DoD's ECMA Awards $41.7M Microsoft Azure Contract for Cloud Services Across Multiple Impact Levels

Contract Overview

Contract Amount: $41,694,437 ($41.7M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2024-12-20

End Date: 2025-12-19

Contract Duration: 364 days

Daily Burn Rate: $114.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THE ENTERPRISE CLOUD MANAGEMENT AGENCY (ECMA) REQUIRES MICROSOFT AZURE CLOUD COMPUTING CAPABILITIES AT DEPARTMENT OF DEFENSE (DOD) IMPACT LEVEL (IL) 4, 5, AND 6 (SECRET) FOR NEW AND EXISTING CUSTOMERS/APPLICATIONS,

Place of Performance

Location: REDMOND, KING County, WASHINGTON, 98052

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $41.7 million to MICROSOFT CORPORATION for work described as: THE ENTERPRISE CLOUD MANAGEMENT AGENCY (ECMA) REQUIRES MICROSOFT AZURE CLOUD COMPUTING CAPABILITIES AT DEPARTMENT OF DEFENSE (DOD) IMPACT LEVEL (IL) 4, 5, AND 6 (SECRET) FOR NEW AND EXISTING CUSTOMERS/APPLICATIONS, Key points: 1. The contract focuses on essential cloud computing capabilities for DoD customers. 2. Microsoft Azure is the sole provider, indicating a potential lack of vendor diversity. 3. The firm fixed-price contract type helps mitigate cost overruns. 4. Spending is concentrated within the IT and cloud services sector.

Value Assessment

Rating: good

The $41.7 million award for Microsoft Azure cloud services appears reasonable given the scope of supporting DoD Impact Levels 4, 5, and 6. Benchmarking against similar large-scale cloud service procurements for government agencies suggests this pricing is competitive, especially considering the specialized security requirements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which suggests that while competition was considered, specific reasons led to the exclusion of other potential vendors. This method may limit price discovery compared to a truly open competition.

Taxpayer Impact: Taxpayer funds are being used to procure critical cloud infrastructure. The pricing appears competitive, but the limited competition aspect warrants scrutiny to ensure the best value is achieved.

Public Impact

Ensures critical cloud infrastructure is available for DoD operations. Supports advanced computing needs for national security applications. Provides access to Microsoft Azure services for various government users.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may not yield the lowest possible price.
Reliance on a single vendor for critical infrastructure.

Positive Signals

Firm fixed-price contract type.
Supports multiple DoD impact levels, indicating broad applicability.

Sector Analysis

This contract falls within the Information Technology sector, specifically cloud computing infrastructure. Spending in this area has been rapidly increasing across government agencies as they modernize their IT systems. Benchmarks for similar large-scale cloud procurements vary widely based on services and impact levels, but this award appears within a typical range for enterprise-level cloud solutions.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as the awardee is Microsoft Corporation. There is no information provided on subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The award was made by the Enterprise Cloud Management Agency (ECMA) for the Department of Defense. Oversight will likely involve monitoring service delivery, security compliance, and adherence to contract terms by ECMA and relevant DoD oversight bodies.

Related Government Programs

Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Potential for vendor lock-in.
Limited competition may not ensure best value.
Reliance on a single provider for critical infrastructure.
Security risks associated with cloud service providers.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.7 million to MICROSOFT CORPORATION. THE ENTERPRISE CLOUD MANAGEMENT AGENCY (ECMA) REQUIRES MICROSOFT AZURE CLOUD COMPUTING CAPABILITIES AT DEPARTMENT OF DEFENSE (DOD) IMPACT LEVEL (IL) 4, 5, AND 6 (SECRET) FOR NEW AND EXISTING CUSTOMERS/APPLICATIONS,

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $41.7 million.

What is the period of performance?

Start: 2024-12-20. End: 2025-12-19.

What specific factors justified the exclusion of other cloud providers during the competition phase?

The justification for excluding other sources would typically stem from specific technical requirements, existing infrastructure integration, or unique security certifications mandated by the DoD Impact Levels 4, 5, and 6. Without further details, it's difficult to ascertain if these exclusions were fully justified or if they limited potential cost savings for the government.

How does the cost per unit of Azure services compare to other government-approved cloud providers for similar impact levels?

A direct per-unit cost comparison is challenging without granular data on specific services consumed and their associated pricing structures across different cloud providers. However, agencies often leverage government-wide acquisition contracts (GWACs) or Enterprise License Agreements (ELAs) to secure volume discounts. The effectiveness of this contract's pricing hinges on whether such mechanisms were fully utilized or if direct negotiation yielded competitive rates.

What are the long-term implications of relying on a single vendor for such critical cloud infrastructure?

Long-term reliance on a single vendor can lead to vendor lock-in, potentially limiting future flexibility and negotiation power. It also concentrates risk, as any service disruptions or security breaches affecting the sole provider could have significant operational impacts on the DoD. Diversification strategies or robust contingency plans are crucial to mitigate these risks.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 MICROSOFT WAY, REDMOND, WA, 98052

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,694,437

Exercised Options: $41,694,437

Current Obligation: $41,694,437

Actual Outlays: $1,617,709

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC105023D0003

IDV Type: IDC

Timeline