DoD Awards $204M for ServiceNow Licenses to Carahsoft, Raising Concerns Over Competition
Contract Overview
Contract Amount: $204,320,637 ($204.3M)
Contractor: Carahsoft Technology Corp
Awarding Agency: Department of Defense
Start Date: 2022-12-23
End Date: 2026-06-22
Contract Duration: 1,277 days
Daily Burn Rate: $160.0K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: INITIAL ORDER OFF IDIQ CONTRACT W519TC23D0005 FOR SERVICE NOW LICENSES.
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $204.3 million to CARAHSOFT TECHNOLOGY CORP for work described as: INITIAL ORDER OFF IDIQ CONTRACT W519TC23D0005 FOR SERVICE NOW LICENSES. Key points: 1. Significant award value of $204.3 million for ServiceNow licenses. 2. Sole-source award to Carahsoft Technology Corp. limits competitive pricing. 3. Potential risk associated with a lack of competition for essential software. 4. IT sector spending on software licenses is a substantial government expenditure.
Value Assessment
Rating: questionable
The award of $204.3 million for ServiceNow licenses appears high without competitive benchmarking. The firm-fixed-price contract type offers some cost certainty, but the lack of competition prevents price discovery and potential savings.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This method bypasses competitive bidding, potentially leading to higher prices and reduced value for taxpayer dollars as market competition is not leveraged.
Taxpayer Impact: The lack of competition on this large contract likely results in higher costs for taxpayers than a competitively awarded contract would yield.
Public Impact
Taxpayers may be overpaying for essential software due to the absence of competitive bidding. Government reliance on a single vendor for critical IT infrastructure can create long-term dependency. The significant expenditure highlights the growing cost of enterprise software for federal agencies.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- Potential Overpricing
- Sole-Source Award
Positive Signals
- Firm Fixed Price Contract
- Long-Term Contract Duration
Sector Analysis
This award falls within the Information Technology sector, specifically for custom computer programming services and software licenses. Government spending on IT, particularly enterprise software like ServiceNow, is a significant and growing portion of the federal budget, often characterized by complex licensing agreements and vendor lock-in.
Small Business Impact
The contract was awarded to Carahsoft Technology Corp., which is not identified as a small business. The lack of small business participation in this specific award is noted, though larger IT contracts often involve complex supply chains where small businesses might participate as subcontractors.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the pricing is fair and reasonable and that the services provided meet the Department of the Army's needs. Future contract actions should explore competitive avenues to ensure accountability and value.
Related Government Programs
- Custom Computer Programming Services
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competitive bidding may lead to inflated prices.
- Sole-source award limits market-driven cost savings.
- Potential for vendor lock-in and reduced negotiation leverage.
- Significant financial commitment without demonstrated best value through competition.
Tags
custom-computer-programming-services, department-of-defense, va, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $204.3 million to CARAHSOFT TECHNOLOGY CORP. INITIAL ORDER OFF IDIQ CONTRACT W519TC23D0005 FOR SERVICE NOW LICENSES.
Who is the contractor on this award?
The obligated recipient is CARAHSOFT TECHNOLOGY CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $204.3 million.
What is the period of performance?
Start: 2022-12-23. End: 2026-06-22.
What justification was provided for the sole-source award of this significant ServiceNow license contract?
The provided data indicates the contract was 'NOT COMPETED'. A formal justification for a sole-source award is typically required under federal acquisition regulations when full and open competition is not feasible or not in the government's best interest. This justification would detail the specific reasons, such as unique capabilities of the vendor or lack of viable alternatives, and should be reviewed to understand the rationale behind bypassing competition.
How does the per-unit cost of these ServiceNow licenses compare to industry benchmarks or other government contracts?
Without specific per-unit pricing details or access to comparative contract data, it is difficult to establish a precise benchmark. However, given the $204.3 million award value and the lack of competition, there is a significant risk that the per-unit cost may be higher than what could be achieved through a competitive process. Further analysis would require access to the detailed pricing structure within the contract.
What is the potential impact on government operational effectiveness if ServiceNow is a critical platform and this vendor relationship is not optimized?
If ServiceNow is critical for operational effectiveness, a non-optimized vendor relationship stemming from a sole-source award could lead to inefficiencies, higher costs, and potential disruptions. Without competitive pressure, the vendor may have less incentive to provide optimal service or pricing. This could impact the agency's ability to leverage the platform fully, potentially hindering mission accomplishment and requiring additional budget allocation.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services
Product/Service Code: IT AND TELECOM - APLLICATIONS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
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: $322,156,609
Exercised Options: $204,320,637
Current Obligation: $204,320,637
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W519TC23D0005
IDV Type: IDC
Timeline
Start Date: 2022-12-23
Current End Date: 2026-06-22
Potential End Date: 2027-12-22 00:00:00
Last Modified: 2026-01-06
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