USDA Awards $28.8M AWS Cloud Services Contract to Amazon Web Services, Inc

Contract Overview

Contract Amount: $28,853,233 ($28.9M)

Contractor: Amazon WEB Services, Inc

Awarding Agency: Department of Agriculture

Start Date: 2024-08-20

End Date: 2029-08-19

Contract Duration: 1,825 days

Daily Burn Rate: $15.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: STRATUS POOL 1 CLOUD SERVICE BOA FOR AWS CLOUD SERVICE PROVIDER CORE SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20250

State: District of Columbia Government Spending

Plain-Language Summary

Department of Agriculture obligated $28.9 million to AMAZON WEB SERVICES, INC for work described as: STRATUS POOL 1 CLOUD SERVICE BOA FOR AWS CLOUD SERVICE PROVIDER CORE SERVICES Key points: 1. Significant award for cloud infrastructure services. 2. Sole-source award to a dominant market player. 3. Long-term contract (5 years) with potential for future growth. 4. Focus on core cloud services for financial operations.

Value Assessment

Rating: good

The contract value of $28.8M over five years suggests a competitive per-year cost for AWS core services, aligning with market rates for large-scale cloud deployments. However, without specific service breakdowns, a precise value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source, meaning competition was not sought. While AWS is a leading provider, the lack of competition limits price discovery and potentially higher savings for taxpayers.

Taxpayer Impact: The sole-source nature may result in a higher cost than if competitive bids were solicited, impacting taxpayer value.

Public Impact

Ensures continuity of critical financial computing infrastructure for the USDA. Supports the operational needs of the Office of the Chief Financial Officer. Leverages established cloud infrastructure for data processing and hosting.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potential cost savings.
Long-term commitment may not adapt to rapidly changing cloud technologies.
Dependence on a single provider for critical services.

Positive Signals

Utilizes a leading cloud service provider for robust infrastructure.
Provides essential computing services for financial operations.
Long-term contract offers stability and predictable service delivery.

Sector Analysis

This contract falls within the IT sector, specifically cloud computing infrastructure. Spending benchmarks for government cloud services vary widely, but large-scale deployments like this often represent significant investments in modernizing IT capabilities.

Small Business Impact

This contract was awarded directly to Amazon Web Services, Inc., a large corporation. There is no indication of subcontracting opportunities for small businesses within this specific award.

Oversight & Accountability

The contract is managed by the USDA's Office of the Chief Financial Officer. Oversight will focus on service delivery, performance metrics, and adherence to contract terms. The sole-source nature warrants close monitoring to ensure fair pricing.

Related Government Programs

Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Department of Agriculture Contracting
Office of the Chief Financial Officer Programs

Risk Flags

Sole-source award
Long contract duration
Potential for price increases
Vendor lock-in
Reliance on a single provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $28.9 million to AMAZON WEB SERVICES, INC. STRATUS POOL 1 CLOUD SERVICE BOA FOR AWS CLOUD SERVICE PROVIDER CORE SERVICES

Who is the contractor on this award?

The obligated recipient is AMAZON WEB SERVICES, INC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Office of the Chief Financial Officer).

What is the total obligated amount?

The obligated amount is $28.9 million.

What is the period of performance?

Start: 2024-08-20. End: 2029-08-19.

What is the estimated cost savings compared to a fully competed contract for similar AWS services?

Quantifying exact savings from a sole-source award is difficult. However, industry analyses suggest that competitive bidding for cloud services can yield savings ranging from 10% to 30% or more, depending on the scope and duration. Without competition, the USDA may be paying a premium for these AWS services.

What are the specific risks associated with relying solely on AWS for core financial services over a five-year period?

Key risks include vendor lock-in, potential price increases upon contract renewal or modification, and exposure to AWS's service outages or security breaches. Furthermore, rapid technological advancements in cloud computing might make the chosen services less optimal or cost-effective over the contract's duration.

How effectively does this contract support the USDA's long-term IT modernization goals?

This contract supports modernization by leveraging a leading cloud platform for critical financial operations. However, its effectiveness is tempered by the sole-source nature, which may limit the adoption of potentially more innovative or cost-effective solutions that could emerge from a competitive market.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 12314424Q0142

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12900 WORLDGATE DR STE 800, HERNDON, VA, 20170

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

Financial Breakdown

Contract Ceiling: $28,853,233

Exercised Options: $28,853,233

Current Obligation: $28,853,233

Actual Outlays: $21,256,822

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 12314424G0052

IDV Type: BOA

Timeline