DoD awards $38.7M for Oracle support, raising questions on value and competition for IT services

Contract Overview

Contract Amount: $38,714,214 ($38.7M)

Contractor: Affigent, LLC

Awarding Agency: Department of Defense

Start Date: 2020-05-22

End Date: 2022-05-24

Contract Duration: 732 days

Daily Burn Rate: $52.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THIS DELIVERY ORDER IS FOR ORACLE PREMIER SUPPORT MAINTENANCE ON PREVIOUSLY ACQUIRED LICENSES (PAL) FOR PEO EIS AND AMC. THE POP WILL RUN FOR 2 YEARS. FROM 25 MAY 20 THRU 24 MAY 2022

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $38.7 million to AFFIGENT, LLC for work described as: THIS DELIVERY ORDER IS FOR ORACLE PREMIER SUPPORT MAINTENANCE ON PREVIOUSLY ACQUIRED LICENSES (PAL) FOR PEO EIS AND AMC. THE POP WILL RUN FOR 2 YEARS. FROM 25 MAY 20 THRU 24 MAY 2022 Key points: 1. The contract's value appears high relative to its duration, suggesting potential overspending. 2. Limited competition raises concerns about price discovery and potential for inflated costs. 3. The reliance on a single vendor for critical software support poses a risk. 4. Performance context is limited, making it difficult to assess the true value delivered. 5. This contract falls within the broader IT services sector, characterized by significant government spending. 6. The fixed-price nature offers some cost certainty but may not reflect true market value. 7. The exclusion of sources in the competition process warrants further investigation.

Value Assessment

Rating: questionable

The total award of $38.7 million over two years for Oracle Premier Support Maintenance averages over $19 million annually. This figure seems high when benchmarked against typical IT maintenance contracts of similar scope and duration. Without specific details on the number of licenses or the level of support required, a precise per-unit cost comparison is difficult. However, the overall expenditure warrants scrutiny to ensure it aligns with market rates for enterprise software support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which is an unusual designation. While it implies some level of competition, the exclusion of specific sources suggests that the playing field was not entirely level. The presence of only two bidders, as indicated by the 'no' field, further limits the competitive landscape. This restricted competition may have led to a higher price than what could have been achieved in a truly open and unrestricted bidding process.

Taxpayer Impact: The limited competition means taxpayers may have paid a premium for this Oracle support. Without robust competition, the government has less leverage to negotiate favorable pricing, potentially leading to inefficient use of public funds.

Public Impact

The Department of the Army benefits from continued access to critical Oracle software and support. This contract ensures the operational continuity of PEO EIS and AMC systems. The services delivered are essential for maintaining the functionality of previously acquired Oracle licenses. The geographic impact is primarily within the Department of Defense's operational footprint. Workforce implications include ensuring IT personnel have the necessary tools and support to perform their duties.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in higher costs for taxpayers.
The 'exclusion of sources' clause raises concerns about the fairness and breadth of the competition.
High annual expenditure for software maintenance could indicate potential overpricing.
Reliance on a single vendor for critical support creates a dependency risk.

Positive Signals

The contract ensures continued support for essential PEO EIS and AMC systems.
A fixed-price contract provides cost certainty for the duration of the delivery order.
The award was made to AFFIGENT, LLC, a known entity in government contracting.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically focusing on software maintenance and support. The IT services market for the federal government is substantial, with significant spending on software licenses, maintenance, and related professional services. Comparable spending benchmarks for enterprise software support can vary widely based on the vendor, product, and support level. However, the annual cost of this contract suggests a significant investment in maintaining Oracle's enterprise solutions.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. The primary contractor, AFFIGENT, LLC, is likely a mid-to-large-sized business, and the focus of this contract is on direct service delivery rather than fostering small business participation through set-asides.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract type, requiring the vendor to deliver specified support services. Transparency is facilitated through contract databases like FPDS, where award details are recorded. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Oracle Software Maintenance
IT Support Services
PEO EIS Systems
AMC Systems
Department of Defense IT Procurement
Software Licensing and Maintenance

Risk Flags

Limited Competition
High Contract Value
Potential for Price Escalation
Vendor Lock-in Risk
Exclusion of Sources Justification Needed

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.7 million to AFFIGENT, LLC. THIS DELIVERY ORDER IS FOR ORACLE PREMIER SUPPORT MAINTENANCE ON PREVIOUSLY ACQUIRED LICENSES (PAL) FOR PEO EIS AND AMC. THE POP WILL RUN FOR 2 YEARS. FROM 25 MAY 20 THRU 24 MAY 2022

Who is the contractor on this award?

The obligated recipient is AFFIGENT, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $38.7 million.

What is the period of performance?

Start: 2020-05-22. End: 2022-05-24.

What is the specific nature of the Oracle Premier Support Maintenance being provided, and what services are included?

The delivery order specifies 'Oracle Premier Support Maintenance on previously acquired licenses (PAL) for PEO EIS and AMC.' Oracle Premier Support is typically the highest tier of support offered by Oracle, providing 24/7 technical support, access to patches and updates, proactive support services, and sometimes access to specialized technical resources. For PEO EIS (Program Executive Office, Enterprise Information Systems) and AMC (Army Materiel Command), this support likely covers critical enterprise resource planning (ERP) systems, database management systems, or other key Oracle software applications essential for their operations. The exact services would be detailed in the Statement of Work (SOW) attached to the delivery order, outlining response times, issue resolution procedures, and specific product versions covered.

How does the $38.7 million award compare to historical spending on Oracle support by the Department of the Army or similar agencies?

Benchmarking this $38.7 million award requires comparing it to historical spending patterns for similar Oracle support contracts within the Department of the Army or across the federal government. Without access to specific historical data for these exact systems (PEO EIS, AMC) or comparable Oracle Premier Support contracts, a direct comparison is challenging. However, annualizing the cost ($38.7M / 2 years = $19.35M/year) provides a basis for comparison. Agencies often spend millions annually on enterprise software support. If historical data shows similar or lower annual costs for comparable support levels and license counts, this award might be within expected ranges. Conversely, if historical spending was significantly lower, it could indicate price increases or scope changes that warrant further investigation into value for money.

What were the specific reasons for excluding other potential sources in the competition process?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that while the initial solicitation was intended to be open, specific sources were later excluded. The Federal Acquisition Regulation (FAR) outlines conditions under which sources may be excluded, such as when a specific technology or capability is only available from a limited number of sources, or when a previous contract established unique requirements. For Oracle support, exclusions might arise if only certain resellers or authorized support partners are permitted by Oracle to provide Premier Support for specific product versions or environments. The justification for these exclusions would be documented in the contract file and would need to demonstrate that the exclusion was necessary and in the government's best interest, ensuring fair and reasonable pricing despite the limited competition.

What are the potential risks associated with relying on a single vendor for critical software support, especially with limited competition?

Relying on a single vendor like Oracle for critical software support, particularly when competition is limited, presents several risks. Firstly, there's a 'vendor lock-in' risk, where the government becomes highly dependent on Oracle's ecosystem, making it difficult and costly to switch to alternative solutions. Secondly, limited competition can lead to price escalation over time, as the vendor faces less pressure to offer competitive rates. Thirdly, the government may have less leverage in negotiating terms and conditions, potentially accepting less favorable service level agreements (SLAs) or support features. Finally, if the vendor experiences financial difficulties or changes its support strategy, the government's operations could be significantly disrupted, impacting mission-critical systems.

How does the fixed-price contract type influence the assessment of value for money in this context?

A Firm Fixed Price (FFP) contract type, as indicated ('pt': 'FIRM FIXED PRICE'), aims to provide price certainty for the government. In this case, the $38.7 million is the total price for the two-year support period. This structure shifts the risk of cost overruns to the contractor, AFFIGENT, LLC. From a value-for-money perspective, FFP is generally preferred when the scope of work is well-defined and technical risks are low, as is often the case with standard software maintenance. However, assessing value still requires ensuring the fixed price itself is reasonable and competitive. If the fixed price is significantly higher than market rates or what could have been achieved through broader competition, then value for money may still be questionable, despite the price certainty.

What is the significance of the contract being a 'Delivery Order' rather than a new contract, and what does this imply about the underlying agreement?

This award being a 'Delivery Order' (aw: 'DELIVERY ORDER') signifies that it is a task order issued under a pre-existing contract, likely a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a basic ordering agreement (BOA). This implies that the foundational terms, conditions, and potentially the competition requirements were established when the parent contract was awarded. Delivery orders are used to procure specific quantities of supplies or services within the scope of the parent contract. The fact that this is a delivery order suggests that the initial competition (or justification for sole-sourcing) for the parent contract has already occurred. The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation likely applies to how this specific delivery order was competed or awarded under the umbrella of that parent contract.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nana Regional Corporation Inc

Address: 2553 DULLES VIEW DR, HERNDON, VA, 20171

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, DoT Certified Disadvantaged Business Enterprise, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $66,116,420

Exercised Options: $38,714,214

Current Obligation: $38,714,214

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG15SC59B

IDV Type: GWAC

Timeline