NIH awards $2.3M for Dell servers, with Paragon Micro Inc. securing the delivery order

Contract Overview

Contract Amount: $2,304,252 ($2.3M)

Contractor: Paragon Micro Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2026-01-14

End Date: 2027-01-14

Contract Duration: 365 days

Daily Burn Rate: $6.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DELL POWEREDGE SERVERS

Place of Performance

Location: LONG GROVE, LAKE County, ILLINOIS, 60047

State: Illinois Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $2.3 million to PARAGON MICRO INC for work described as: DELL POWEREDGE SERVERS Key points: 1. Value for money assessed through comparison with similar IT hardware procurements. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include contract duration and the specific nature of IT hardware. 4. Performance context relies on successful delivery and adherence to specifications. 5. Sector positioning within IT hardware procurement for research institutions.

Value Assessment

Rating: good

The contract value of $2.3 million for Dell servers appears reasonable when benchmarked against similar IT hardware procurements by federal agencies. While specific per-unit costs are not detailed here, the firm-fixed-price structure suggests that the government has locked in a price, mitigating cost overrun risks. The award to Paragon Micro Inc. for a standard IT commodity suggests a competitive market where pricing is generally well-understood.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of two bids suggests a moderate level of competition for this specific delivery order. While more bidders could potentially lead to even lower prices, a full and open process is generally favorable for price discovery and ensuring fair market value.

Taxpayer Impact: A full and open competition process helps ensure that taxpayer dollars are used efficiently by fostering a competitive environment that drives down prices for necessary goods and services.

Public Impact

The National Institutes of Health (NIH) benefits from this contract by acquiring essential IT infrastructure. The services delivered include the provision of Dell PowerEdge servers, crucial for data processing and research. The geographic impact is primarily within Illinois, where the contractor is located, and at NIH facilities. Workforce implications are minimal, primarily related to the IT support staff managing the new hardware.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for hardware obsolescence if not managed proactively.
Dependence on a single vendor for specific server models could create future lock-in.
Ensuring timely delivery and installation to meet research timelines.

Positive Signals

Awarded under full and open competition, indicating a fair process.
Firm-fixed-price contract type limits cost uncertainty for the government.
Clear end dates for the delivery order provide defined project scope.

Sector Analysis

This contract falls within the broader Information Technology (IT) sector, specifically in the procurement of enterprise-level servers. The market for IT hardware is highly competitive, with numerous vendors offering a wide range of products. Federal agencies are significant buyers in this sector, often procuring through large indefinite-delivery/indefinite-quantity (IDIQ) contracts or direct solicitations like this one. Benchmarks for server procurement vary widely based on specifications, volume, and vendor.

Small Business Impact

This contract was not specifically set aside for small businesses, and the award went to Paragon Micro Inc., which is not explicitly identified as a small business in the provided data. There is no information on subcontracting plans for small businesses. The impact on the small business ecosystem is neutral, as this appears to be a direct award for commodity hardware.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program officials within the National Institutes of Health. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods by a certain date. Transparency is facilitated by the public nature of federal contract awards, allowing for review of basic award details.

Related Government Programs

IT Hardware Procurement
Server Infrastructure
Research and Development IT Support
Department of Health and Human Services IT Spending

Risk Flags

Potential for hardware obsolescence
Vendor lock-in risk
Supply chain security concerns

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $2.3 million to PARAGON MICRO INC. DELL POWEREDGE SERVERS

Who is the contractor on this award?

The obligated recipient is PARAGON MICRO INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $2.3 million.

What is the period of performance?

Start: 2026-01-14. End: 2027-01-14.

What is the typical lifespan and refresh cycle for Dell PowerEdge servers in a federal research environment like NIH?

The typical lifespan and refresh cycle for Dell PowerEdge servers in a federal research environment like NIH can vary significantly based on usage intensity, technological advancements, and agency refresh policies. Generally, enterprise-grade servers are designed for a 3-5 year operational lifespan before performance degradation or obsolescence becomes a significant concern. NIH, being a leading research institution, likely adheres to a proactive IT lifecycle management strategy. This often involves replacing servers within a 3-5 year window to ensure researchers have access to up-to-date technology, maintain optimal performance for data-intensive tasks, and reduce the risk of hardware failures. Factors such as warranty expirations, availability of security patches, and the emergence of more energy-efficient or powerful models also influence refresh decisions. The $2.3 million award for servers with an end date of January 2027 suggests these are intended for use within this typical refresh cycle.

How does the price of these Dell PowerEdge servers compare to commercial off-the-shelf (COTS) pricing?

Comparing the price of these Dell PowerEdge servers to commercial off-the-shelf (COTS) pricing is challenging without the specific model numbers and configurations. Federal agencies often negotiate enterprise agreements or leverage bulk purchasing power, which can result in prices that are either lower or higher than standard COTS pricing found on retail websites. Factors such as extended warranties, specific support levels (e.g., 24/7 on-site support), and compliance with federal security standards can increase the cost compared to basic consumer or small business configurations. However, the full and open competition process used for this award suggests that Paragon Micro Inc. offered a competitive price relative to other potential bidders. It is plausible that the negotiated price reflects a blend of volume discounts and specific service requirements tailored to NIH's needs, making a direct COTS comparison difficult without more granular data.

What are the potential risks associated with relying on a single vendor, Paragon Micro Inc., for this server procurement?

While this specific award is for a delivery order, the reliance on Paragon Micro Inc. for these Dell PowerEdge servers introduces several potential risks. Firstly, there's a risk of vendor lock-in if future needs or upgrades are heavily tied to the specific configurations or support services offered by Paragon Micro. Secondly, if Paragon Micro experiences financial instability or operational issues, it could disrupt the supply chain or support for these critical servers. Thirdly, while competition was present for this award, future procurements might face less competition if Paragon Micro becomes the dominant supplier for NIH's server needs. To mitigate these risks, NIH should ensure clear contract terms regarding performance, support, and potential exit strategies. Maintaining awareness of the broader server market and encouraging competition in future solicitations are also crucial.

What is the historical spending pattern of NIH on IT hardware, specifically servers, over the last five years?

Analyzing NIH's historical spending on IT hardware, particularly servers, over the last five years would reveal trends in technology adoption, research infrastructure investment, and vendor relationships. While specific figures for this period are not provided, federal agencies like NIH typically exhibit consistent or increasing spending on IT infrastructure to support growing research demands, data storage needs, and computational power requirements. Spending patterns are often influenced by strategic IT modernization initiatives, budget allocations, and the lifecycle of existing hardware. It's common for large research institutions to procure servers through a mix of direct purchases, IDIQ contracts, and GSA schedules. A review of historical data would likely show significant investment in server technology, potentially with fluctuations based on major research projects or infrastructure upgrades. This $2.3 million award represents a component of that ongoing investment.

How does the National Institutes of Health (NIH) ensure the security and compliance of procured IT hardware like these servers?

The National Institutes of Health (NIH), like other federal agencies, ensures the security and compliance of procured IT hardware through a multi-faceted approach. This typically begins with stringent requirements outlined in the solicitation documents, which must align with federal standards such as NIST (National Institute of Standards and Technology) guidelines and FISMA (Federal Information Security Management Act). Vendors are required to attest to compliance and may need to provide documentation regarding their supply chain security and product integrity. During the award process, NIH's IT security and compliance teams vet the proposed solutions. Post-award, rigorous testing, configuration management, and ongoing monitoring are implemented. This includes vulnerability scanning, patch management, and ensuring that the servers are configured according to NIH's security policies before being integrated into the network. The firm-fixed-price nature of the contract also implies that the vendor is responsible for delivering compliant hardware.

Industry Classification

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

Product/Service Code: IT AND TELECOM - END USER

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

Address: 2 CORPORATE DR STE 105, LAKE ZURICH, IL, 60047

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

Financial Breakdown

Contract Ceiling: $2,304,252

Exercised Options: $2,304,252

Current Obligation: $2,304,252

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: HHSN316201500061W

IDV Type: GWAC

Timeline