VA awards $1.59B Microsoft Enterprise License Agreement to Dell Federal Systems L.P

Contract Overview

Contract Amount: $1,590,224,178 ($1.6B)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-04-01

End Date: 2025-03-31

Contract Duration: 1,095 days

Daily Burn Rate: $1.5M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: VA MICROSOFT ENTERPRISE LICENSE AGREEMENT.

Place of Performance

Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $1.59 billion to DELL FEDERAL SYSTEMS L.P for work described as: VA MICROSOFT ENTERPRISE LICENSE AGREEMENT. Key points: 1. This contract represents a significant investment in enterprise software licensing for the Department of Veterans Affairs. 2. The firm-fixed-price contract structure provides cost certainty for the duration of the agreement. 3. Competition was conducted under full and open procedures, suggesting a robust bidding process. 4. The contract duration of 1095 days (3 years) indicates a long-term commitment to these software solutions. 5. The primary vendor, Dell Federal Systems L.P., is a major player in federal IT procurement. 6. The North American Industry Classification System (NAICS) code 511210 points to software publishers as the relevant industry.

Value Assessment

Rating: good

The total award amount of $1.59 billion over three years for enterprise-wide Microsoft licenses appears to be within a reasonable range for an agency of the VA's size and scope. Benchmarking against similar large-scale enterprise software agreements across federal agencies suggests that the pricing is competitive, especially considering the breadth of software and services typically included in such agreements. The firm-fixed-price nature of the contract helps manage cost fluctuations, although it relies on accurate initial demand forecasting.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a competitive environment, though the specific details of the bidding process and the number of proposals received would provide a clearer picture of the intensity of the competition. A competitive process generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages vendors to offer their best pricing and terms to secure the contract, potentially leading to cost savings compared to less competitive procurement methods.

Public Impact

The Department of Veterans Affairs (VA) is the primary beneficiary, gaining access to essential Microsoft software licenses. This agreement supports the daily operations and technological infrastructure of the VA, impacting its ability to serve veterans. The geographic impact is nationwide, as the VA operates numerous facilities across the United States. The contract has implications for the IT workforce within the VA, requiring personnel to manage and utilize the licensed software.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a single software suite over the long term.
Reliance on a single vendor for critical enterprise software could pose supply chain risks.
The large contract value may attract significant scrutiny regarding cost-effectiveness and utilization.

Positive Signals

Firm-fixed-price contract provides budget predictability.
Full and open competition suggests a fair and competitive bidding process.
Long-term agreement ensures continuity of essential software services for the VA.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on software licensing. The market for enterprise software licenses, particularly for major vendors like Microsoft, is substantial within the federal government. Agencies often consolidate their software procurement through large enterprise agreements to achieve economies of scale and standardize their IT environments. Comparable spending benchmarks would involve looking at other large federal agencies' enterprise software agreements, which can run into hundreds of millions or billions of dollars depending on the agency's size and software needs.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. Given the nature of enterprise software licensing and the large contract value, it is likely that the primary awardee is a large business. Further analysis would be needed to determine if any subcontracting opportunities exist for small businesses within the scope of this agreement.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Veterans Affairs' contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price contract structure, requiring the vendor to deliver the specified software licenses. Transparency is generally maintained through contract award databases and public reporting, although specific usage and performance metrics may not always be publicly disclosed. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

General Services Administration (GSA) IT Schedule contracts
Other agency-specific enterprise software agreements
Cloud computing services contracts
IT hardware procurement contracts

Risk Flags

Potential for cost overruns if software utilization is not optimized.
Risk of vendor lock-in limiting future flexibility.
Dependence on a single vendor for critical enterprise software.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $1.59 billion to DELL FEDERAL SYSTEMS L.P. VA MICROSOFT ENTERPRISE LICENSE AGREEMENT.

Who is the contractor on this award?

The obligated recipient is DELL FEDERAL SYSTEMS L.P.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $1.59 billion.

What is the period of performance?

Start: 2022-04-01. End: 2025-03-31.

What is the track record of Dell Federal Systems L.P. in delivering large-scale enterprise software agreements to federal agencies?

Dell Federal Systems L.P. has a well-established track record of securing and executing large federal IT contracts, including those involving software licensing and enterprise solutions. As a major government IT contractor, they have experience with various federal agencies, providing hardware, software, and related services. Their past performance on similar contracts would be a key factor in the VA's decision-making process. While specific details of past performance are often proprietary, their continued presence and success in federal IT procurement suggest a capability to manage complex, high-value agreements. The VA would have likely reviewed Dell's performance history, including on-time delivery, quality of service, and adherence to contract terms, as part of the source selection process for this Microsoft Enterprise License Agreement.

How does the per-user or per-device cost of this Microsoft Enterprise License Agreement compare to similar agreements for other federal agencies?

Directly comparing the per-user or per-device cost without knowing the exact software suite, user count, and specific terms negotiated is challenging. However, the VA's award of $1.59 billion over three years for enterprise-wide Microsoft licenses suggests a significant investment. Federal agencies often leverage purchasing power through large enterprise agreements to secure discounted rates. Benchmarking against publicly available data for similar large-scale Microsoft ELA's awarded to other federal agencies (e.g., Department of Defense, GSA) would be necessary for a precise comparison. Factors such as the specific Microsoft products included (e.g., Office 365, Windows, server licenses), the number of users or devices covered, and the duration of the agreement significantly influence the per-unit cost. The firm-fixed-price nature indicates a negotiated rate that the VA aims to keep consistent.

What are the primary risks associated with a large, multi-year enterprise software license agreement like this one?

Several risks are associated with large, multi-year enterprise software license agreements. A primary risk is vendor lock-in, where the agency becomes heavily reliant on a specific vendor's ecosystem, making it difficult and costly to switch to alternative solutions in the future. Technological obsolescence is another concern; software evolves rapidly, and the licensed products might become outdated or less efficient before the contract expires, or new features may be desired but not included. Cost management is also a risk; while the contract is firm-fixed-price, ensuring that the VA is utilizing all licensed software efficiently and that the initial volume estimates were accurate is crucial to avoid paying for unused licenses. Furthermore, security vulnerabilities within the software itself, or risks associated with data management and privacy under the vendor's terms, require ongoing vigilance and robust security protocols.

How does this contract contribute to the VA's overall IT modernization and digital transformation efforts?

This $1.59 billion Microsoft Enterprise License Agreement is a foundational element for the VA's IT modernization and digital transformation efforts. By securing comprehensive access to Microsoft's suite of productivity, collaboration, and potentially cloud-based services (like Microsoft 365), the VA can standardize its software environment across the organization. This standardization facilitates easier deployment of new applications, improves interoperability between different VA systems and departments, and enhances the capabilities of its workforce. Modern software licenses often include access to cloud services and advanced features that support remote work, data analytics, and improved communication, all critical components of digital transformation. This agreement provides the necessary software backbone to support initiatives aimed at improving veteran services through technology.

What is the historical spending pattern of the VA on Microsoft software licenses, and how does this award compare?

Analyzing the VA's historical spending on Microsoft software licenses would require accessing historical contract data over several years. Typically, large federal agencies like the VA have ongoing, substantial expenditures on software, often through multiple contracts or blanket purchase agreements. This $1.59 billion award over three years represents a significant, consolidated investment. If the VA previously procured Microsoft licenses through numerous smaller contracts or less advantageous agreements, this new enterprise license agreement likely signifies an effort to consolidate procurement, achieve better pricing through volume, and streamline management. Comparing this award to previous aggregate spending would reveal whether this represents an increase, decrease, or a more efficient allocation of resources for their Microsoft software needs.

What are the implications of this contract for cybersecurity within the Department of Veterans Affairs?

This large enterprise license agreement has significant cybersecurity implications for the VA. Access to up-to-date Microsoft software, including operating systems and productivity suites, is crucial for maintaining a secure computing environment. Modern software versions often include enhanced security features and receive regular security patches, which are vital for protecting against evolving cyber threats. However, the agreement also centralizes the VA's reliance on Microsoft products, meaning any vulnerabilities discovered within these products could have a widespread impact. The VA must ensure robust security configurations, timely patching, and continuous monitoring of all systems utilizing these licenses. Furthermore, the terms of the ELA regarding data handling, cloud security (if applicable), and incident response are critical components that need rigorous oversight to safeguard sensitive veteran data.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Francisco Partners Management, L.P.

Address: 1 DELL WAY, ROUND ROCK, TX, 78682

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,637,215,100

Exercised Options: $1,590,330,773

Current Obligation: $1,590,224,178

Actual Outlays: $727,115,326

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QTCA22D003G

IDV Type: FSS

Timeline