DoD Awards $80.5M to Microsoft for Custom Computer Programming Services, No Competition

Contract Overview

Contract Amount: $80,515,592 ($80.5M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2019-06-28

End Date: 2024-06-27

Contract Duration: 1,826 days

Daily Burn Rate: $44.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MICROSOFT CONSULTING SERVICES - LABOR

Place of Performance

Location: FORT HUACHUCA, COCHISE County, ARIZONA, 85613

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $80.5 million to MICROSOFT CORPORATION for work described as: MICROSOFT CONSULTING SERVICES - LABOR Key points: 1. Significant contract value of $80.5 million awarded to a single large vendor. 2. Lack of competition raises concerns about potential overpricing and limited innovation. 3. Contract spans five years, indicating a long-term reliance on Microsoft's services. 4. Services fall under custom computer programming, a critical area for defense operations.

Value Assessment

Rating: questionable

The contract value of $80.5 million for custom computer programming services is substantial. Without competitive bidding, it's difficult to benchmark against similar contracts to ensure fair pricing. The lack of transparency makes a definitive value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers. The justification for sole-sourcing is not provided.

Taxpayer Impact: The absence of competition for an $80.5 million contract likely results in a higher cost to taxpayers than if multiple bids were solicited and evaluated.

Public Impact

Taxpayers may be overpaying for custom computer programming due to the lack of competitive bidding. The Department of Defense's reliance on a single vendor for critical IT services could pose a risk. Limited opportunities for small businesses to compete for a portion of this significant contract. Lack of transparency in the procurement process hinders public understanding of government spending.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Positive Signals

Services provided by a well-established vendor
Firm fixed price contract type

Sector Analysis

The IT services sector, particularly custom computer programming, is vital for modern defense operations. Spending benchmarks for such services can vary widely based on complexity and vendor. This $80.5 million award represents a significant investment in this area.

Small Business Impact

The contract was not awarded to small businesses, and the sole-source nature likely prevented any subcontracting opportunities for them. This represents a missed opportunity for small business participation in a large federal contract.

Oversight & Accountability

The sole-source award warrants scrutiny from oversight bodies to ensure the justification was sound and that taxpayer funds were used efficiently. A review of the necessity and pricing of these services is recommended.

Related Government Programs

Custom Computer Programming Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award lacks transparency and competitive pricing.
Potential for overpayment due to absence of competition.
Long-term reliance on a single vendor creates strategic risk.
Limited opportunities for small business participation.
Lack of detailed justification for sole-source procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.5 million to MICROSOFT CORPORATION. MICROSOFT CONSULTING SERVICES - LABOR

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $80.5 million.

What is the period of performance?

Start: 2019-06-28. End: 2024-06-27.

What was the justification for awarding this contract on a sole-source basis, and was it adequately documented?

The provided data does not include the justification for the sole-source award. Typically, sole-source contracts are justified when only one vendor possesses the necessary capabilities or when urgency prevents a competitive process. Without this documentation, it's impossible to assess the validity of the sole-source decision and ensure it served the government's best interest.

How does the $80.5 million contract value compare to industry benchmarks for similar custom computer programming services?

Benchmarking this $80.5 million contract is challenging without more specific details on the services rendered and the labor categories involved. However, given the lack of competition, there's a heightened risk that the pricing may exceed typical market rates. A thorough independent cost analysis would be needed to determine if the price is fair and reasonable.

What are the potential risks associated with the Department of Defense's long-term reliance on a single vendor for critical IT services?

Long-term reliance on a single vendor can lead to vendor lock-in, reduced bargaining power, and potential complacency in service delivery. It also increases the risk of service disruption if the vendor faces financial difficulties or strategic changes. Furthermore, it stifles innovation by limiting exposure to alternative solutions and technologies from other market players.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 MICROSOFT WAY, REDMOND, WA, 98052

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $81,125,592

Exercised Options: $80,845,592

Current Obligation: $80,515,592

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6600119D0019

IDV Type: IDC

Timeline