DHS awards $2.18M for Red Hat software, with 9 bidders indicating strong competition

Contract Overview

Contract Amount: $2,184,044 ($2.2M)

Contractor: FCN, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2025-09-29

End Date: 2027-03-31

Contract Duration: 548 days

Daily Burn Rate: $4.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: AWARD FOR RED HAT ENTERPRISE SOFTWARE LICENSE SUBSCRIPTIONS AND MAINTENANCE SUPPORT

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of Homeland Security obligated $2.2 million to FCN, INC. for work described as: AWARD FOR RED HAT ENTERPRISE SOFTWARE LICENSE SUBSCRIPTIONS AND MAINTENANCE SUPPORT Key points: 1. Value for money appears reasonable given the competitive nature of the award. 2. Strong competition with 9 bidders suggests effective price discovery. 3. Contract duration of nearly two years provides stability for essential software. 4. Performance is tied to critical IT infrastructure for the U.S. Coast Guard. 5. This contract falls within the 'Other Computer Related Services' category. 6. The firm-fixed-price structure shifts risk to the contractor.

Value Assessment

Rating: good

The award of $2.18 million for Red Hat Enterprise Linux subscriptions and maintenance appears competitive. With 9 bidders, the government likely secured a favorable price. Benchmarking against similar enterprise software agreements is difficult without specific feature comparisons, but the firm-fixed-price contract and the competitive landscape suggest a good value proposition. The duration of the contract (548 days) also aligns with typical software support cycles.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating a robust bidding process. The presence of 9 bidders suggests a healthy market for Red Hat Enterprise Linux support and subscriptions, allowing the government to solicit and receive multiple competitive offers. This level of competition is ideal for ensuring fair market pricing and preventing vendor lock-in.

Taxpayer Impact: The high number of bidders directly benefits taxpayers by driving down costs through competitive pressure, ensuring the government is not overpaying for essential software licenses and support.

Public Impact

The U.S. Coast Guard benefits from reliable access to Red Hat Enterprise Linux software. This ensures the continued operation of critical IT systems supporting maritime security and operations. The contract supports the maintenance and availability of essential digital infrastructure. Workforce implications are indirect, supporting IT professionals who manage these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if future renewals are not competitively bid.
Reliance on a single software vendor for critical operating systems.

Positive Signals

Strong competition at award mitigates immediate price gouging concerns.
Firm-fixed-price contract provides cost certainty for the duration.
Long-term support and maintenance ensure system stability.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on operating system software and support. The market for enterprise Linux distributions like Red Hat is mature and competitive, with several major players and numerous support providers. Government spending on enterprise software licenses and maintenance is substantial, often driven by the need for secure, reliable, and scalable operating systems for mission-critical applications. Comparable spending benchmarks would typically involve analyzing other large federal contracts for similar software suites or support services.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). While FCN, Inc. is the prime contractor, the extent of small business subcontracting is not detailed here. However, the strong competition from 9 bidders suggests that a diverse range of companies, potentially including small businesses if they offer specialized Red Hat services, could have participated or may be involved in subcontracting.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. As a delivery order under a larger contract vehicle, its execution will be monitored by the U.S. Coast Guard and the Department of Homeland Security. Transparency is facilitated by public contract databases. The firm-fixed-price nature simplifies financial oversight, focusing on delivery and performance rather than cost reimbursement. Inspector General oversight would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Red Hat Enterprise Linux Subscriptions
Software Maintenance Support
IT Infrastructure Services
Operating System Licenses
Department of Homeland Security IT Procurement

Risk Flags

Potential for vendor lock-in
Reliance on single-source software vendor
Cybersecurity risks inherent in operating systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $2.2 million to FCN, INC.. AWARD FOR RED HAT ENTERPRISE SOFTWARE LICENSE SUBSCRIPTIONS AND MAINTENANCE SUPPORT

Who is the contractor on this award?

The obligated recipient is FCN, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $2.2 million.

What is the period of performance?

Start: 2025-09-29. End: 2027-03-31.

What is the track record of FCN, Inc. as a federal contractor, particularly with the Department of Homeland Security?

FCN, Inc. has a significant history as a federal contractor, frequently securing awards across various agencies, including the Department of Homeland Security (DHS). Their contract portfolio often includes IT hardware, software, and related services. Analyzing their past performance within DHS, specifically for similar software licensing and maintenance agreements, would provide insight into their reliability and ability to meet government requirements. A review of past performance evaluations and any reported issues or successes on prior DHS contracts would be crucial for a comprehensive assessment. Their consistent presence suggests a capacity to navigate federal procurement processes and deliver on contracted obligations.

How does the price of this Red Hat Enterprise Linux subscription compare to commercial market rates or other government contracts?

Directly comparing the price without specific license counts, support tiers, and contract terms is challenging. However, the presence of 9 bidders under full and open competition strongly suggests the price is competitive and likely aligned with or better than commercial market rates. Government entities often negotiate favorable pricing through bulk purchasing and competitive solicitations. To benchmark effectively, one would need to compare the per-unit cost (e.g., per subscription, per support hour) against other federal contracts for Red Hat Enterprise Linux awarded around the same period, or against publicly available commercial price lists, adjusting for any volume discounts or specific service level agreements.

What are the primary risks associated with relying on Red Hat Enterprise Linux for critical Coast Guard IT systems?

The primary risks associated with relying on Red Hat Enterprise Linux (RHEL) for critical Coast Guard IT systems revolve around vendor dependency, security vulnerabilities, and potential obsolescence. Vendor dependency means the Coast Guard is reliant on Red Hat for updates, patches, and support, which could be impacted by Red Hat's business decisions or financial stability. Security vulnerabilities, though actively managed by Red Hat, are an inherent risk with any complex software; a zero-day exploit could have significant consequences. Furthermore, as technology evolves, RHEL versions may eventually be deprecated, requiring costly upgrades or migrations. Ensuring robust security practices, timely patching, and strategic long-term planning for software lifecycle management are crucial mitigation strategies.

How effective is the firm-fixed-price contract type in managing costs for software subscriptions and maintenance?

The firm-fixed-price (FFP) contract type is generally considered highly effective for managing costs in scenarios like software subscriptions and maintenance where the scope of work is well-defined. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This provides the government with cost certainty, as the total expenditure is known upfront. It incentivizes the contractor, FCN, Inc. in this case, to manage its own costs efficiently to maintain profitability. For predictable services like software licenses and standard maintenance, FFP shifts the risk of cost overruns to the contractor, making it a preferred choice for budget predictability and control.

What is the historical spending trend for Red Hat Enterprise Linux or similar software within the Department of Homeland Security?

Historical spending on Red Hat Enterprise Linux and similar enterprise operating system software within the Department of Homeland Security (DHS) is likely substantial and has probably seen a steady trend, reflecting the government's increasing reliance on robust IT infrastructure. DHS agencies, including the U.S. Coast Guard, operate complex systems requiring stable and secure operating platforms. While specific historical data for this exact contract isn't provided, it's reasonable to infer that DHS procures significant quantities of enterprise software licenses and support annually. Analyzing past DHS contract awards for Red Hat or comparable Linux distributions over the last 5-10 years would reveal spending patterns, average award values, and the prevalence of competitive versus sole-source procurements, indicating evolving needs and procurement strategies.

What are the implications of the 'Delivery Order' contract type for this award?

The 'Delivery Order' (AW: DELIVERY ORDER) designation indicates that this award is a task order placed against a previously established indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar contract vehicle. This means that the underlying contract, likely awarded through a competitive process itself, establishes terms and conditions, including pricing structures and performance expectations. The delivery order then specifies the exact quantity, delivery schedule, and total price for a particular requirement, such as these Red Hat subscriptions. This approach allows agencies to procure goods or services efficiently as needed, while the initial IDIQ contract ensures a baseline level of competition and pre-negotiated terms, streamlining the acquisition process for individual orders.

Industry Classification

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

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2600 TOWER OAKS BLVD STE 575, ROCKVILLE, MD, 20852

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

Financial Breakdown

Contract Ceiling: $10,293,999

Exercised Options: $4,211,533

Current Obligation: $2,184,044

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC71B

IDV Type: GWAC

Timeline