DOT's $12.4M Microsoft ELA renewal for software licenses awarded to Dell Federal Systems

Contract Overview

Contract Amount: $12,420,309 ($12.4M)

Contractor: Dell Federal Systems L.P

Awarding Agency: Department of Transportation

Start Date: 2025-08-22

End Date: 2026-10-31

Contract Duration: 435 days

Daily Burn Rate: $28.6K/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THIS FIRM FIXED PRICE CALL ORDER IS FOR THE RENEWAL OF MICROSOFT LICENSES FOR THE BASE PERIOD OF DATE OF AWARD THROUGH 10/31/2025 FOLLOWED BY THREE (3) 12-MONTH OPTION PERIODS UNDER THE MICROSOFT ENTERPRISE LICENSE AGREEMENT (MS ELA).

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20590

State: District of Columbia Government Spending

Plain-Language Summary

Department of Transportation obligated $12.4 million to DELL FEDERAL SYSTEMS L.P for work described as: THIS FIRM FIXED PRICE CALL ORDER IS FOR THE RENEWAL OF MICROSOFT LICENSES FOR THE BASE PERIOD OF DATE OF AWARD THROUGH 10/31/2025 FOLLOWED BY THREE (3) 12-MONTH OPTION PERIODS UNDER THE MICROSOFT ENTERPRISE LICENSE AGREEMENT (MS ELA). Key points: 1. Value for money assessed through comparison with similar enterprise license agreements. 2. Competition dynamics indicate a competed contract, potentially leading to better pricing. 3. Risk indicators include reliance on a single vendor for critical software. 4. Performance context is a renewal, suggesting ongoing need and established usage. 5. Sector positioning within software publishers, a common area for government IT spending.

Value Assessment

Rating: good

The contract's value of approximately $12.4 million for a multi-year renewal of Microsoft licenses appears reasonable within the context of enterprise-level software agreements. Benchmarking against similar government-wide or agency-specific Microsoft ELA renewals would provide a more precise assessment of value. The fixed-price nature of the contract offers cost certainty for the Federal Highway Administration. However, without detailed breakdowns of specific software and user counts, a definitive value-for-money judgment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was competed under a Simplified Acquisition Procedure (SAP), suggesting a competitive process was employed. The data indicates it was 'COMPETED UNDER SAP', which typically involves soliciting offers from multiple sources. The number of bidders is not explicitly stated, but the fact that it was competed implies that more than one offer was considered, contributing to price discovery and potentially securing a more favorable outcome for the government compared to a sole-source award.

Taxpayer Impact: A competed award, even under SAP, generally benefits taxpayers by fostering competition that can drive down costs and encourage better terms for the government.

Public Impact

Federal employees within the Department of Transportation, specifically the Federal Highway Administration, will benefit from continued access to essential Microsoft software. The contract delivers software licenses, ensuring operational continuity for critical IT functions. The geographic impact is primarily within the District of Columbia, where the agency is located. Workforce implications include enabling productivity for users reliant on Microsoft's suite of applications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a single software provider for extended periods.
Reliance on Microsoft's product roadmap and pricing strategies.
Security vulnerabilities associated with widespread software deployment.

Positive Signals

Established relationship with a major software vendor, ensuring compatibility and support.
Renewal of existing licenses suggests successful prior utilization and integration.
Fixed-price contract provides budget predictability.

Sector Analysis

This contract falls within the Software Publishers sector, a significant segment of the IT industry. Government spending on software licenses, particularly for widely used enterprise suites like Microsoft's, is substantial. The market is dominated by a few large players, making enterprise license agreements a common procurement vehicle. Comparable spending benchmarks would involve looking at other federal agencies' Microsoft ELA renewals or similar large-scale software procurements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a renewal of an enterprise license agreement, it is unlikely to have significant subcontracting opportunities directly tied to this specific award, though the prime contractor, Dell Federal Systems L.P., may engage small businesses in other aspects of their broader operations. The focus is on a large-scale software acquisition rather than services that typically involve a larger small business subcontracting component.

Oversight & Accountability

Oversight for this contract would primarily reside with the Federal Highway Administration's contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price structure, requiring delivery of specified licenses. Transparency is facilitated by the contract being competed and publicly reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Microsoft Enterprise Agreements
Software Licensing Procurements
Federal IT Modernization Programs
Department of Transportation IT Spending

Risk Flags

Potential for vendor lock-in
Reliance on single-source software provider
Cybersecurity vulnerabilities associated with widespread software use

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $12.4 million to DELL FEDERAL SYSTEMS L.P. THIS FIRM FIXED PRICE CALL ORDER IS FOR THE RENEWAL OF MICROSOFT LICENSES FOR THE BASE PERIOD OF DATE OF AWARD THROUGH 10/31/2025 FOLLOWED BY THREE (3) 12-MONTH OPTION PERIODS UNDER THE MICROSOFT ENTERPRISE LICENSE AGREEMENT (MS ELA).

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 Transportation (Federal Highway Administration).

What is the total obligated amount?

The obligated amount is $12.4 million.

What is the period of performance?

Start: 2025-08-22. End: 2026-10-31.

What is the historical spending trend for Microsoft licenses within the Federal Highway Administration?

Analyzing historical spending on Microsoft licenses by the Federal Highway Administration (FHWA) is crucial for understanding the context of this $12.4 million renewal. While specific historical data for FHWA's Microsoft licenses isn't provided in the current data, federal agencies typically engage in multi-year Enterprise License Agreements (ELAs) with Microsoft. These renewals often reflect an increase in costs due to inflation, new software features, or expanded user bases. Without prior FHWA ELA data, it's difficult to ascertain if this $12.4 million represents a significant increase or decrease compared to previous periods. However, the duration of the contract (base period through 2026) suggests a consistent need for these software capabilities. Agencies often track their spending on major software vendors like Microsoft to manage budgets and identify potential cost-saving opportunities through consolidation or renegotiation.

How does the per-user cost of this Microsoft ELA compare to other federal agencies or commercial benchmarks?

Determining the precise per-user cost for this Microsoft ELA renewal is challenging without knowing the exact number of users and the specific Microsoft products included in the $12.4 million contract. However, enterprise agreements are designed to offer volume discounts. To benchmark, one would need to compare the total cost against the number of licensed users and the specific software suite (e.g., Microsoft 365 E3, E5). Federal agencies often leverage the General Services Administration's (GSA) schedules or participate in government-wide contracts to secure favorable pricing. Commercial benchmarks can be found through industry reports or by comparing with similar-sized private sector organizations. Given that this contract was competed under SAP, it suggests an effort to achieve competitive pricing. If the number of users is substantial, the per-user cost should ideally be lower than retail or smaller business licenses.

What are the specific Microsoft products and versions covered under this Enterprise License Agreement?

The provided data specifies this is a renewal of Microsoft licenses under an Enterprise License Agreement (ELA) but does not detail the specific products or versions included. Typically, Microsoft ELAs cover a broad suite of products, which can include operating systems (like Windows), productivity software (like the Microsoft Office suite - Word, Excel, PowerPoint, Outlook), collaboration tools (like Teams), and potentially server software or cloud services (like Azure or Microsoft 365 subscriptions). The Federal Highway Administration (FHWA) would have a detailed list of the software entitlements within their contract documentation. Understanding the exact product mix is critical for assessing the value proposition, ensuring the licenses align with agency needs, and comparing costs against alternative solutions or previous agreements. Without this detail, it's difficult to evaluate if the $12.4 million covers essential software or includes underutilized components.

What is Dell Federal Systems L.P.'s track record in providing and managing Microsoft Enterprise License Agreements for federal agencies?

Dell Federal Systems L.P. is a significant IT solutions provider with a substantial presence in the federal market. Their track record in managing large-scale software licensing, including Microsoft Enterprise Agreements (ELAs), is generally robust. As a major reseller and integrator, Dell typically partners directly with software vendors like Microsoft to fulfill government contracts. Their experience would likely encompass procurement, deployment support, and potentially license management services. Federal agencies often select vendors like Dell based on their established relationships with software manufacturers, their ability to meet security requirements, and their capacity to handle complex IT procurements. A review of Dell's past performance on similar contracts, including customer satisfaction ratings and any past performance issues, would provide further insight into their reliability for this specific ELA renewal.

Are there any identified risks associated with the long-term reliance on Microsoft software for the Federal Highway Administration?

Yes, there are several potential risks associated with the long-term reliance on Microsoft software, even with a competitively procured ELA. One primary risk is vendor lock-in; as agencies become deeply integrated with Microsoft's ecosystem (Windows, Office 365, Azure), switching to alternative solutions becomes technically complex and costly. This reliance also makes the agency vulnerable to Microsoft's future pricing strategies and product roadmap decisions. Security is another concern; widespread use of any software platform presents a large attack surface, and vulnerabilities in Microsoft products can have significant impacts across the agency. Furthermore, dependence on proprietary software can sometimes limit flexibility and innovation compared to open-source alternatives. The FHWA must maintain robust cybersecurity practices and stay informed about Microsoft's security updates and best practices to mitigate these risks.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

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: $35,724,841

Exercised Options: $12,420,309

Current Obligation: $12,420,309

Actual Outlays: $12,420,252

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 692M1523A00001

IDV Type: BPA

Timeline