DoD's $39.5M Red Hat Software Subscription contract awarded to DLT Solutions, LLC

Contract Overview

Contract Amount: $39,510,360 ($39.5M)

Contractor: DLT Solutions, LLC

Awarding Agency: Department of Defense

Start Date: 2015-05-30

End Date: 2018-05-29

Contract Duration: 1,095 days

Daily Burn Rate: $36.1K/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: RED HAT SOFTWARE SUBSCRIPTIONS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $39.5 million to DLT SOLUTIONS, LLC for work described as: RED HAT SOFTWARE SUBSCRIPTIONS Key points: 1. Value for money appears fair given the duration and nature of software subscriptions. 2. Competition dynamics were limited, with the award made under a Blanket Purchase Agreement (BPA) call. 3. Risk indicators are moderate, primarily related to potential vendor lock-in and the need for ongoing subscription management. 4. Performance context is within the Defense Information Systems Agency (DISA) for software support. 5. Sector positioning is within IT software and services, a critical area for defense operations.

Value Assessment

Rating: fair

The total contract value of $39.5 million over three years for software subscriptions suggests a moderate annual spend. Benchmarking against similar large-scale software subscription contracts is challenging without more specific details on the software suite and user base. However, the price per year is approximately $13.17 million, which seems within a reasonable range for enterprise-level software support for a large organization like the Department of Defense. The fixed-price nature of the contract provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a BPA call, indicating that the underlying BPA may have been competed previously, but this specific call likely had limited competition. The data shows 2 offers were received, suggesting some level of competition, but the award mechanism (BPA call) often implies pre-negotiated terms or a restricted pool of eligible vendors. Without knowing the specifics of the BPA competition, it's difficult to definitively assess the breadth of market engagement for this particular call.

Taxpayer Impact: The limited competition for this BPA call means taxpayers may not have benefited from the most aggressive pricing achievable through a fully open and competitive process. While two offers were received, a broader competition could potentially have driven prices lower.

Public Impact

The primary beneficiaries are the Department of Defense personnel who rely on Red Hat software for their daily operations. The services delivered include software subscriptions, maintenance, and support for Red Hat products. The geographic impact is likely widespread across various DoD installations and operational units. Workforce implications include ensuring IT personnel have the necessary tools and support to maintain and operate critical systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with specialized software subscriptions.
Reliance on a single vendor for critical software updates and security patches.
Need for continuous monitoring of subscription renewals and potential price increases.

Positive Signals

Provides access to essential Red Hat software, crucial for many DoD IT infrastructure components.
The fixed-price contract offers budget predictability for the duration of the award.
Awarded to a known vendor (DLT Solutions) with experience in government contracting.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically software publishers and subscription services. The market for enterprise Linux distributions and associated support is dominated by a few key players, with Red Hat being a significant one. The Department of Defense is a major consumer of such software, requiring robust, secure, and supported operating systems and middleware for its vast network infrastructure. Comparable spending benchmarks would involve looking at other large federal agencies' software subscription costs for similar enterprise solutions.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). DLT Solutions, LLC, is a large business. There is no explicit information on subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this specific contract appears minimal, though DLT may engage small businesses in other capacities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight bodies. The Defense Contract Management Agency (DCMA) may have been involved in contract administration. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Red Hat Enterprise Linux Subscriptions
Department of Defense IT Software Procurement
Defense Information Systems Agency (DISA) Contracts
Blanket Purchase Agreements (BPAs)

Risk Flags

Limited competition award mechanism (BPA Call)
Potential for price increases upon renewal
Reliance on specific vendor technology

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.5 million to DLT SOLUTIONS, LLC. RED HAT SOFTWARE SUBSCRIPTIONS

Who is the contractor on this award?

The obligated recipient is DLT SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $39.5 million.

What is the period of performance?

Start: 2015-05-30. End: 2018-05-29.

What specific Red Hat software products and versions are covered under this $39.5 million contract?

The provided data does not specify the exact Red Hat software products or versions included in this $39.5 million contract. Typically, such large subscription contracts would cover core offerings like Red Hat Enterprise Linux (RHEL) operating systems, potentially middleware solutions (e.g., JBoss), containerization platforms (e.g., OpenShift), and associated support and maintenance services. The Defense Information Systems Agency (DISA) likely procured these subscriptions to standardize and support its extensive IT infrastructure, ensuring access to critical updates, security patches, and technical assistance for a defined period. Without a detailed product list, a precise assessment of value for money or technical scope is limited.

How does the annual cost of approximately $13.17 million compare to Red Hat's standard enterprise pricing?

Comparing the annual cost of approximately $13.17 million to Red Hat's standard enterprise pricing requires knowledge of the specific products, quantities, support levels, and any negotiated discounts. Government contracts, especially those awarded under BPAs or through large resellers like DLT Solutions, often include volume discounts or specific terms negotiated over time. While $13.17 million per year is substantial, it could represent a significant volume of subscriptions and support agreements. To benchmark effectively, one would need to compare it against Red Hat's published list prices for comparable enterprise agreements, factoring in potential government-specific discounts or the value-added services provided by the reseller. The fact that it was competed under a BPA suggests some level of pre-negotiated pricing, but the exact discount achieved is not evident from the summary data.

What is the track record of DLT Solutions, LLC, in fulfilling similar large-scale software subscription contracts for the Department of Defense?

DLT Solutions, LLC, has a significant track record of providing IT hardware, software, and services to the federal government, including the Department of Defense. As a major government IT reseller, they frequently hold contracts and participate in BPAs that facilitate the procurement of software subscriptions from various vendors, including Red Hat. Their experience suggests they are capable of managing the logistical and administrative aspects of delivering these subscriptions. The award of this $39.5 million contract indicates a level of trust and past performance recognized by the Defense Information Systems Agency (DISA). Specific details on past performance metrics for similar Red Hat contracts would typically be found in more detailed contract award documents or performance reviews, which are not provided here.

What are the potential risks associated with a sole-source or limited-competition award for essential software subscriptions?

The primary risks associated with sole-source or limited-competition awards for essential software subscriptions include higher costs for taxpayers, reduced innovation, and potential vendor lock-in. When competition is limited, vendors may have less incentive to offer the most competitive pricing, as the agency has fewer alternatives. This can lead to paying a premium for the software and support. Vendor lock-in occurs because switching to a different software provider can be complex, costly, and disruptive, especially for deeply integrated systems. This contract was competed under a BPA call with 2 offers, indicating limited rather than sole-source competition. While this is better than sole-source, it still presents a risk of not achieving the best possible value compared to a fully open competition.

How does this spending compare to overall DoD spending on software and IT services?

This $39.5 million contract for Red Hat software subscriptions represents a small fraction of the Department of Defense's overall IT and software spending, which runs into the tens of billions of dollars annually. The DoD is one of the largest government consumers of technology, procuring a vast array of hardware, software, cloud services, cybersecurity solutions, and IT support. While $39.5 million is a significant sum for a single contract, it is likely one of many such awards supporting different software needs across various branches and agencies within the DoD. To contextualize this spending, one would need to examine the DoD's total IT budget and compare this contract's value to the allocated amounts for operating systems, middleware, and related support services.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: HC102814R0009

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: DLT Mergerco LLC

Address: 2411 DULLES CORNER PARK STE 800, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,510,360

Exercised Options: $39,510,360

Current Obligation: $39,510,360

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102814A0003

IDV Type: BPA

Timeline