's difficult to provide precise figures, but it's reasonable to assume consistent, albeit variable, expenditure to maintain critical health IT infrastructure.

How does the per-unit cost of this Red Hat subscription compare to market rates for similar enterprise support?

Determining the precise per-unit cost for Red Hat subscriptions within this $13.2 million contract is challenging without a detailed breakdown of the number and type of subscriptions procured. However, the overall contract value, spread over approximately four years, provides a basis for a high-level assessment. Enterprise-level Red Hat subscriptions and support typically include various tiers (e.g., Standard, Premium, Self-Support) with differing service level agreements (SLAs) and pricing. Market rates can vary significantly based on volume discounts, the specific products (e.g., RHEL, OpenShift), and the duration of the support agreement. Generally, government contracts, especially those awarded under full and open competition, aim to secure pricing competitive with or better than commercial enterprise rates due to bulk purchasing power and negotiated discounts. If this contract represents a significant volume of subscriptions, the per-unit cost should ideally fall within or below the typical range for large enterprise deployments. Benchmarking would involve comparing the effective annual cost per subscription against publicly available pricing or data from similar large-scale government procurements.

What are the key performance indicators (KPIs) associated with this contract, and how is performance being measured?

While the provided data does not explicitly list the Key Performance Indicators (KPIs) for this Red Hat subscription and support contract, typical metrics for such agreements focus on service availability, response times, and resolution times for support incidents. For operating system support, KPIs often include uptime guarantees for critical systems managed by Red Hat, adherence to Service Level Agreements (SLAs) for technical support (e.g., time to acknowledge and time to resolve issues based on severity), and the availability of security patches and updates. Performance measurement would likely involve regular reporting from Sterling Computers Corporation on support ticket metrics, system performance data, and potentially user satisfaction surveys. The Defense Health Agency (DHA) would monitor these reports against contractual requirements to ensure the vendor is meeting its obligations, thereby maintaining the stability and security of their network and server monitoring systems.

What is the track record of Sterling Computers Corporation in delivering similar IT support services to federal agencies?

Sterling Computers Corporation has a history of providing IT products and services to federal agencies, including hardware, software, and related support. Their track record in delivering complex IT support services, particularly for enterprise operating systems like Red Hat, would be assessed through past performance evaluations included in their bids for government contracts. Agencies typically review a contractor's history of meeting delivery schedules, quality standards, and contractual obligations on previous projects. Sterling Computers' experience with Department of Defense (DoD) agencies, such as the Defense Health Agency (DHA), is also a relevant factor. A review of their contract history, including any past performance issues or commendations, would provide insight into their capability to successfully execute this current requirement for Red Hat subscriptions and support.

Are there any identified risks associated with the long-term reliance on Red Hat for DHA's critical systems?

The primary risks associated with long-term reliance on Red Hat for critical systems within the Defense Health Agency (DHA) revolve around vendor lock-in, potential cost escalations over time, and the strategic implications of depending on a single commercial entity for core operating system support. While Red Hat Enterprise Linux (RHEL) is a robust and widely adopted platform, reliance on a specific vendor can limit flexibility in adopting alternative technologies or negotiating future support agreements. Cost escalations are a concern, as subscription and support renewals may increase over the contract's life or beyond. Strategically, the DHA must ensure that its IT architecture remains adaptable. While this contract is for a defined period, future planning should consider diversification or alternative open-source solutions to mitigate risks associated with prolonged single-vendor dependency and to maintain competitive leverage in future procurements.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 15

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 303 CENTENIAL DR, NORTH SIOUX CITY, SD, 57049

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Economically Disadvantaged Women Owned Small Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $16,999,851

Exercised Options: $13,228,909

Current Obligation: $13,187,574

Actual Outlays: $357,197

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: NNG15SC20B

IDV Type: GWAC

Timeline