VA awards $602M Microsoft Enterprise Agreement to Dell Federal Systems, spanning over 360 days

Contract Overview

Contract Amount: $602,237,304 ($602.2M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-04-01

End Date: 2026-03-31

Contract Duration: 364 days

Daily Burn Rate: $1.7M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MICROSOFT ENTERPRISE AGREEMENT

Place of Performance

Location: ROUND ROCK, WILLIAMSON County, TEXAS, 78682

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $602.2 million to DELL FEDERAL SYSTEMS L.P for work described as: MICROSOFT ENTERPRISE AGREEMENT Key points: 1. The contract's value suggests a significant investment in enterprise software licensing and support for the VA. 2. Competition dynamics for large enterprise software agreements can be complex, often involving established vendors and specific licensing models. 3. Performance risk may be moderate, depending on the successful integration and adoption of Microsoft products across VA systems. 4. The contract's duration of approximately one year indicates a need for ongoing software access and updates. 5. This falls within the Software Publishers sector, a critical area for government IT infrastructure. 6. The firm-fixed-price structure aims to provide cost certainty for the VA.

Value Assessment

Rating: good

Benchmarking the value of a $602 million Microsoft Enterprise Agreement is challenging without specific details on user counts, software modules, and support levels. However, for a large federal agency like the VA, such an expenditure is not uncommon for comprehensive enterprise software solutions. The firm-fixed-price nature provides cost predictability. Comparisons to similar large-scale enterprise software procurements by other federal agencies would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bidders (implied by 'no': 2) suggests a competitive process, though the specifics of the bidding landscape for such large enterprise agreements are often dominated by a few key players. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: A full and open competition for a significant software agreement like this is beneficial for taxpayers as it encourages multiple vendors to offer their best pricing and terms, potentially leading to cost savings compared to a sole-source or limited competition scenario.

Public Impact

Veterans Affairs personnel will benefit from access to updated Microsoft software and services, potentially improving efficiency in healthcare delivery and administrative functions. The contract supports the delivery of essential IT infrastructure and software tools necessary for the VA's mission. The primary geographic impact is national, as the VA operates across numerous facilities nationwide. Workforce implications include ensuring VA employees have the necessary software tools and training to utilize the licensed products effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with Microsoft products, making future transitions costly.
Risk of underutilization of licensed software, leading to inefficient spending.
Dependence on a single vendor for critical enterprise software can pose supply chain risks.

Positive Signals

Leveraging a widely adopted software suite like Microsoft can enhance interoperability across VA systems.
The firm-fixed-price contract provides budget certainty for the VA.
Full and open competition suggests a competitive pricing environment was sought.

Sector Analysis

The Software Publishers sector is a cornerstone of modern IT infrastructure, providing the operating systems, productivity suites, and specialized applications that power government operations. This contract for Microsoft enterprise software fits within the broader trend of federal agencies consolidating software licenses and support to achieve economies of scale and streamline IT management. Comparable spending benchmarks for enterprise software agreements can vary widely based on agency size, user base, and specific software needs, but multi-million dollar agreements are common for large federal entities.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Large enterprise software agreements of this magnitude are typically awarded to major technology vendors or their prime federal contractors, which are often large businesses. There may be opportunities for small businesses to participate as subcontractors to Dell Federal Systems, particularly in areas like implementation, training, or specialized support services, but the primary awardee is a large entity.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting officers and program managers. Transparency is generally maintained through contract award databases like FPDS. Accountability measures are tied to the performance work statement and delivery schedules. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract is suspected.

Related Government Programs

Microsoft Enterprise Agreements
Federal Civilian IT Spending
Software Licensing and Support
Department of Veterans Affairs IT Modernization

Risk Flags

Potential for vendor lock-in
Underutilization of licensed software
Dependence on single vendor for critical software

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $602.2 million to DELL FEDERAL SYSTEMS L.P. MICROSOFT ENTERPRISE 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 $602.2 million.

What is the period of performance?

Start: 2025-04-01. End: 2026-03-31.

What is the historical spending pattern for Microsoft enterprise agreements at the Department of Veterans Affairs?

Analyzing historical spending on Microsoft enterprise agreements at the VA is crucial for understanding trends and identifying potential cost efficiencies or escalations. Without specific historical data for this exact contract vehicle, we can infer that the VA, as a large federal agency with extensive IT needs, likely engages in recurring procurements for Microsoft software and services. Previous enterprise agreements, if any, would provide a baseline for comparison. Factors such as user growth, adoption of new Microsoft products (e.g., cloud services like Microsoft 365), and changes in licensing models over time would influence spending patterns. A detailed review of past VA contracts for similar Microsoft solutions would reveal whether this $602 million award represents an increase, decrease, or stable level of investment in Microsoft technologies.

How does the per-user cost of this Microsoft Enterprise Agreement compare to industry benchmarks?

Determining the precise per-user cost for this $602 million Microsoft Enterprise Agreement requires knowing the total number of users covered and the specific Microsoft products and services included (e.g., Office 365 E3/E5, Windows licenses, server software). Federal agencies often negotiate volume discounts, which can make their per-user costs competitive. However, without these specific details, a direct comparison to industry benchmarks is difficult. Generally, large enterprise agreements aim for cost-effectiveness through bulk purchasing. If the VA has a large user base, the per-user cost might be lower than commercial rates for smaller organizations. Conversely, if the agreement includes premium services or a high number of users with extensive software needs, the per-user cost could be higher. Benchmarking would involve comparing the negotiated rates against publicly available federal procurement data for similar Microsoft agreements or against commercial enterprise licensing guides, adjusted for volume and federal purchasing power.

What are the key performance indicators (KPIs) for this contract, and how will they be measured?

Key performance indicators (KPIs) for a Microsoft Enterprise Agreement typically focus on software availability, performance, and support responsiveness. While not explicitly detailed in the provided data, common KPIs would likely include metrics such as software uptime guarantees (e.g., 99.9% availability for cloud services), response times for technical support incidents based on severity levels, and successful delivery of software updates and patches. The contract's Performance Work Statement (PWS) would outline these specific KPIs, along with the methodologies for measurement (e.g., vendor-reported metrics, user surveys, system logs) and any associated remedies or incentives for meeting or failing to meet these targets. The VA's contracting officer and technical points of contact would be responsible for monitoring these KPIs throughout the contract period.

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 significant track record as a major IT solutions provider for the federal government, including extensive experience with large-scale enterprise software agreements. They are a prime contractor for numerous federal agencies, often delivering hardware, software, and related services. Their experience typically encompasses managing complex licensing, deployment, and support for major software vendors like Microsoft. When evaluating their performance on this specific VA contract, it would be prudent to examine past performance evaluations, any reported issues or successes on similar large software procurements, and their overall relationship with the VA and other federal clients. Their established presence and existing contract vehicles suggest a capacity to handle the scope and complexity of this $602 million Microsoft Enterprise Agreement.

What are the potential risks associated with the sole-source nature of specific software components within this broader enterprise agreement?

The provided data indicates this contract was awarded under 'FULL AND OPEN COMPETITION,' not sole-source. Therefore, the premise of the question is incorrect based on the available information. If, however, certain software components *within* a larger enterprise agreement were procured via sole-source means (which is not indicated here), the risks would include lack of price competition, potential for higher costs, limited vendor options for future upgrades or support, and increased dependency on a single supplier. This could lead to vendor lock-in and make it difficult for the agency to switch to alternative solutions or negotiate better terms in the future. For this specific contract, the full and open competition mitigates these risks at the primary award level.

How does this contract align with the VA's broader IT modernization and digital transformation goals?

This $602 million Microsoft Enterprise Agreement is likely a critical component of the VA's broader IT modernization and digital transformation efforts. Modern enterprise software suites, particularly those incorporating cloud-based services (like Microsoft 365), are fundamental to enabling digital transformation. Such agreements provide the foundational tools for enhancing collaboration, improving data management, streamlining workflows, and delivering more efficient services to veterans. By consolidating licenses and support under a single, competitively awarded agreement, the VA can achieve greater standardization, improve security posture, and potentially reduce the complexity and cost of managing its software environment. This aligns with goals to create a more agile, responsive, and technologically advanced healthcare and benefits system for veterans.

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: $4,650,679,410

Exercised Options: $602,257,922

Current Obligation: $602,237,304

Actual Outlays: $539,002,544

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QTCA22D003G

IDV Type: FSS

Timeline