DoD's $24.2M contract for computer systems design services awarded to Microsoft Corporation

Contract Overview

Contract Amount: $24,260,287 ($24.3M)

Contractor: Microsoft Corporation

Awarding Agency: Department of Defense

Start Date: 2017-06-09

End Date: 2019-06-08

Contract Duration: 729 days

Daily Burn Rate: $33.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF

Place of Performance

Location: SCOTT AFB, SAINT CLAIR County, ILLINOIS, 62225

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.3 million to MICROSOFT CORPORATION for work described as: IGF::CT::IGF Key points: 1. Value for money appears fair given the firm-fixed-price nature of the contract. 2. Competition was limited, raising questions about potential price overruns. 3. Performance risk is moderate, with a defined period of performance. 4. The contract falls within the IT sector, specifically computer systems design. 5. This contract represents a small portion of overall federal IT spending.

Value Assessment

Rating: fair

The contract's total value of $24.2 million for computer systems design services is difficult to benchmark without more specific details on the services rendered. However, the firm-fixed-price contract type suggests that the government has a clearer understanding of costs upfront. Compared to similar large-scale IT service contracts, the per-year cost of approximately $3.3 million seems within a reasonable range, though a detailed cost-benefit analysis would be needed for a definitive assessment of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Microsoft Corporation, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances, such as when a particular vendor possesses unique capabilities or existing infrastructure, the lack of competition can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the cost savings that could arise from a bidding war among multiple qualified vendors. This could result in a less optimal use of taxpayer funds if alternative, more cost-effective solutions were available.

Public Impact

The Department of Defense is the primary beneficiary, receiving computer systems design services. The services delivered are crucial for maintaining and potentially upgrading defense information systems. The contract's geographic impact is likely concentrated in Illinois, where the award was made. Workforce implications may include the utilization of Microsoft's technical expertise and potentially local IT support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in with Microsoft's proprietary systems.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a well-established technology provider like Microsoft suggests a degree of reliability.
Contract duration of two years allows for sustained support.

Sector Analysis

The Information Technology (IT) sector is a vast and critical component of federal spending, encompassing a wide range of services from software development to cybersecurity. Computer Systems Design Services, classified under NAICS code 541512, represent a significant portion of this spending, focusing on the design, development, integration, and support of complex IT systems. Federal agencies rely heavily on these services to maintain operational efficiency and national security. This contract with Microsoft Corporation fits within this broader IT landscape, addressing specific design needs for defense information systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary contractor, Microsoft Corporation, will likely handle the majority of the work internally. Consequently, the direct impact on the small business ecosystem is minimal, with limited opportunities for small businesses to participate as subcontractors on this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Department of Defense's Inspector General (IG). The firm-fixed-price nature of the contract provides a degree of cost control, but oversight would still focus on performance, delivery schedules, and adherence to contract terms. Transparency is moderate, as the award details are publicly available, but the justification for the sole-source nature of the award would require deeper investigation.

Related Government Programs

Defense Information Systems Agency (DISA) IT Services
Department of Defense Software Development Contracts
Federal Civilian IT Modernization Programs
Cloud Computing Services for Government

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed service description limits full value assessment.
Potential for vendor lock-in with Microsoft's ecosystem.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.3 million to MICROSOFT CORPORATION. IGF::CT::IGF

Who is the contractor on this award?

The obligated recipient is MICROSOFT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $24.3 million.

What is the period of performance?

Start: 2017-06-09. End: 2019-06-08.

What specific computer systems design services were provided under this contract?

The provided data indicates the contract was for 'Computer Systems Design Services' (NAICS 541512) awarded to Microsoft Corporation by the Department of Defense. However, the specific nature of these design services is not detailed. Typically, such services can encompass a broad range of activities including system architecture design, software development lifecycle support, network design, integration of hardware and software components, and the development of custom IT solutions. Without further documentation, it's impossible to ascertain if this involved designing new systems, modifying existing ones, or providing specialized technical consulting for defense information infrastructure. The duration of the contract (729 days) suggests a substantial project or ongoing support.

How does the $24.2 million contract value compare to similar IT services contracts awarded by the DoD?

Benchmarking the $24.2 million contract value requires comparing it to similar 'Computer Systems Design Services' contracts awarded by the Department of Defense (DoD) within a comparable timeframe and scope. Given this was a sole-source award to Microsoft, it's crucial to assess if the price was competitive relative to what could have been achieved through a competitive process. While the total value is significant, its 'fairness' depends heavily on the complexity, duration, and deliverables. For instance, if this contract covered the design and implementation of a critical, large-scale defense system, the cost might be justified. Conversely, if it involved more routine design tasks, it could be considered high. A detailed analysis would involve comparing the cost per year ($3.3M) or cost per day ($33.2K) against industry standards and other DoD contracts for similar services.

What are the primary risks associated with a sole-source award for IT services?

Sole-source awards for IT services, like this $24.2 million contract to Microsoft, carry several inherent risks. The most significant is the lack of price competition, which can lead to inflated costs for the government as the vendor faces no pressure to offer the lowest possible price. This can result in a suboptimal return on investment for taxpayer funds. Another risk is potential vendor lock-in, where the government becomes overly reliant on a single provider's technology and expertise, making future transitions to different vendors or solutions difficult and costly. Furthermore, without competitive proposals, there's a reduced incentive for the sole-source provider to innovate or offer the most efficient solutions. Finally, the justification for a sole-source award must be robust; if not adequately documented, it can raise concerns about fairness and transparency in the procurement process.

What is Microsoft Corporation's track record with federal IT contracts, particularly with the Department of Defense?

Microsoft Corporation is a major technology provider with an extensive history of securing federal IT contracts across various agencies, including the Department of Defense (DoD). Their track record generally includes providing a wide array of software, cloud services (Azure), hardware, and IT support. The DoD, in particular, has awarded Microsoft numerous contracts, often related to enterprise software licenses, operating systems, and cloud infrastructure. While Microsoft is a well-established entity with significant resources and experience, the specifics of their performance on individual contracts, including adherence to schedules, quality of deliverables, and cost management, can vary. For this specific $24.2 million computer systems design services contract, assessing their track record would involve reviewing past performance evaluations and any reported issues or successes related to similar DoD engagements.

How does this contract align with broader federal IT spending trends and priorities?

This $24.2 million contract for computer systems design services aligns with the broader federal IT spending trend of investing in modernization and maintaining critical infrastructure, particularly within the defense sector. Agencies like the DoD consistently allocate substantial budgets to IT to ensure operational readiness, cybersecurity, and technological superiority. The focus on 'Computer Systems Design Services' reflects a need for specialized expertise in architecting, developing, and integrating complex systems. This contract likely supports the DoD's ongoing efforts to upgrade its information systems, potentially incorporating newer technologies or enhancing existing capabilities. It fits within the larger narrative of federal agencies leveraging technology to meet evolving mission requirements, even if the sole-source nature raises questions about optimal resource allocation compared to competitive procurements.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HC102816R0024

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ONE 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: $24,260,287

Exercised Options: $24,260,287

Current Obligation: $24,260,287

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102817D0001

IDV Type: IDC

Timeline