DoD's $119.5M Business Suite Licenses: Carahsoft Dominates with Firm Fixed Price Contracts

Contract Overview

Contract Amount: $119,513,830 ($119.5M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of Defense

Start Date: 2011-06-28

End Date: 2017-09-27

Contract Duration: 2,283 days

Daily Burn Rate: $52.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: BUSINESS SUITE EXPERT USER LICENSES

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22332

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $119.5 million to CARAHSOFT TECHNOLOGY CORP for work described as: BUSINESS SUITE EXPERT USER LICENSES Key points: 1. Significant investment in essential business software licenses for the Department of Defense. 2. Carahsoft Technology Corp. is the primary contractor, indicating a strong market position. 3. The contract utilizes a firm fixed-price structure, offering cost predictability. 4. A long performance period of over 6 years suggests sustained operational needs. 5. The contract was awarded under full and open competition, implying a broad search for vendors. 6. The North American Industry Classification System (NAICS) code 541519 points to specialized IT services. 7. The contract type is a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: good

The total value of $119.5 million for business suite user licenses over approximately six years appears reasonable given the scale of the Department of Defense. Without specific details on the number of licenses or the exact software suite, a direct per-unit cost comparison is difficult. However, the firm fixed-price nature of the contract suggests that the government secured predictable costs for these essential software licenses. The long duration and substantial value indicate a critical need and potentially a well-negotiated long-term agreement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of 3 bidders indicates a competitive process, though the specific details of the bidding landscape are not provided. Full and open competition generally leads to better price discovery and ensures the government receives offers from a wide range of qualified sources, potentially driving down costs and improving the quality of services.

Taxpayer Impact: Taxpayers benefit from the assurance that the government sought the best possible value through a competitive process, rather than being limited to a single or restricted set of vendors.

Public Impact

Department of Defense personnel benefit from access to essential business software, enhancing operational efficiency. The services delivered are software licenses crucial for administrative and operational functions within the DoD. The geographic impact is nationwide, supporting DoD operations across various locations. Workforce implications include enabling employees to perform their duties effectively with the necessary software tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if Carahsoft is the sole distributor for these specific licenses.
Reliance on a single primary contractor for a significant software suite could pose supply chain risks.
The long contract duration might not fully account for rapid technological advancements in business software.

Positive Signals

Firm fixed-price contract provides cost certainty for the DoD.
Full and open competition suggests a robust vetting of potential suppliers.
The contract's substantial value indicates a critical and well-supported need within the DoD.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on software licensing and related services. The market for enterprise business software licenses is vast, with major players offering comprehensive suites for large organizations. The Department of Defense represents a significant customer base for IT services and software, often procuring through large-scale contracts. Benchmarking this spending would require comparing it to similar large-scale enterprise software procurements by other federal agencies or large private sector organizations, considering the number of users and the specific software functionalities.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific contract, as the 'small business set-aside' flag is false. Carahsoft Technology Corp. is a large reseller, and while they may work with small businesses in their supply chain, this contract itself does not appear to be directly set aside for small businesses. The impact on the small business ecosystem would depend on Carahsoft's subcontracting practices, which are not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and program managers within the Department of the Army and the broader Department of Defense. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods or services at an agreed-upon price. Transparency is facilitated by the contract's award under full and open competition, with data typically available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Procurement
Enterprise Software Licensing
General Services Administration (GSA) Schedule Contracts
IT Services for Federal Agencies
Software as a Service (SaaS) Procurement

Risk Flags

Long contract duration may not align with rapid software evolution.
Reliance on a single primary reseller could limit future flexibility.
Lack of specific software details hinders in-depth value analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $119.5 million to CARAHSOFT TECHNOLOGY CORP. BUSINESS SUITE EXPERT USER LICENSES

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $119.5 million.

What is the period of performance?

Start: 2011-06-28. End: 2017-09-27.

What specific business suite software is being licensed under this contract, and what are its primary functions for the DoD?

The provided data does not specify the exact business suite software. However, given the NAICS code 541519 (Other Computer Related Services) and the context of enterprise licenses, it likely refers to a comprehensive suite of applications used for managing core business operations. This could include modules for human resources, financial management, supply chain, project management, or customer relationship management. The primary functions for the DoD would be to streamline administrative processes, improve data management, enhance decision-making, and ensure operational efficiency across various departments and units. Without more granular information, the precise software suite remains unidentified.

How does Carahsoft Technology Corp.'s role as a reseller impact the overall cost and service delivery for the DoD?

Carahsoft Technology Corp. primarily acts as a reseller and aggregator, often leveraging government-wide acquisition contracts (GWACs) or other large IDIQ vehicles to provide software and IT solutions. Their role can streamline procurement for agencies by consolidating offerings from multiple software manufacturers. For the DoD, this can mean simplified ordering and potentially competitive pricing due to Carahsoft's volume purchasing power and established relationships with vendors. However, as a reseller, Carahsoft adds a margin to the manufacturer's price. The overall cost-effectiveness depends on the negotiated discounts and the efficiency gains in the procurement process compared to direct purchasing. Service delivery is often managed in conjunction with the original software manufacturer, with Carahsoft facilitating the contractual and logistical aspects.

What are the potential risks associated with a single contractor, Carahsoft, holding such a large contract for business suite licenses?

A significant risk associated with a single primary contractor like Carahsoft holding a large contract is potential vendor lock-in. If Carahsoft is the exclusive or primary channel for these specific licenses, the DoD may have limited flexibility to switch to alternative solutions or vendors without incurring substantial costs or disruption. Furthermore, reliance on one entity can create supply chain vulnerabilities; any issues faced by Carahsoft, such as financial instability or changes in their business strategy, could directly impact the DoD's access to critical software. While competition was involved in the initial award, the long duration and the nature of software licensing could reduce future competitive pressures if alternatives are not actively explored or if the contract is repeatedly renewed with the incumbent.

How does the firm fixed-price contract type benefit the Department of Defense in this scenario?

The firm fixed-price (FFP) contract type provides significant cost certainty for the Department of Defense. Under an FFP agreement, the contractor, Carahsoft Technology Corp., assumes the primary risk for cost overruns. This means the DoD knows the exact amount it will pay for the business suite user licenses throughout the contract's duration, assuming the scope of work remains unchanged. This predictability is crucial for budgeting and financial planning within a large organization like the DoD. It protects the government from unexpected price increases related to the contractor's labor, materials, or overhead, allowing for more accurate allocation of funds and reducing the potential for budget shortfalls related to this specific procurement.

Given the contract's duration (2011-2017), what does historical spending data suggest about the DoD's ongoing needs for such software?

The contract's performance period from June 28, 2011, to September 27, 2017, spanning over six years, indicates a sustained and long-term requirement for business suite software within the Department of Defense. This duration suggests that the software is integral to the DoD's operations and that the agency likely experienced consistent needs for user licenses throughout this period. The substantial award amount of $119.5 million further underscores the scale of these ongoing requirements. Such long-term commitments often reflect the strategic importance of the software and the significant investment required for implementation and integration into existing DoD systems. It implies that the DoD views this software as a critical enabler for its mission.

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12369 SUNRISE VALLEY DR,STE. D2, RESTON, VA, 20191

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $195,889,355

Exercised Options: $131,867,849

Current Obligation: $119,513,830

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS35F0131R

IDV Type: FSS

Timeline