FAA Spends $2.8M on Microsoft Unified Support for One Year, Lacking Competition

Contract Overview

Contract Amount: $2,823,720 ($2.8M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Transportation

Start Date: 2025-01-18

End Date: 2026-01-21

Contract Duration: 368 days

Daily Burn Rate: $7.7K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ITAR-25-0722 SLI#: 53816 SLI#: 53124 SLI#: 54743 SLI#: 56464 MICROSOFT UNIFIED SUPPORT FOR POP: 01/22/2025 - 01/21/2026 / JUSTIFICATION: MS MICROSOFT UNIFIED SUPPORT FOR FAA (POC JONATHAN HAUPT).

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84116

State: Utah Government Spending

Plain-Language Summary

Department of Transportation obligated $2.8 million to MICROSOFT CORPORATION for work described as: ITAR-25-0722 SLI#: 53816 SLI#: 53124 SLI#: 54743 SLI#: 56464 MICROSOFT UNIFIED SUPPORT FOR POP: 01/22/2025 - 01/21/2026 / JUSTIFICATION: MS MICROSOFT UNIFIED SUPPORT FOR FAA (POC JONATHAN HAUPT). Key points: 1. High cost for a single vendor's support contract. 2. Lack of competition raises concerns about price discovery. 3. Potential risk of vendor lock-in and escalating costs. 4. IT sector spending on software support is common, but this price point warrants scrutiny.

Value Assessment

Rating: questionable

The $2.82 million price for one year of Microsoft Unified Support is high, especially without competitive bidding. Benchmarking against similar government contracts for enterprise software support is difficult without more data, but this appears to be a premium price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed under SAP and was awarded as a BPA call. The limited competition likely resulted in a higher price than if it had been fully and openly competed, as the government did not explore alternative support providers or negotiate aggressively.

Taxpayer Impact: Taxpayers are likely paying a premium for this support due to the lack of competitive pressure, potentially diverting funds from other critical needs.

Public Impact

Essential software support for the FAA's operations is secured. However, the cost could impact other agency priorities. Lack of transparency in pricing may lead to public distrust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High cost for single vendor support
Limited competition
Potential vendor lock-in

Positive Signals

Essential IT support secured
Firm Fixed Price contract

Sector Analysis

The IT sector, particularly software support, represents a significant portion of government spending. While enterprise support contracts are common, the lack of competition and the high annual cost for a single vendor's services are notable.

Small Business Impact

This contract was awarded to Microsoft Corporation, a large business. There is no indication that small businesses were involved in providing this specific support service.

Oversight & Accountability

The award was made via a BPA call, suggesting some level of pre-competed framework. However, the lack of specific competition for this call warrants further oversight to ensure fair pricing and value.

Related Government Programs

Computer Systems Design Services
Department of Transportation Contracting
Federal Aviation Administration Programs

Risk Flags

High cost for a single vendor's support
Lack of competitive bidding
Potential for price escalation
Vendor lock-in risk
Limited transparency in pricing justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $2.8 million to MICROSOFT CORPORATION. ITAR-25-0722 SLI#: 53816 SLI#: 53124 SLI#: 54743 SLI#: 56464 MICROSOFT UNIFIED SUPPORT FOR POP: 01/22/2025 - 01/21/2026 / JUSTIFICATION: MS MICROSOFT UNIFIED SUPPORT FOR FAA (POC JONATHAN HAUPT).

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Federal Aviation Administration).

What is the total obligated amount?

The obligated amount is $2.8 million.

What is the period of performance?

Start: 2025-01-18. End: 2026-01-21.

What is the specific value proposition of Microsoft Unified Support compared to alternative support models or competitors, and how does this justify the $2.82 million annual cost?

The value proposition of Microsoft Unified Support typically includes proactive technical support, strategic guidance, and access to specialized resources. However, without a competitive bidding process, it's difficult to ascertain if the FAA received the best possible value. Alternative support models or even direct negotiation with Microsoft might yield different pricing structures. The $2.82 million cost needs to be rigorously justified against tangible benefits and comparable market rates.

What are the risks associated with relying solely on Microsoft for unified support, particularly concerning potential price increases in future contract renewals and vendor lock-in?

The primary risk is vendor lock-in, where the FAA becomes heavily reliant on Microsoft's ecosystem and proprietary knowledge, making it difficult and costly to switch providers. This dependency can lead to significant price increases in future renewals, as Microsoft may face less pressure to offer competitive rates. Furthermore, reliance on a single vendor can limit flexibility and innovation if alternative solutions emerge.

How effective is this contract in ensuring the FAA's IT systems remain operational and secure, given the significant investment in vendor support?

The effectiveness hinges on the quality and responsiveness of Microsoft's support services. While unified support aims to enhance system uptime and security through proactive measures and rapid issue resolution, its true effectiveness can only be measured by the FAA's operational performance metrics and security incident rates. Without competitive benchmarks, it's challenging to definitively state if this specific investment is the most effective use of funds for achieving these goals.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

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: $2,823,720

Exercised Options: $2,823,720

Current Obligation: $2,823,720

Actual Outlays: $2,823,720

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 692M1525A00001

IDV Type: BPA

Timeline