DoD's $24.3M Oracle software agreement with Mythics, LLC shows fair value despite limited competition

Contract Overview

Contract Amount: $24,311,695 ($24.3M)

Contractor: Mythics, LLC

Awarding Agency: Department of Defense

Start Date: 2010-09-30

End Date: 2013-09-29

Contract Duration: 1,095 days

Daily Burn Rate: $22.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ORACLE UNLIMITED SOFTWARE LICENSE AGREEMENT AND MAINTENANCE

Place of Performance

Location: VIRGINIA BEACH, VIRGINIA BEACH (CITY) County, VIRGINIA, 23454

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $24.3 million to MYTHICS, LLC for work described as: ORACLE UNLIMITED SOFTWARE LICENSE AGREEMENT AND MAINTENANCE Key points: 1. The contract's value appears reasonable when benchmarked against similar software licensing agreements. 2. Competition was limited, potentially impacting price discovery and overall value for taxpayers. 3. The firm-fixed-price structure shifts risk to the contractor, which is a positive indicator. 4. This contract supports critical IT infrastructure for the Department of the Air Force. 5. The duration of the contract (3 years) is standard for enterprise software agreements. 6. Oversight is likely managed through standard DoD procurement and contract management processes.

Value Assessment

Rating: fair

The total value of $24.3 million over three years for Oracle software and maintenance suggests a per-year cost of approximately $8.1 million. This aligns with typical enterprise software licensing costs for large organizations. While specific benchmarks are difficult without knowing the exact Oracle products and user counts, the overall expenditure is within expected ranges for such agreements. The firm-fixed-price nature of the contract also indicates that the price was agreed upon upfront, providing cost certainty.

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 had the opportunity to bid. However, the data shows only two bids were received. While full and open competition is the preferred method, a low number of bids can sometimes suggest market limitations or specific requirements that may have deterred broader participation. This level of competition is adequate but not robust, potentially limiting the downward pressure on pricing.

Taxpayer Impact: While full and open competition was utilized, the low number of bidders suggests that taxpayers may not have benefited from the most aggressive pricing possible. However, it still provided a basis for comparison and avoided sole-source pricing.

Public Impact

The Department of the Air Force benefits from access to essential Oracle software licenses and maintenance. This agreement ensures the continuity of IT operations and services for Air Force personnel. The contract supports the technological infrastructure necessary for national defense operations. Workforce implications are minimal, as this is a software procurement rather than a service contract requiring significant new personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may have resulted in a higher price than if more vendors had participated.
Reliance on a single vendor (Oracle) for software can lead to vendor lock-in and potentially higher future costs.

Positive Signals

Firm-fixed-price contract shifts performance risk to the contractor.
Full and open competition, even with few bidders, provides a baseline for fair pricing.
The contract supports critical IT infrastructure for a major defense agency.

Sector Analysis

This contract falls within the broader IT services sector, specifically software licensing and maintenance. The market for enterprise software, particularly from major vendors like Oracle, is characterized by high upfront costs and ongoing maintenance fees. Government spending in this area is substantial, supporting a wide range of agencies. Benchmarking is often done against similar enterprise agreements, considering factors like user count, modules licensed, and support levels. The size of this contract is moderate within the context of large federal IT procurements.

Small Business Impact

There is no indication that this contract involved small business set-asides. The nature of enterprise software agreements with major vendors like Oracle typically involves large dollar values and specialized licensing that may not be conducive to small business participation as prime contractors. Subcontracting opportunities for small businesses are unlikely to be significant under this type of agreement.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Air Force. Standard procurement regulations and contract administration processes would apply. Transparency is generally maintained through contract databases like FPDS. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Oracle Software Licenses
Enterprise Software Maintenance
Department of Defense IT Procurement
Air Force Software Agreements

Risk Flags

Limited competition
Potential for vendor lock-in
High cost of enterprise software

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.3 million to MYTHICS, LLC. ORACLE UNLIMITED SOFTWARE LICENSE AGREEMENT AND MAINTENANCE

Who is the contractor on this award?

The obligated recipient is MYTHICS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $24.3 million.

What is the period of performance?

Start: 2010-09-30. End: 2013-09-29.

What specific Oracle products were covered under this unlimited license agreement?

The provided data does not specify the exact Oracle products included in the 'ORACLE UNLIMITED SOFTWARE LICENSE AGREEMENT AND MAINTENANCE'. Unlimited license agreements typically cover a broad range of Oracle software products that the government may deploy across its enterprise. This could include database software, middleware, applications (like E-Business Suite or PeopleSoft), and other specialized solutions. The 'unlimited' aspect suggests flexibility in deployment but often comes with a higher initial cost and is negotiated based on anticipated usage and scope across the agency. Understanding the specific modules and products is crucial for a precise value assessment and comparison to other contracts.

How does the $8.1 million annual cost compare to similar Oracle unlimited license agreements in the federal government?

Benchmarking the $8.1 million annual cost requires detailed comparison with other federal Oracle unlimited license agreements, considering factors such as the number of users, specific software modules licensed (e.g., database, applications, middleware), support levels, and the duration of the agreement. Without access to a comprehensive database of comparable contracts with these granular details, a precise comparison is challenging. However, for large federal agencies, annual spending in the multi-million dollar range for comprehensive Oracle software and maintenance is not uncommon, reflecting the vendor's market position and the breadth of its product suite. The value is considered fair if it aligns with the scope and support provided, relative to other large-scale federal deployments.

What are the risks associated with an 'unlimited' software license agreement?

An 'unlimited' software license agreement, while offering flexibility, carries several risks. Firstly, the upfront cost is typically higher, as the government is paying for potential broad usage rather than specific, quantified deployments. This can lead to paying for unused capacity. Secondly, it can foster vendor lock-in, making it difficult and costly to migrate to alternative solutions in the future. Thirdly, the definition of 'unlimited' can sometimes be ambiguous or subject to interpretation by the vendor, potentially leading to disputes over usage or scope. Finally, without clear usage metrics, it can be harder to track return on investment and ensure cost-effectiveness over time.

What is the typical duration for federal Oracle software maintenance contracts?

Federal contracts for enterprise software maintenance, including those from Oracle, often have initial terms ranging from one to five years. This particular contract had a duration of 1095 days, which is exactly three years. This duration is fairly standard and balances the need for stable support and predictable costs against the government's desire for flexibility to re-evaluate its needs and the market. Longer-term contracts might offer volume discounts but increase the risk of obsolescence or overpayment if needs change significantly. Shorter terms provide more frequent opportunities for competition and reassessment.

How does the firm-fixed-price (FFP) contract type benefit the government in this scenario?

A firm-fixed-price (FFP) contract type is generally advantageous for the government when the scope of work and requirements are well-defined, as is typical for software licensing and maintenance. Under an FFP agreement, the contractor, Mythics, LLC, is obligated to provide the specified Oracle software licenses and maintenance services for a set price. This means that any cost overruns incurred by the contractor are absorbed by them, not the government. This structure provides the Department of Defense with cost certainty and predictability, minimizing the financial risk associated with potential fluctuations in the contractor's costs. It incentivizes the contractor to manage their own expenses efficiently to maintain profitability.

What does the low number of bidders (2) for a full and open competition suggest about the market for this type of Oracle agreement?

A low number of bidders, such as two, in a full and open competition for an Oracle unlimited software license and maintenance agreement can suggest several market dynamics. It might indicate that the market for reselling and supporting Oracle's extensive enterprise software suite is concentrated among a few key players. Alternatively, the specific requirements or the complexity of the agreement may have limited the number of capable and interested vendors. It could also imply that Oracle's direct sales channels or other large resellers were not actively pursuing this specific opportunity, or that the barriers to entry for new competitors are high. This limited competition can reduce price pressure and potentially lead to higher costs for the government compared to a more robustly competed contract.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1439 N GREAT NECK RD STE 2, VIRGINIA BEACH, VA, 02

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $28,245,794

Exercised Options: $24,311,695

Current Obligation: $24,311,695

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06A0003

IDV Type: IDC

Timeline