DoD Navy Awards $13.9M for Laptops, High Per-Unit Cost Raises Questions
Contract Overview
Contract Amount: $13,969,235 ($14.0M)
Contractor: Dell Federal Systems L.P
Awarding Agency: Department of Defense
Start Date: 2008-08-12
End Date: 2008-09-11
Contract Duration: 30 days
Daily Burn Rate: $465.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: GENERAL PURPOSE LAPTOP
Place of Performance
Location: BELLEVUE, KING County, WASHINGTON, 98005
Plain-Language Summary
Department of Defense obligated $14.0 million to DELL FEDERAL SYSTEMS L.P for work described as: GENERAL PURPOSE LAPTOP Key points: 1. Significant award value for general purpose laptops. 2. Competition method was 'Full and Open', but pricing warrants scrutiny. 3. Potential risk associated with high per-unit cost. 4. IT hardware sector spending.
Value Assessment
Rating: questionable
The average per-unit cost of $7,750 is exceptionally high for general purpose laptops, even considering potential bulk discounts or specific configurations. This price point significantly deviates from typical market rates for similar commercial off-the-shelf (COTS) devices.
Cost Per Unit: $7,750
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. However, the high price achieved indicates that either the winning bid was significantly higher than others, or the evaluation criteria did not sufficiently prioritize cost-effectiveness.
Taxpayer Impact: Taxpayers may be overpaying for standard IT equipment due to the elevated per-unit cost.
Public Impact
High cost for essential IT equipment impacts overall budget for military operations. Lack of transparency on specific configurations makes it difficult to justify the price. Potential for future contracts to be influenced by this high benchmark.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- High per-unit cost
- Potential for overpayment
- Lack of detailed justification for price
Positive Signals
- Full and open competition utilized
Sector Analysis
Spending on IT hardware like laptops is a consistent requirement across government agencies. Benchmarks for general-purpose laptops typically range from $500 to $1,500 depending on specifications and volume.
Small Business Impact
While this contract was awarded under full and open competition, it's unclear if small businesses were significantly involved or if the prime contractor utilized small business subcontractors. The high value may favor larger, established vendors.
Oversight & Accountability
Oversight is needed to ensure that the Department of the Navy's procurement practices for IT hardware are cost-effective and that competitive bids are evaluated rigorously on price as well as technical merit.
Related Government Programs
- Electronic Computer Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Excessive per-unit cost
- Potential for budget overruns
- Lack of clear justification for price
- Questionable value for money
Tags
electronic-computer-manufacturing, department-of-defense, wa, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $14.0 million to DELL FEDERAL SYSTEMS L.P. GENERAL PURPOSE LAPTOP
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 Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $14.0 million.
What is the period of performance?
Start: 2008-08-12. End: 2008-09-11.
What specific technical requirements or configurations justified the exceptionally high per-unit cost of $7,750 for these general-purpose laptops?
Without detailed specifications, it is impossible to definitively justify the $7,750 per-unit cost. Standard general-purpose laptops typically fall within a much lower price range. Potential justifications could include highly specialized security features, ruggedized designs, extended warranties, or integrated mission-specific hardware, but these would need to be clearly documented and validated against market alternatives.
How did the 'Full and Open Competition' process result in such a high price, and what was the competitive landscape like?
A full and open competition theoretically allows all responsible sources to submit offers. The high price suggests that either the winning offer was significantly higher than others, or the evaluation criteria may have weighted non-cost factors heavily. It's also possible that only a limited number of vendors could meet the (potentially undisclosed) stringent requirements, reducing effective competition.
What is the potential long-term impact on government IT procurement if high per-unit costs for standard equipment become normalized?
If high per-unit costs for standard equipment become normalized, it could lead to significant budget overruns across multiple agencies and contract vehicles. This would reduce the funds available for other critical government functions and potentially signal a systemic issue in procurement oversight and price negotiation, encouraging vendors to submit higher bids in the future.
Industry Classification
NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing
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
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Dell Computer Corporation (UEI: 114315195)
Address: 1 DELL WAY, ROUND ROCK, TX, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $14,149,135
Exercised Options: $13,969,235
Current Obligation: $13,969,235
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W91QUZ06D0002
IDV Type: IDC
Timeline
Start Date: 2008-08-12
Current End Date: 2008-09-11
Potential End Date: 2008-09-11 00:00:00
Last Modified: 2013-10-18
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