VA's $664M Microsoft Enterprise Agreement shows significant spending on IT services over five years

Contract Overview

Contract Amount: $663,858,343 ($663.9M)

Contractor: Microtechnologies LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2012-04-01

End Date: 2017-03-27

Contract Duration: 1,821 days

Daily Burn Rate: $364.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MICROSOFT ENTERPRISE AGREEMENT FOR MICROSOFT PRODUCTS AND SERVICES IGF::OT::IGF CORRECTED TO UPDATE BLANK NAIC AND PSC ON MOD. CW 4/5/16

Place of Performance

Location: VIENNA, FAIRFAX County, VIRGINIA, 22182

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $663.9 million to MICROTECHNOLOGIES LLC for work described as: MICROSOFT ENTERPRISE AGREEMENT FOR MICROSOFT PRODUCTS AND SERVICES IGF::OT::IGF CORRECTED TO UPDATE BLANK NAIC AND PSC ON MOD. CW 4/5/16 Key points: 1. The contract represents substantial investment in IT infrastructure and services for the VA. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. The contract duration of 1821 days indicates a long-term commitment to these services. 4. The award was made to Microtechnologies LLC, a significant player in IT services. 5. The fixed-price contract type provides cost certainty for the government. 6. The primary service category is 'Other Computer Related Services', highlighting a broad IT scope.

Value Assessment

Rating: fair

The total award amount of $663.8 million over approximately five years for Microsoft products and services is substantial. Benchmarking this against similar enterprise-wide software licensing agreements is challenging without specific details on the exact products and user counts. However, the fixed-price nature of the contract suggests that the VA aimed for cost predictability. The value for money would depend heavily on the utilization rates and the negotiated discounts compared to direct purchase of licenses.

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. The presence of 5 bids suggests a reasonable level of competition for this significant IT services contract. This competitive process is expected to drive more favorable pricing and terms for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market where vendors strive to offer the best value and pricing to secure large government contracts.

Public Impact

Veterans and VA staff benefit from access to essential Microsoft software and services, supporting daily operations and patient care. The contract ensures the availability of critical IT infrastructure for the Department of Veterans Affairs. The geographic impact is nationwide, as the VA operates numerous facilities across the United States. The contract supports jobs within the IT services sector, particularly for the prime contractor and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with Microsoft products, limiting future flexibility.
Risk of over-licensing or underutilization of software features, impacting value for money.
Dependence on a single large contractor for critical IT services could pose a risk if performance falters.

Positive Signals

Full and open competition suggests a robust procurement process.
Fixed-price contract provides budget certainty for the VA.
Long contract duration indicates a stable IT environment for users.

Sector Analysis

This contract falls within the broader Information Technology sector, specifically focusing on software licensing and related IT services. The market for enterprise software agreements, particularly for major vendors like Microsoft, is characterized by large, long-term contracts. Comparable spending benchmarks would involve looking at other federal agencies' enterprise agreements for similar software suites, which often run into hundreds of millions of dollars due to the scale of government operations.

Small Business Impact

There is no indication from the provided data that this contract included specific small business set-asides or subcontracting requirements. As a large enterprise agreement, it is likely that the prime contractor, Microtechnologies LLC, would manage the delivery of services. Further analysis would be needed to determine if any small businesses were involved as subcontractors.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The Department of Veterans Affairs' own contracting officers and program managers would oversee performance and compliance. Inspector General reviews could be initiated if specific concerns regarding waste, fraud, or abuse arise. Transparency is generally maintained through contract award databases like FPDS.

Related Government Programs

General Services Administration (GSA) IT Schedule contracts
Other agency-specific enterprise software agreements
Cloud computing services contracts
IT professional services contracts

Risk Flags

Potential for vendor lock-in
Risk of underutilization of licensed software
Dependence on a single large contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $663.9 million to MICROTECHNOLOGIES LLC. MICROSOFT ENTERPRISE AGREEMENT FOR MICROSOFT PRODUCTS AND SERVICES IGF::OT::IGF CORRECTED TO UPDATE BLANK NAIC AND PSC ON MOD. CW 4/5/16

Who is the contractor on this award?

The obligated recipient is MICROTECHNOLOGIES LLC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $663.9 million.

What is the period of performance?

Start: 2012-04-01. End: 2017-03-27.

What was the specific breakdown of Microsoft products and services covered under this $664 million agreement?

The provided data does not specify the exact breakdown of Microsoft products and services included in the $664 million Enterprise Agreement. Typically, such agreements cover a wide range of Microsoft software licenses (e.g., Windows, Office 365, server licenses) and potentially associated support and maintenance services. Without a detailed contract line item breakdown or statement of work, it's impossible to ascertain the precise mix. This information is crucial for a granular value-for-money assessment, as different products have varying market prices and strategic importance.

How did the pricing negotiated by Microtechnologies LLC compare to standard commercial pricing or other government enterprise agreements?

The provided data indicates the contract was awarded under full and open competition with 5 bidders, which suggests a competitive pricing environment. However, it does not include specific pricing details or benchmarks against commercial rates or other government agreements. To assess the value, one would need to compare the per-unit costs for specific licenses or services against GSA Schedule pricing, other agency enterprise agreements, or publicly available commercial price lists. The fixed-price nature provides certainty but doesn't inherently guarantee the best possible price without comparative data.

What were the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The summary data does not detail the specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this Microsoft Enterprise Agreement. In a contract of this magnitude and duration, robust KPIs and SLAs are typically established to measure contractor performance, such as software availability, response times for support, and patch management. The absence of this information in the summary prevents an assessment of the contractor's performance obligations and the VA's mechanisms for ensuring service delivery quality.

What is the track record of Microtechnologies LLC in delivering large-scale IT enterprise agreements for federal agencies?

Microtechnologies LLC was the prime contractor for this $664 million VA Microsoft Enterprise Agreement. While the data confirms their role in this specific award, it does not provide a comprehensive overview of their broader track record with similar large-scale IT contracts across the federal government. Further investigation into their contract history, past performance evaluations, and experience with other federal agencies would be necessary to fully assess their capability and reliability in managing such significant IT procurements.

How has VA spending on Microsoft products and services evolved over time, and does this contract represent a significant shift?

This specific contract, awarded in 2012 and ending in 2017, represents a significant single award for Microsoft products and services totaling $663.8 million. To understand the evolution of VA spending, one would need to analyze historical data on all VA contracts related to Microsoft software and services over a longer period. This would involve looking at prior agreements, subsequent contracts, and potentially smaller, unbundled purchases. Without that broader context, it's difficult to definitively state if this contract represented a 'shift' or was part of a consistent spending pattern.

What are the potential risks associated with a long-term, high-value contract for enterprise software like this?

Long-term, high-value enterprise software contracts carry several potential risks. These include vendor lock-in, where switching to alternative solutions becomes prohibitively expensive or complex. There's also the risk of technological obsolescence if the contracted software doesn't keep pace with advancements, or conversely, paying for features that are never utilized, leading to poor value for money. Furthermore, dependence on a single vendor for critical infrastructure can create security vulnerabilities or operational disruptions if the vendor experiences issues. Contract management is key to mitigating these risks through regular reviews and performance monitoring.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8320 OLD COURTHOUSE RD STE 500, VIENNA, VA, 22182

Business Categories: Category Business, Hispanic American Owned Business, Limited Liability Corporation, Minority Owned Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $690,946,625

Exercised Options: $663,858,343

Current Obligation: $663,858,343

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS35F0629R

IDV Type: FSS

Timeline