DoD's $29.4M Cisco appliance purchase shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $29,397,410 ($29.4M)

Contractor: World Wide Technology LLC

Awarding Agency: Department of Defense

Start Date: 2016-09-21

End Date: 2019-10-07

Contract Duration: 1,111 days

Daily Burn Rate: $26.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CISCO FIREPOWER VIRTUAL APPLIANCE

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $29.4 million to WORLD WIDE TECHNOLOGY LLC for work described as: CISCO FIREPOWER VIRTUAL APPLIANCE Key points: 1. Value appears reasonable given the market for advanced network security hardware. 2. Competition was limited, potentially impacting price discovery and taxpayer savings. 3. Contract duration and delivery order structure suggest a need for ongoing security solutions. 4. The award was made to a single vendor, indicating a lack of broader market engagement. 5. Performance context is tied to electronic computer manufacturing, a critical defense sector. 6. Sector positioning is within IT infrastructure, specifically network security appliances.

Value Assessment

Rating: good

The contract value of approximately $29.4 million for Cisco Firepower virtual appliances appears to be within a reasonable range for enterprise-grade network security solutions. Benchmarking against similar large-scale procurements of advanced cybersecurity hardware suggests that the pricing, while not explicitly detailed per unit, is competitive for the technology offered. The firm-fixed-price structure also provides cost certainty for the Department of Defense. However, without more granular data on specific configurations and support levels, a definitive value-for-money assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for robust market engagement. However, the data indicates only one bid was received. While the solicitation process was open, the low number of bids suggests potential barriers to entry for other qualified vendors or a lack of interest in this specific requirement. This could be due to the specialized nature of the product or the contract terms.

Taxpayer Impact: A single bid under full and open competition means taxpayers may not have benefited from the full spectrum of potential price reductions that could arise from a more competitive bidding environment.

Public Impact

The Department of Defense benefits from enhanced network security capabilities, protecting critical infrastructure and data. Services delivered include the provision of virtual network security appliances, crucial for modern defense networks. Geographic impact is likely nationwide, supporting DoD installations and operations. Workforce implications may include the need for trained personnel to manage and maintain the new security infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition despite full and open solicitation could lead to higher costs.
Single bid received may indicate market concentration or barriers to entry for other vendors.
Contract duration of over three years requires careful monitoring of performance and evolving needs.

Positive Signals

Awarded under full and open competition, adhering to procurement best practices.
Firm-fixed-price contract provides cost predictability for the agency.
Procurement of advanced security appliances enhances the DoD's cybersecurity posture.

Sector Analysis

The procurement of Cisco Firepower virtual appliances falls within the Information Technology sector, specifically focusing on cybersecurity hardware and software. The market for network security solutions is substantial and highly competitive, with numerous vendors offering a range of products from firewalls to intrusion prevention systems. This contract represents a significant investment in safeguarding sensitive defense networks against evolving cyber threats. Comparable spending benchmarks in this area often involve multi-million dollar investments for enterprise-level security infrastructure.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. Given the nature of the product (advanced Cisco virtual appliances) and the prime contractor (World Wide Technology LLC, a large systems integrator), it is unlikely that small businesses were the primary focus of this direct award. However, the prime contractor may engage small businesses for subcontracting opportunities related to installation, support, or related IT services, though this is not explicitly detailed.

Oversight & Accountability

The Department of Defense employs various oversight mechanisms for contracts of this magnitude, including contract performance monitoring, financial audits, and program reviews. The firm-fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to this procurement.

Related Government Programs

Network Security Hardware Procurement
Cybersecurity Solutions
IT Infrastructure Modernization
Department of Defense IT Spending
Virtual Appliance Deployments

Risk Flags

Limited competition despite full and open solicitation
Single bid received
Potential for uncompetitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.4 million to WORLD WIDE TECHNOLOGY LLC. CISCO FIREPOWER VIRTUAL APPLIANCE

Who is the contractor on this award?

The obligated recipient is WORLD WIDE TECHNOLOGY 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 $29.4 million.

What is the period of performance?

Start: 2016-09-21. End: 2019-10-07.

What is the track record of World Wide Technology LLC in fulfilling similar large-scale IT infrastructure contracts for the Department of Defense?

World Wide Technology LLC (WWT) is a major government IT solutions provider with a significant history of delivering complex technology projects for federal agencies, including the Department of Defense. They have experience with large-scale hardware and software deployments, cloud solutions, and cybersecurity services. While specific performance metrics for this particular contract are not detailed here, WWT's general track record suggests they are capable of managing and executing contracts of this size and complexity. Their extensive partnerships with major technology vendors like Cisco further support their ability to fulfill such requirements. However, a deeper dive into past performance reviews and any documented issues on prior DoD contracts would provide a more comprehensive assessment.

How does the awarded price compare to the estimated value or benchmark pricing for Cisco Firepower virtual appliances in the federal market?

The awarded value of $29,397,410.45 represents the total contract value over its duration. Without a detailed breakdown of specific SKUs, quantities, licensing terms, and support packages included, a precise per-unit cost comparison is difficult. However, Cisco Firepower virtual appliances are enterprise-grade security solutions, and their pricing can vary significantly based on features, capacity, and support levels. The federal government often negotiates volume discounts. The benchmark price of $26,460 noted in the data might represent a specific component or a pre-negotiated unit price for a particular configuration. Given the total contract value and the likely scope, the overall price appears within the expected range for such a significant deployment, though further granular analysis would be needed to confirm optimal value.

What are the primary risks associated with a sole-bidder scenario, even under full and open competition?

A sole-bidder scenario, even when a contract is solicited under full and open competition, presents several risks. Primarily, it limits price competition, potentially leading to higher costs for the government than if multiple vendors had bid. This lack of competition can reduce the incentive for the awarded contractor to offer the most competitive pricing or the best possible terms. Furthermore, it raises questions about market dynamics: Was the requirement too specialized? Were there barriers to entry that discouraged other qualified vendors? Or was the solicitation poorly advertised? This situation can also indicate a lack of market readiness or interest, potentially impacting future procurements and the availability of alternative solutions. For taxpayers, the risk is paying a premium due to the absence of competitive pressure.

What is the expected effectiveness of Cisco Firepower virtual appliances in enhancing the Department of Defense's cybersecurity posture?

Cisco Firepower virtual appliances are designed to provide advanced threat defense capabilities, including next-generation firewall (NGFW) features, intrusion prevention systems (IPS), application visibility and control, and advanced malware protection. For the Department of Defense, deploying these virtual appliances is expected to significantly enhance their cybersecurity posture by providing a robust, integrated security solution capable of defending against a wide range of modern cyber threats. The virtual nature allows for flexible deployment across various environments. Effective implementation, proper configuration, and ongoing management are crucial for realizing these benefits. When properly utilized, these appliances contribute to network segmentation, threat detection, and incident response, thereby protecting critical military networks and sensitive data.

How has federal spending on cybersecurity solutions, particularly network security appliances, trended over the past five years?

Federal spending on cybersecurity solutions, including network security appliances, has seen a consistent upward trend over the past five years, driven by increasing cyber threats, evolving technology landscapes, and a growing awareness of the critical need for robust digital defenses across all government agencies. Agencies like the Department of Defense, Homeland Security, and others have significantly increased their investments in advanced security technologies. This includes spending on hardware like firewalls and intrusion detection systems, as well as software-based solutions and services. The shift towards virtual and cloud-based security solutions has also influenced spending patterns. Overall, the federal market for cybersecurity remains a substantial and growing segment of IT procurement, reflecting its high priority.

What is the significance of the 'Electronic Computer Manufacturing' (NAICS 334111) code in relation to this contract?

The North American Industry Classification System (NAICS) code 334111, 'Electronic Computer Manufacturing,' is assigned to establishments primarily engaged in manufacturing computers and related electronic equipment. While this contract is for Cisco Firepower *virtual* appliances, which are software-based, the NAICS code likely relates to the underlying technology or the manufacturing capabilities of the vendor or components involved in the broader ecosystem. It suggests that the procurement is tied to the production or development of computer hardware and related systems, even if the delivered product is a virtualized instance. This code is often used for procurements involving the manufacturing or integration of computer systems and peripherals.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

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

Parent Company: World Wide Technology Holding CO., Inc. (UEI: 131784451)

Address: 1 WORLD WIDE WAY, SAINT LOUIS, MO, 63146

Business Categories: Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $34,578,667

Exercised Options: $29,397,415

Current Obligation: $29,397,410

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: NNG15SC22B

IDV Type: GWAC

Timeline