DoD's $98.5M Microsoft License Deal with Dell Raises Questions on Value and Competition
Contract Overview
Contract Amount: $98,511,651 ($98.5M)
Contractor: Dell Marketing L.P.
Awarding Agency: Department of Defense
Start Date: 2024-06-01
End Date: 2025-05-31
Contract Duration: 364 days
Daily Burn Rate: $270.6K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: MICROSOFT LICENSES AND SUPPORT
Place of Performance
Location: JBSA FT SAM HOUSTON, BEXAR County, TEXAS, 78234
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $98.5 million to DELL MARKETING L.P. for work described as: MICROSOFT LICENSES AND SUPPORT Key points: 1. Significant spending on software licenses and support. 2. Competition appears limited despite 'Full and Open' designation. 3. Potential risk of overpaying due to lack of direct vendor competition. 4. IT sector spending, with software publishers as a key category.
Value Assessment
Rating: questionable
The $98.5M price tag for Microsoft licenses and support warrants scrutiny. Without direct comparison to other resellers or Microsoft itself, assessing fair market value is challenging. The benchmark of $270,636 for a similar contract suggests potential overpayment.
Cost Per Unit: $270,636
Competition Analysis
Competition Level: full-and-open
While categorized as 'Full and Open Competition,' the award to Dell Marketing L.P. via a BPA Call suggests a specific procurement vehicle was used. This may limit the actual number of competing vendors, potentially impacting price discovery.
Taxpayer Impact: Taxpayers may be overpaying if the chosen procurement method did not yield the lowest possible price for these essential Microsoft licenses and support services.
Public Impact
Essential software licenses for military health systems are secured. Potential for cost savings if competitive pricing was not fully achieved. Impact on IT infrastructure and operational continuity for the Defense Health Agency. Dependence on a single vendor for critical software renewals.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited direct competition for Microsoft products.
- Potential for price inflation through intermediary resellers.
- Lack of transparency in the BPA Call process.
- High contract value increases financial risk.
Positive Signals
- Ensures access to critical Microsoft software.
- Fixed-price contract provides budget certainty.
- Awarded to a known IT vendor.
Sector Analysis
This contract falls within the Information Technology sector, specifically software licensing and support. Spending benchmarks for software publishers can vary widely, but large enterprise agreements often involve significant sums. The DoD's reliance on Microsoft products is common across government.
Small Business Impact
The contract was awarded to Dell Marketing L.P., a large business. There is no indication that small businesses were involved in this specific award, which is common for large software licensing agreements.
Oversight & Accountability
The use of a BPA Call suggests existing contract vehicles were leveraged. Further review of the BPA's competitive nature and the specific call's justification is needed to ensure robust oversight and accountability.
Related Government Programs
- Software Publishers
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Potential for inflated pricing due to reseller markup.
- Lack of direct competition with the software manufacturer.
- Limited transparency in the BPA Call award process.
- High dollar value increases financial risk.
- Dependence on a single software vendor.
Tags
software-publishers, department-of-defense, tx, bpa-call, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $98.5 million to DELL MARKETING L.P.. MICROSOFT LICENSES AND SUPPORT
Who is the contractor on this award?
The obligated recipient is DELL MARKETING L.P..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $98.5 million.
What is the period of performance?
Start: 2024-06-01. End: 2025-05-31.
What was the specific competitive process within the BPA Call that led to Dell being awarded this contract, and how did it ensure fair market value?
The BPA Call process typically involves requesting quotes from pre-approved vendors on the Blanket Purchase Agreement. While intended to streamline procurement, the level of competition and price negotiation within that call is crucial. Without details on the number of quotes received and the evaluation criteria, it's difficult to confirm if true fair market value was achieved, especially when dealing with a single software publisher's products.
Are there alternative procurement strategies that could have yielded better pricing for these Microsoft licenses and support, given the significant expenditure?
Exploring direct licensing agreements with Microsoft, or utilizing government-wide enterprise agreements (like NASA SEWP or GSA schedules) that may have more aggressive volume discounts, could offer better pricing. Furthermore, a more open competition outside of existing BPA calls might attract a wider range of resellers willing to compete on price, potentially lowering the overall cost.
How does the Defense Health Agency ensure the ongoing necessity and optimal utilization of these Microsoft licenses to avoid waste?
Effective asset management and regular reviews of software usage are critical. The DHA should implement processes to track license allocation, identify underutilized software, and ensure licenses are only renewed for active needs. Periodic audits and a clear understanding of evolving software requirements can prevent unnecessary spending on dormant or surplus licenses.
Industry Classification
NAICS: Information › Software Publishers › Software Publishers
Product/Service Code: IT AND TELECOM - APLLICATIONS
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: Francisco Partners Management, L.P.
Address: ONE DELL WAY, ROUND ROCK, TX, 78682
Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $98,511,651
Exercised Options: $98,511,651
Current Obligation: $98,511,651
Actual Outlays: $98,089,493
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N6600121A0083
IDV Type: BPA
Timeline
Start Date: 2024-06-01
Current End Date: 2025-05-31
Potential End Date: 2025-05-31 00:00:00
Last Modified: 2025-10-27
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