DoD Spends $183M on VMware Licenses for Army, Raising Questions on Value and Competition
Contract Overview
Contract Amount: $183,218,776 ($183.2M)
Contractor: Dell Federal Systems L.P
Awarding Agency: Department of Defense
Start Date: 2022-01-28
End Date: 2024-01-22
Contract Duration: 724 days
Daily Burn Rate: $253.1K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: VMWARE SOFTWARE LICENSE MAINTENANCE FOR 229,290 CURRENT ARMY LICENSES.
Place of Performance
Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $183.2 million to DELL FEDERAL SYSTEMS L.P for work described as: VMWARE SOFTWARE LICENSE MAINTENANCE FOR 229,290 CURRENT ARMY LICENSES. Key points: 1. Significant expenditure on essential software licenses highlights reliance on a key vendor. 2. The contract's duration and fixed-price nature may limit flexibility and cost optimization. 3. Competition method needs scrutiny to ensure taxpayer value for this substantial investment. 4. IT sector spending benchmarks suggest this is a substantial, but not necessarily excessive, outlay for enterprise software.
Value Assessment
Rating: fair
The $183.2 million price tag for VMware licenses and maintenance over two years appears high. Benchmarking against similar large-scale enterprise software agreements is crucial to determine if this represents fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While advertised as full and open competition, the specific award mechanism (BPA Call) warrants further examination to understand how competitive pressures were applied. The fixed-price contract type suggests price was determined upfront, potentially limiting further negotiation.
Taxpayer Impact: The substantial cost raises concerns about taxpayer impact. Ensuring competitive pricing and efficient use of funds is paramount for maximizing return on investment.
Public Impact
Army operations heavily depend on this VMware software, impacting readiness and efficiency. Taxpayers are funding a significant portion of the DoD's IT infrastructure. The long-term implications of this licensing agreement on future IT modernization efforts are unclear.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- High cost for software licenses
- Long contract duration
- Potential for vendor lock-in
Positive Signals
- Essential software for Army operations
- Fixed-price contract provides cost certainty
Sector Analysis
This contract falls within the IT sector, specifically software licensing and maintenance. Large enterprise software deals like this are common across government agencies, but often represent significant portions of IT budgets.
Small Business Impact
The data does not indicate any specific benefit or set-aside for small businesses in this contract award. Large enterprise software procurements often favor established prime contractors.
Oversight & Accountability
The award was made via a BPA Call, suggesting it was part of a pre-existing agreement. Oversight should focus on the initial BPA's competitiveness and the justification for this specific call's value.
Related Government Programs
- Other Computer Related Services
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- High dollar value
- Long contract duration
- Potential for vendor lock-in
- Limited transparency on specific competition details
Tags
other-computer-related-services, department-of-defense, tx, bpa-call, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $183.2 million to DELL FEDERAL SYSTEMS L.P. VMWARE SOFTWARE LICENSE MAINTENANCE FOR 229,290 CURRENT ARMY LICENSES.
Who is the contractor on this award?
The obligated recipient is DELL FEDERAL SYSTEMS L.P.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $183.2 million.
What is the period of performance?
Start: 2022-01-28. End: 2024-01-22.
What was the competitive landscape for this specific BPA call, and how did it ensure the best value for the Army?
The contract states 'full and open competition,' but the award mechanism was a BPA Call. Further analysis is needed to understand the specific solicitations under the BPA and the number of bids received for this particular call. Without this detail, it's difficult to definitively assess if the competitive process yielded the best possible value for the $183 million investment.
Are there opportunities to optimize costs for VMware software maintenance in the future, given the long-term nature of this agreement?
The current contract runs for 724 days (approximately two years). Future strategies could involve exploring alternative licensing models, negotiating volume discounts, or evaluating competitive software solutions upon contract expiration. Proactive market research and engagement with other vendors are key to identifying cost-saving opportunities.
How does this spending align with the Army's broader IT modernization strategy and potential cloud migration efforts?
The significant investment in on-premises VMware licenses raises questions about its alignment with potential cloud migration strategies. While VMware offers cloud solutions, the focus on maintaining existing licenses might indicate a slower transition to cloud-native architectures. Understanding the Army's long-term IT roadmap is crucial to assess the strategic effectiveness of this expenditure.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: IT AND TELECOM - APLLICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Dell Technologies Inc.
Address: 1 DELL WAY, ROUND ROCK, TX, 78682
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $276,246,449
Exercised Options: $183,218,776
Current Obligation: $183,218,776
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: 47QTCA22A0003
IDV Type: BPA
Timeline
Start Date: 2022-01-28
Current End Date: 2024-01-22
Potential End Date: 2024-01-22 00:00:00
Last Modified: 2023-01-27
More Contracts from Dell Federal Systems L.P
- THE Purpose of This Acquisition IS to Provide the Department of Veterans Affairs With an Enterprise Agreement for Brand Name Microsoft Software Products and Services. This Enterprise Agreement Will Provide 1) Support Services 2) Operational Support and 3) Additional Licenses of Microsoft Products, Current and Planned, to Support the VA Enterprise. Subject Procurement WAS Competed Among Microsoft's Eight Authorized Federal Government License Solution Providers. Igf::ot::igf — $1.7B (Department of Veterans Affairs)
- VA Microsoft Enterprise License Agreement — $1.6B (Department of Veterans Affairs)
- Microsoft Enterprise Agreement — $602.2M (Department of Veterans Affairs)
- Cloud Hosted Enterprise Services (ches) — $369.2M (General Services Administration)
- Microsoft Jela III AF Enterprise Licenses SA — $282.3M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)