Treasury's IRS Spends $108M on Microsoft Suite via Competitive Order
Contract Overview
Contract Amount: $108,019,440 ($108.0M)
Contractor: Softchoice Corp
Awarding Agency: Department of the Treasury
Start Date: 2007-12-19
End Date: 2008-12-18
Contract Duration: 365 days
Daily Burn Rate: $295.9K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: MICROSOFT PRODUCT SUITE
Place of Performance
Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20703, UNITED STATES OF AMERICA
State: Maryland Government Spending
Plain-Language Summary
Department of the Treasury obligated $108.0 million to SOFTCHOICE CORP for work described as: MICROSOFT PRODUCT SUITE Key points: 1. Significant spending on a Microsoft product suite highlights reliance on major software vendors. 2. Competition was present, but the specific delivery order mechanism warrants review for optimal pricing. 3. The fixed-price contract structure offers cost certainty but may limit savings from market fluctuations. 4. IT sector spending is substantial, with software licenses being a recurring government expense.
Value Assessment
Rating: fair
The $108 million spent on the Microsoft product suite is a substantial amount. Benchmarking against similar large-scale software procurements would be necessary to determine if the pricing was competitive.
Cost Per Unit: N/A
Competition Analysis
Competition Level: unknown
This was a competitive delivery order, indicating multiple vendors could bid. However, the specific nature of delivery orders can sometimes lead to less aggressive pricing compared to broader contract vehicles.
Taxpayer Impact: Taxpayer funds were used for this procurement. The competitive nature suggests an effort to achieve reasonable pricing, but the total cost is high.
Public Impact
Government reliance on commercial software like Microsoft impacts IT budgets and long-term strategy. The large sum allocated could have been used for other critical government services or infrastructure. Ensuring competitive pricing on software licenses is crucial for fiscal responsibility.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- High dollar value for a single software suite.
- Potential for vendor lock-in with proprietary software.
- Contract duration and renewal terms need scrutiny.
Positive Signals
- Procured through a competitive process.
- Firm fixed-price contract provides budget predictability.
Sector Analysis
This procurement falls within the Information Technology sector, specifically software. Government spending on software licenses is a significant and ongoing expenditure, often dominated by a few major vendors.
Small Business Impact
This contract does not appear to directly benefit small businesses, as it involves a large software suite likely procured from a major reseller or directly from Microsoft.
Oversight & Accountability
The use of competitive delivery orders suggests some level of oversight in the award process. However, ongoing monitoring of usage and potential for cost savings through alternative licensing or software is essential.
Related Government Programs
- Computer and Software Stores
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- High dollar value
- Potential for vendor lock-in
- Limited visibility into specific software components and usage
- Reliance on commercial off-the-shelf software
Tags
computer-and-software-stores, department-of-the-treasury, md, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $108.0 million to SOFTCHOICE CORP. MICROSOFT PRODUCT SUITE
Who is the contractor on this award?
The obligated recipient is SOFTCHOICE CORP.
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Internal Revenue Service).
What is the total obligated amount?
The obligated amount is $108.0 million.
What is the period of performance?
Start: 2007-12-19. End: 2008-12-18.
Could the IRS have achieved better pricing through a more strategic, long-term enterprise license agreement rather than individual delivery orders?
It's possible. Enterprise agreements often offer volume discounts and more predictable budgeting for software. However, they can also lead to vendor lock-in and may not be flexible enough if needs change rapidly. A detailed analysis of usage patterns and future requirements would be needed to confirm if an enterprise agreement would have been more cost-effective.
What are the risks associated with the IRS's reliance on a single vendor's product suite for critical operations?
Reliance on a single vendor creates significant risks, including potential vendor lock-in, making it difficult and costly to switch to alternative solutions. It also exposes the IRS to price increases upon contract renewal and supply chain vulnerabilities if the vendor experiences issues. Furthermore, it can stifle innovation by limiting the adoption of best-of-breed solutions from different providers.
How effective was the competitive delivery order process in ensuring value for money for this $108 million Microsoft product suite purchase?
The effectiveness is difficult to ascertain without more data. While the 'competitive' aspect suggests multiple bids were considered, the nature of delivery orders can sometimes limit the depth of competition compared to full and open solicitations. The final price achieved relative to market benchmarks and the actual utility derived from the software are key indicators of value, which require further analysis.
Industry Classification
NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores
Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Solicitation Procedures: SIMPLIFIED ACQUISITION
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Softchoice Corporation (UEI: 248864415)
Address: 314 W SUPERIOR ST STE - 301, CHICAGO, IL, 60610
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $441,794,516
Exercised Options: $361,410,378
Current Obligation: $108,019,440
Parent Contract
Parent Award PIID: GS35F0196M
IDV Type: FSS
Timeline
Start Date: 2007-12-19
Current End Date: 2008-12-18
Potential End Date: 2008-12-18 00:00:00
Last Modified: 2017-07-16
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