DoD Spends $20.6M on Microsoft Licenses via Dell, Raising Value Concerns
Contract Overview
Contract Amount: $20,608,781 ($20.6M)
Contractor: Dell Marketing L.P.
Awarding Agency: Department of Defense
Start Date: 2008-09-26
End Date: 2012-10-31
Contract Duration: 1,496 days
Daily Burn Rate: $13.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: MICROSOFT SOFTWARE LICENSES AND MAINT
Place of Performance
Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22041
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $20.6 million to DELL MARKETING L.P. for work described as: MICROSOFT SOFTWARE LICENSES AND MAINT Key points: 1. Significant spending on software licenses highlights reliance on specific vendors. 2. Competition appears limited despite a 'Full and Open' contract type. 3. Potential for overpayment exists given the long duration and fixed pricing. 4. The IT sector is characterized by rapid technological change, impacting long-term software value.
Value Assessment
Rating: questionable
The $20.6M spent on Microsoft licenses over nearly 5 years warrants scrutiny. Without clear benchmarks or competitive re-evaluation, it's difficult to ascertain if this represents fair market value compared to similar enterprise agreements or direct purchases.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While the contract was awarded under 'Full and Open Competition,' the specific award to Dell Marketing L.P. for Microsoft products suggests a reseller model. This may limit direct price negotiation with the software manufacturer, potentially impacting price discovery.
Taxpayer Impact: Taxpayer funds are utilized for software procurement. The effectiveness of the competition method in securing the best price for these licenses is unclear, potentially leading to suboptimal value.
Public Impact
Government reliance on specific software vendors can lead to vendor lock-in. Long-term contracts for software may not keep pace with technological advancements or evolving pricing models. Transparency in software licensing costs is crucial for public trust and efficient resource allocation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of clear value assessment
- Potential for price inflation over contract duration
- Limited direct competition for software licenses
Positive Signals
- Established contract vehicle used for procurement
- Defined delivery order structure
Sector Analysis
The IT sector, particularly software licensing, is dynamic. Benchmarks for enterprise agreements vary widely based on volume, support levels, and vendor negotiations. This $20.6M spend falls within a range for large federal software procurements, but value depends heavily on specific terms.
Small Business Impact
This contract does not appear to directly involve small businesses as prime contractors. Analysis of subcontracting opportunities for small businesses within this IT software procurement is not provided.
Oversight & Accountability
The use of delivery orders under a larger contract requires oversight to ensure each order represents fair and reasonable pricing. Regular review of software usage and market prices is essential for accountability.
Related Government Programs
- Household Appliance Stores
- Department of Defense Contracting
- Defense Information Systems Agency Programs
Risk Flags
- Potential for overpayment due to fixed pricing over a long duration.
- Limited transparency on direct price negotiation with the software manufacturer.
- Risk of software obsolescence or underutilization.
- Lack of clear justification for sole-source-like procurement of specific software.
Tags
household-appliance-stores, department-of-defense, va, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $20.6 million to DELL MARKETING L.P.. MICROSOFT SOFTWARE LICENSES AND MAINT
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 (Defense Information Systems Agency).
What is the total obligated amount?
The obligated amount is $20.6 million.
What is the period of performance?
Start: 2008-09-26. End: 2012-10-31.
What was the basis for determining the $20.6M price as fair and reasonable at the time of award and throughout the contract period?
The determination of fair and reasonable pricing typically involves market research, comparison with similar contracts, and analysis of vendor quotes. For software licenses, this can be complex due to volume discounts, support agreements, and evolving licensing models. Without specific documentation, it's difficult to confirm the thoroughness of this assessment for the $20.6M spent.
How did the 'Full and Open Competition' requirement translate into actual price negotiation leverage with Microsoft products?
While the contract vehicle may have been competed fully and openly, the specific products procured (Microsoft) are often subject to manufacturer pricing structures. Competition might have occurred among resellers like Dell, but direct negotiation leverage with Microsoft itself could be limited, potentially impacting the final price achieved for the government.
What is the projected cost savings or value realization from these Microsoft licenses over their full term compared to alternative solutions or renegotiated terms?
Assessing value realization requires comparing the total cost against the utility derived and potential savings from alternative solutions or updated licensing agreements. Given the duration and fixed price, it's possible that more cost-effective options or volume-based discounts were missed, impacting the overall value proposition for the taxpayer.
Industry Classification
NAICS: Retail Trade › Electronics and Appliance Stores › Household Appliance Stores
Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Contractor Details
Parent Company: Dell Technologies Inc. (UEI: 601839660)
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: $20,608,781
Exercised Options: $20,608,781
Current Obligation: $20,608,781
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0010402AZE78
IDV Type: IDC
Timeline
Start Date: 2008-09-26
Current End Date: 2012-10-31
Potential End Date: 2012-11-30 00:00:00
Last Modified: 2020-09-21
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