DoD awards $74.5M for ESRI software, raising questions about value and competition for IT services

Contract Overview

Contract Amount: $74,493,382 ($74.5M)

Contractor: Environmental Systems Research Institute, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-02-24

End Date: 2022-02-28

Contract Duration: 1,830 days

Daily Burn Rate: $40.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF NEW DELIVERY ORDER AWARD FOR ESRI SOFTWARE PRODUCTS

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $74.5 million to ENVIRONMENTAL SYSTEMS RESEARCH INSTITUTE, INC. for work described as: IGF::OT::IGF NEW DELIVERY ORDER AWARD FOR ESRI SOFTWARE PRODUCTS Key points: 1. The contract's significant value warrants scrutiny for cost-effectiveness and potential for better pricing. 2. Full and open competition was utilized, but the number of bidders is not specified, impacting price discovery. 3. The long duration of the contract (5 years) suggests a need for ongoing performance monitoring. 4. This award falls within the 'Other Computer Related Services' NAICS code, a broad category. 5. The contract's fixed-price nature aims to control costs, but flexibility for evolving needs is a consideration. 6. The lack of small business set-aside indicates a focus on large prime contractors for this requirement.

Value Assessment

Rating: fair

The $74.5 million award over five years for ESRI software products represents a substantial investment. Benchmarking this against similar enterprise software licenses or IT service contracts is challenging without more specific details on the software modules and support included. The fixed-price nature provides cost certainty, but the overall value for money depends on the criticality and utilization of the ESRI suite within the Department of Defense. Without comparative data on per-unit costs or broader market pricing for comparable enterprise GIS solutions, assessing the pricing efficiency is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for ensuring a broad range of potential offerors and promoting competitive pricing. However, the specific number of bids received is not detailed, which is crucial for understanding the true level of competition. A high number of bidders typically leads to more aggressive pricing and better value for the government. If only a few bids were submitted, even under full and open competition, the price discovery mechanism might be less effective.

Taxpayer Impact: Full and open competition is intended to drive down prices through market forces, potentially saving taxpayer dollars. However, the effectiveness of this mechanism hinges on the actual number of competitive bids received and the responsiveness of the market to the government's needs.

Public Impact

The Department of Defense is the primary beneficiary, likely utilizing ESRI's Geographic Information System (GIS) software for various operational, intelligence, and planning functions. Services delivered include the provision of ESRI software products, which could encompass licenses, maintenance, and potentially support. The geographic impact is likely nationwide within DoD installations and operational areas, supporting a wide range of military activities. Workforce implications may involve training and utilization of personnel skilled in GIS software and data analysis across different military branches.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with specialized GIS software.
Risk of cost overruns if software needs evolve beyond initial scope.
Dependence on a single software provider for critical geospatial capabilities.

Positive Signals

Use of a widely adopted and industry-standard GIS platform.
Fixed-price contract structure provides cost predictability.
Full and open competition aims to ensure market-driven pricing.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on software licensing and related services. The market for enterprise GIS software is dominated by a few key players, with ESRI being a significant leader. The Department of Defense is a major consumer of such technologies, utilizing GIS for a wide array of applications from battlefield visualization to infrastructure management. Comparable spending benchmarks would involve looking at other large government or enterprise-level software procurements, particularly for specialized data management and analysis tools.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). This suggests that the requirement was likely fulfilled by large prime contractors capable of providing enterprise-level software solutions and comprehensive support. There is no explicit information on subcontracting plans for small businesses, which could represent missed opportunities for smaller firms to participate in the broader IT ecosystem supporting this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would be tied to the terms and conditions of the fixed-price delivery order, including delivery schedules and software functionality. Transparency is generally facilitated through contract award databases like FPDS, though detailed performance metrics are often internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

DoD Enterprise Software Agreements
Geographic Information System (GIS) Services
IT Services for Defense Agencies
Software Licensing and Maintenance Contracts

Risk Flags

Potential for vendor lock-in
Lack of specific competition metrics
Unclear performance metrics and SLAs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.5 million to ENVIRONMENTAL SYSTEMS RESEARCH INSTITUTE, INC.. IGF::OT::IGF NEW DELIVERY ORDER AWARD FOR ESRI SOFTWARE PRODUCTS

Who is the contractor on this award?

The obligated recipient is ENVIRONMENTAL SYSTEMS RESEARCH INSTITUTE, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $74.5 million.

What is the period of performance?

Start: 2017-02-24. End: 2022-02-28.

What specific ESRI software products and modules are included in this $74.5 million award, and what are their intended uses within the Department of Defense?

The provided data identifies the award as being for 'ESRI SOFTWARE PRODUCTS' but does not specify the exact modules or versions. ESRI's product suite is extensive, including ArcGIS Desktop, ArcGIS Enterprise, ArcGIS Online, and various specialized extensions for spatial analysis, data management, and visualization. Within the Department of Defense, these products are likely used for a broad range of applications such as mission planning, intelligence analysis, infrastructure management, environmental assessment, and logistics support. Understanding the specific components is crucial for assessing the true scope of the procurement and its alignment with DoD's operational requirements.

How does the $74.5 million cost over five years compare to historical spending on ESRI software by the Department of Defense or similar federal agencies?

Without access to historical spending data specifically for ESRI products within the DoD or comparable agencies, a direct comparison is difficult. However, $74.5 million over five years averages to approximately $14.9 million annually. This figure should be benchmarked against the total IT spending of the DoD and the proportion allocated to GIS solutions. If similar agencies procure comparable enterprise software suites for similar durations and user bases, this figure could provide a relative indicator of cost. Further analysis would require examining past contract awards for ESRI or competing GIS solutions to identify trends in pricing and volume.

What was the number of bids received for this delivery order, and how does this level of competition influence the final price and value for money?

The contract was awarded under 'FULL AND OPEN COMPETITION,' which theoretically allows any responsible source to submit an offer. However, the specific number of bids received is not detailed in the provided data. A robust competition, typically involving multiple qualified bidders, is expected to drive down prices and enhance value for the government. If only a few bids were submitted, even under a full and open solicitation, the government may have had less leverage in negotiating the final price. The effectiveness of the competition in achieving optimal price discovery is therefore contingent on the actual number and quality of proposals received.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract to ensure effective delivery and utilization of ESRI software?

The provided data does not specify the key performance indicators (KPIs) or service level agreements (SLAs) for this contract. Typically, for software licensing and maintenance contracts, KPIs might relate to software uptime, availability of technical support, response times for issue resolution, and successful delivery of software updates or patches. SLAs would define the expected level of service for these aspects. Without these details, it is challenging to assess how the government will measure the contractor's performance and ensure the software is meeting the DoD's operational needs effectively throughout the contract period.

Are there any identified risks associated with relying on a single vendor like ESRI for critical geospatial capabilities within the Department of Defense?

Yes, there are inherent risks associated with relying on a single vendor for critical capabilities. Vendor lock-in is a primary concern, making it difficult and potentially costly to switch to alternative solutions in the future. Dependence on ESRI means the DoD's geospatial operations are subject to ESRI's pricing strategies, product development roadmap, and business stability. Furthermore, if ESRI discontops certain products or significantly alters its licensing model, the DoD could face disruption or unexpected cost increases. Mitigation strategies often involve maintaining strong contract management, exploring interoperability with other systems, and periodically reassessing the market landscape.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 380 NEW YORK ST, REDLANDS, CA, 92373

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $90,126,969

Exercised Options: $74,493,382

Current Obligation: $74,493,382

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F5086H

IDV Type: FSS

Timeline