DoD's $243M software purchase from Dell Marketing L.P. for 8-month term raises value questions
Contract Overview
Contract Amount: $243,238,359 ($243.2M)
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: $668.2K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: PERSONA 5 (8 MONTH TERM)
Place of Performance
Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $243.2 million to DELL MARKETING L.P. for work described as: PERSONA 5 (8 MONTH TERM) Key points: 1. The contract's value proposition is unclear given the short 8-month duration for a substantial software acquisition. 2. Competition dynamics appear robust with 'Full and Open Competition' but require deeper analysis of bidder participation. 3. Risk indicators are moderate, primarily related to potential overspending due to the short term and fixed-price nature. 4. Performance context is limited without specific details on the software's intended use and expected outcomes. 5. The contract falls within the Software Publishers (NAICS 511210) sector, a common area for federal IT procurement.
Value Assessment
Rating: fair
The total award of $243.2 million for an 8-month term suggests a high per-month expenditure for software. Without knowing the specific software and its criticality, it's difficult to benchmark value effectively. Compared to typical multi-year software licenses or enterprise agreements, this short-term, high-value contract warrants scrutiny to ensure it represents a cost-effective solution rather than a stop-gap measure. The firm fixed-price structure provides cost certainty but could lead to overpayment if the software is not fully utilized or if market prices are significantly lower.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition,' indicating that all responsible sources were permitted to submit offers. While this suggests a competitive environment, the number of actual bidders and the specific terms of the solicitation are not detailed here. A high level of competition generally drives down prices and encourages innovation, but the effectiveness of this competition in achieving optimal value for this specific software acquisition remains to be seen without further data on the bidding process.
Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it aims to secure the best possible pricing and terms through market forces. However, the ultimate benefit depends on the specific software procured and whether the competition truly drove down costs effectively for this particular need.
Public Impact
The Department of the Navy benefits from access to necessary software, presumably for operational or administrative functions. The services delivered are the provision of software licenses and potentially associated support, crucial for modern military operations. The geographic impact is primarily within the Department of Defense's operational areas, with the contract managed from Texas. Workforce implications are indirect, likely supporting personnel who utilize the software, rather than directly creating new jobs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for overpayment due to the high cost concentrated in a short 8-month period.
- Lack of clarity on whether this short-term acquisition aligns with long-term strategic software needs.
- Risk of vendor lock-in or difficulty transitioning if this is a precursor to a larger, longer-term solution.
- The firm fixed-price nature might not capture potential volume discounts or more favorable multi-year pricing structures.
Positive Signals
- Awarded through full and open competition, suggesting a potentially competitive pricing environment.
- Firm fixed-price contract provides cost certainty for the government.
- Procurement managed through a BPA Call, which can streamline the acquisition process for established agreements.
Sector Analysis
This contract falls within the Information Technology sector, specifically under Software Publishers (NAICS 511210). The federal government is a significant purchaser of software, with spending often driven by modernization efforts, cybersecurity needs, and operational efficiency. Comparable spending benchmarks would typically involve analyzing the average cost of similar enterprise software licenses or subscription services procured by other federal agencies or large commercial entities, considering factors like user count, features, and support levels.
Small Business Impact
The data indicates that small business participation (ss: false, sb: false) was not a specific set-aside requirement for this contract. Consequently, there are no direct subcontracting implications for small businesses mandated by this award. The focus appears to be on securing the required software from a large vendor, Dell Marketing L.P., rather than prioritizing small business engagement through set-asides.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, requiring Dell Marketing L.P. to deliver the specified software within the agreed-upon terms. Transparency is facilitated by the public nature of contract awards, though detailed performance metrics and usage data may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- General Services Administration (GSA) Schedules
- Department of Defense Enterprise Software Agreements (DESA)
- IT Modernization Initiatives
- Software Licensing and Maintenance Contracts
Risk Flags
- High Cost Concentration in Short Term
- Lack of Specific Software Detail
- Potential for Underutilization
- Limited Long-Term Strategic Alignment
Tags
department-of-defense, department-of-the-navy, it-procurement, software-publisher, full-and-open-competition, firm-fixed-price, bpa-call, large-contract, texas, commercial-off-the-shelf
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $243.2 million to DELL MARKETING L.P.. PERSONA 5 (8 MONTH TERM)
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 (Department of the Navy).
What is the total obligated amount?
The obligated amount is $243.2 million.
What is the period of performance?
Start: 2024-06-01. End: 2025-05-31.
What specific software is being procured under this contract, and what is its intended use by the Department of the Navy?
The provided data does not specify the exact software being procured. However, given the vendor (Dell Marketing L.P.) and the NAICS code (511210 - Software Publishers), it is likely a commercial off-the-shelf (COTS) software product or suite. The intended use could range widely, from operating systems, productivity software, specialized engineering or simulation tools, to cybersecurity solutions. Understanding the specific software is crucial for assessing its necessity, potential alternatives, and the appropriateness of the $243.2 million expenditure over 8 months. Without this detail, a full value assessment is challenging.
How does the per-unit cost or overall value of this contract compare to similar software procurements by the Department of Defense or other federal agencies?
Benchmarking this contract's value is difficult without knowing the specific software. However, a $243.2 million award for an 8-month term implies a significant monthly expenditure. If this represents a large volume of licenses or a high-cost enterprise solution, it might be comparable to other major federal IT procurements. However, if it's for a more common type of software, the cost per month ($30.4M/month) appears exceptionally high. Typical federal software procurements often leverage enterprise agreements or GSA schedules that aim for volume discounts and better long-term value, which this short-term, high-value contract may not fully achieve.
What is the track record of Dell Marketing L.P. in fulfilling large federal software contracts, particularly those with short durations?
Dell Marketing L.P. is a well-established entity with a significant history of contracting with the U.S. federal government, including the Department of Defense. They frequently supply hardware, software, and related services. Their track record generally involves large-scale IT solutions. However, contracts of this specific magnitude ($243.2M) concentrated over a very short term (8 months) might be less common than multi-year agreements. Assessing their performance on similar short-term, high-value software deals would require a deeper dive into historical contract data to ensure reliability and adherence to terms.
What are the potential risks associated with a firm fixed-price contract of this size and duration for software?
The primary risk with a firm fixed-price contract of this magnitude and short duration is the potential for overpayment if the government does not fully utilize the procured software or if market prices decline significantly during the term. While it offers cost certainty, it removes the government's ability to benefit from potential cost savings if actual usage is lower than anticipated or if more economical alternatives emerge. For an 8-month term, there's also a risk that the software may not be fully integrated or beneficial before the contract expires, potentially leading to wasted expenditure if not managed proactively.
What is the historical spending pattern for this type of software (NAICS 511210) by the Department of the Navy or the Department of Defense?
The Department of Defense, including the Department of the Navy, consistently spends billions of dollars annually on software, encompassing a wide range of categories under NAICS 511210 and related codes. Historical spending often reflects a mix of large enterprise licenses, specialized defense applications, and COTS products. Analyzing past spending patterns would reveal trends in software acquisition strategies, average contract values, and the prevalence of short-term versus long-term agreements. This specific $243.2 million award for 8 months would need to be contextualized against the backdrop of the DoD's overall IT budget and its typical software procurement cycles.
Industry Classification
NAICS: Information › Software Publishers › Software Publishers
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - END USER
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: $243,238,359
Exercised Options: $243,238,359
Current Obligation: $243,238,359
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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