DoD's $106M ServiceNow contract for enterprise platform modernization awarded to Carahsoft Technology Corp
Contract Overview
Contract Amount: $105,778,194 ($105.8M)
Contractor: Carahsoft Technology Corp
Awarding Agency: Department of Defense
Start Date: 2024-07-31
End Date: 2026-04-30
Contract Duration: 638 days
Daily Burn Rate: $165.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: SERVICENOW TERM SOFTWARE LICENSING AND LICENSE SUBSCRIPTION SERVICES FOR DLA'S ENTERPRISE PLATFORM AND DIGITAL BUSINESS MODERNIZATION INITIATIVES
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $105.8 million to CARAHSOFT TECHNOLOGY CORP for work described as: SERVICENOW TERM SOFTWARE LICENSING AND LICENSE SUBSCRIPTION SERVICES FOR DLA'S ENTERPRISE PLATFORM AND DIGITAL BUSINESS MODERNIZATION INITIATIVES Key points: 1. Contract supports critical digital business modernization efforts for the Defense Logistics Agency. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The contract duration of approximately 2 years (638 days) indicates a medium-term project. 4. The firm-fixed-price contract type aims to provide cost certainty for the government. 5. This spending aligns with broader federal IT modernization initiatives. 6. The primary contractor, Carahsoft Technology Corp, is a major reseller of software and IT solutions.
Value Assessment
Rating: good
The contract value of approximately $106 million over roughly two years for enterprise software licensing and subscription services appears reasonable given the scope of supporting a major agency's digital modernization. Benchmarking against similar large-scale enterprise software deals for federal agencies suggests this pricing is within expected ranges. The firm-fixed-price structure provides a degree of cost predictability, which is a positive indicator for value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bids suggests a healthy level of competition for this significant software licensing and subscription service. This competitive environment is generally favorable for price discovery and achieving better value for the government.
Taxpayer Impact: The full and open competition process likely resulted in a more competitive price for taxpayers compared to a sole-source or limited competition award.
Public Impact
The Defense Logistics Agency (DLA) will benefit from modernized enterprise platforms and digital business capabilities. Services delivered include software licensing and subscription for ServiceNow, enabling improved workflows and data management. The geographic impact is primarily within the DLA's operational footprint, supporting its mission across various locations. Workforce implications include potential for enhanced productivity and efficiency for DLA personnel utilizing the new platforms.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in with a single software provider for critical enterprise functions.
- Reliance on a third-party reseller (Carahsoft) may introduce additional layers in the supply chain.
- Ensuring ongoing cost-effectiveness of subscription renewals beyond the initial contract period.
- Managing the integration of ServiceNow with existing DLA IT infrastructure.
- Cybersecurity risks associated with sensitive government data hosted on a commercial platform.
Positive Signals
- Supports DLA's strategic goals for digital transformation and modernization.
- Leverages a widely adopted enterprise platform (ServiceNow) known for its capabilities.
- Firm-fixed-price contract provides budget certainty for the initial period.
- Awarded through full and open competition, indicating a competitive selection process.
- Contract duration allows for phased implementation and adoption of new capabilities.
Sector Analysis
The federal IT sector, particularly software publishers and IT professional services, represents a significant portion of government spending. This contract falls within the enterprise resource planning (ERP) and IT service management (ITSM) sub-sectors, where platforms like ServiceNow are dominant. The market for such enterprise software is characterized by a few major players and a robust reseller channel. Comparable spending benchmarks for similar enterprise software suites across large federal agencies often run into tens or hundreds of millions of dollars over several years.
Small Business Impact
This contract was not specifically set aside for small businesses, and the primary awardee, Carahsoft Technology Corp, is a large business. While Carahsoft often partners with small businesses for subcontracting, there is no explicit indication of small business subcontracting goals tied to this specific award in the provided data. The impact on the small business ecosystem would depend on whether Carahsoft engages them for support or value-added services related to this contract.
Oversight & Accountability
Oversight for this contract will likely be managed by the Defense Logistics Agency's contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price contract type, requiring delivery of specified software licenses and subscription services. Transparency is facilitated by the contract's award under full and open competition, with details often available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- DoD Enterprise Software Agreements
- IT Modernization Initiatives
- Digital Business Transformation Programs
- Defense Logistics Agency IT Services
- Software Licensing and Subscription Contracts
Risk Flags
- Potential for cost creep in future subscription renewals.
- Integration challenges with legacy systems.
- Cybersecurity vulnerabilities of cloud-based platforms.
- Over-reliance on a single software vendor.
- Ensuring adequate user adoption and training.
Tags
dod, defense-logistics-agency, it-services, software-licensing, enterprise-resource-planning, digital-modernization, firm-fixed-price, full-and-open-competition, carahsoft-technology-corp, service-now, cloud-computing, information-technology
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $105.8 million to CARAHSOFT TECHNOLOGY CORP. SERVICENOW TERM SOFTWARE LICENSING AND LICENSE SUBSCRIPTION SERVICES FOR DLA'S ENTERPRISE PLATFORM AND DIGITAL BUSINESS MODERNIZATION INITIATIVES
Who is the contractor on this award?
The obligated recipient is CARAHSOFT TECHNOLOGY CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $105.8 million.
What is the period of performance?
Start: 2024-07-31. End: 2026-04-30.
What is Carahsoft Technology Corp's track record with large federal IT contracts, particularly involving enterprise software?
Carahsoft Technology Corp is a prominent government IT reseller with a substantial track record of winning and fulfilling large federal contracts. They specialize in providing a wide range of software and hardware solutions to government agencies, often acting as a prime contractor or reseller for major technology vendors. Their experience includes numerous awards for enterprise software licenses, cloud services, and cybersecurity solutions across various federal departments, including the Department of Defense. This extensive experience suggests a strong understanding of government procurement processes and the ability to manage complex IT procurements, including those involving significant dollar values and long-term support requirements.
How does the $106 million value compare to similar ServiceNow deployments in the federal government?
The $106 million value for ServiceNow licensing and subscription services over approximately two years is substantial but aligns with the scale of enterprise-wide deployments for large federal agencies. ServiceNow is a widely adopted platform for IT Service Management (ITSM), workflow automation, and digital transformation initiatives. Federal agencies like the Department of Veterans Affairs, NASA, and other branches of the Department of Defense have awarded multi-year contracts for ServiceNow that can reach similar or even higher total values, especially when including implementation, customization, and ongoing support services. The value here reflects the comprehensive nature of supporting DLA's enterprise platform and modernization efforts.
What are the primary risks associated with this contract, and how are they mitigated?
Key risks include potential vendor lock-in with ServiceNow, the complexity of integrating the platform with DLA's existing IT infrastructure, and ensuring the long-term cost-effectiveness of subscription renewals. Cybersecurity risks are also present, as sensitive government data will be managed on the platform. Mitigation strategies likely involve robust contract management, clear performance metrics, defined service level agreements (SLAs), and potentially phased implementation to manage integration challenges. The firm-fixed-price nature helps mitigate cost overrun risks for the initial period. DLA's internal IT security protocols and ServiceNow's own security certifications are crucial for addressing cybersecurity concerns.
How effective is ServiceNow as a platform for federal agency digital business modernization?
ServiceNow is generally considered a highly effective platform for federal agency digital business modernization due to its integrated suite of applications for IT Service Management (ITSM), workflow automation, HR service delivery, customer service management, and more. Its ability to consolidate disparate systems onto a single cloud-based platform streamlines operations, improves efficiency, and enhances user experience. Many federal agencies leverage ServiceNow to automate manual processes, improve service delivery, and gain better visibility into their operations. Its success is often tied to proper implementation, configuration, and ongoing adoption by the workforce, which DLA's contract aims to facilitate.
What are the historical spending patterns for ServiceNow or similar enterprise software within the Department of Defense?
The Department of Defense (DoD) has a significant and growing history of spending on enterprise software solutions, including platforms like ServiceNow, to support its vast and complex operations. Historical spending patterns indicate a trend towards consolidating IT infrastructure and modernizing digital capabilities across its various branches and agencies. This includes substantial investments in software licenses, subscriptions, and related professional services. While specific historical figures for ServiceNow across the entire DoD are not provided here, it is known that multiple defense agencies have awarded contracts in the tens to hundreds of millions of dollars for such enterprise platforms over multi-year periods, reflecting a strategic priority for digital transformation.
What is the significance of the 'Delivery Order' award type in this context?
The 'Delivery Order' (AW: DELIVERY ORDER) award type signifies that this contract is likely a task order issued under a larger, pre-existing indefinite-delivery indefinite-quantity (IDIQ) contract or a similar multiple-award contract vehicle. This means that the 'full and open competition' likely occurred at the IDIQ contract level, and this specific delivery order represents a call for a defined quantity of goods or services (in this case, ServiceNow licenses and subscriptions) for a specific period and price. This approach allows agencies to procure needed items efficiently once a foundational contract is in place, often with pre-negotiated terms and pricing.
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
Solicitation ID: SP470124Q0141
Offers Received: 5
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 11493 SUNSET HILLS RD, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $105,778,194
Exercised Options: $105,778,194
Current Obligation: $105,778,194
Actual Outlays: $22,900,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS35F0119Y
IDV Type: FSS
Timeline
Start Date: 2024-07-31
Current End Date: 2026-04-30
Potential End Date: 2029-04-30 00:00:00
Last Modified: 2025-10-15
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