CMS Spends $97M on Salesforce SaaS for CRM, Awarded via Full and Open Competition

Contract Overview

Contract Amount: $97,044,580 ($97.0M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of Health and Human Services

Start Date: 2023-08-31

End Date: 2027-01-19

Contract Duration: 1,237 days

Daily Burn Rate: $78.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SALESFORCE IS A COMMERCIAL SOFTWARE AS A SERVICE (SAAS) FEDRAMP APPROVED TOOL THAT PROVIDES CUSTOMER RELATIONSHIP MANAGEMENT TECHNOLOGY. CMS USES SALESFORCE TO MANAGE RELATIONSHIPS WITH INDIVIDUALS WITHIN CMS AND TO CONNECT AND COLLABORATE WITH EXTE

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $97.0 million to CARAHSOFT TECHNOLOGY CORP for work described as: SALESFORCE IS A COMMERCIAL SOFTWARE AS A SERVICE (SAAS) FEDRAMP APPROVED TOOL THAT PROVIDES CUSTOMER RELATIONSHIP MANAGEMENT TECHNOLOGY. CMS USES SALESFORCE TO MANAGE RELATIONSHIPS WITH INDIVIDUALS WITHIN CMS AND TO CONNECT AND COLLABORATE WITH EXTE Key points: 1. Significant investment in a widely adopted CRM platform. 2. Competition was full and open, suggesting market availability. 3. Risk is moderate, tied to vendor lock-in and ongoing subscription costs. 4. IT sector spending, with a focus on software as a service.

Value Assessment

Rating: good

The $97M contract for Salesforce SaaS appears reasonable given its comprehensive CRM capabilities and FedRAMP approval. Benchmarking against similar large-scale SaaS deployments would provide further validation.

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 could have bid. This method generally promotes competitive pricing and allows the government to select the best value.

Taxpayer Impact: Full and open competition is expected to yield fair pricing, maximizing taxpayer value for essential CRM services.

Public Impact

Enhances CMS's ability to manage relationships with individuals. Facilitates collaboration and connection with external entities. Leverages a FedRAMP-approved cloud solution for security and compliance. Supports critical customer relationship management functions.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Potential for vendor lock-in with a proprietary SaaS solution.
Subscription costs can escalate over time.
Reliance on a single vendor for core CRM functionality.

Positive Signals

Utilizes a FedRAMP-approved, secure platform.
Awarded through full and open competition.
Supports essential government functions.

Sector Analysis

This contract falls within the IT sector, specifically for Software as a Service (SaaS) for Customer Relationship Management (CRM). Spending on enterprise CRM solutions by federal agencies is common, with costs varying based on user count, features, and contract duration.

Small Business Impact

While CARAHSOFT TECHNOLOGY CORP is the prime contractor, the data does not indicate the extent of small business participation in the subcontracting. Further analysis would be needed to assess SMB involvement.

Oversight & Accountability

The contract was awarded by CMS, a major agency within HHS, suggesting established oversight mechanisms. The use of a FedRAMP-approved tool also implies adherence to federal security and compliance standards.

Related Government Programs

Software Publishers
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Potential for price escalation in future contract renewals.
Dependency on a single SaaS provider.
Data migration challenges if switching vendors.
Need for ongoing training and support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $97.0 million to CARAHSOFT TECHNOLOGY CORP. SALESFORCE IS A COMMERCIAL SOFTWARE AS A SERVICE (SAAS) FEDRAMP APPROVED TOOL THAT PROVIDES CUSTOMER RELATIONSHIP MANAGEMENT TECHNOLOGY. CMS USES SALESFORCE TO MANAGE RELATIONSHIPS WITH INDIVIDUALS WITHIN CMS AND TO CONNECT AND COLLABORATE WITH EXTE

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $97.0 million.

What is the period of performance?

Start: 2023-08-31. End: 2027-01-19.

What is the projected cost per user or per active relationship managed by Salesforce under this contract?

The provided data does not specify a per-user or per-relationship cost. The total award value is $97,044,579.8 for a duration of 1237 days. To determine per-unit costs, additional information on the number of users or managed relationships would be required for a precise calculation.

What are the specific risks associated with vendor lock-in for this Salesforce contract?

Vendor lock-in risks include potential price increases upon renewal, difficulties in migrating data to a different system, and a reduced ability to negotiate favorable terms due to dependence on Salesforce's proprietary platform. This can limit future flexibility and potentially increase long-term costs for CMS.

How does the functionality of Salesforce align with CMS's specific needs for managing relationships and collaboration?

Salesforce is a robust CRM platform designed for managing customer interactions, sales processes, and service delivery. Its FedRAMP approval suggests it meets federal security requirements. The extent to which its specific modules and configurations align with CMS's unique operational needs for both internal and external relationship management would require a deeper dive into CMS's requirements documentation.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11493 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $122,913,627

Exercised Options: $97,044,580

Current Obligation: $97,044,580

Actual Outlays: $53,381,314

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QSWA18D008F

IDV Type: FSS

Timeline