Navy awards $130M Red Hat II Enterprise License Agreement to DLT Solutions, LLC for IT services

Contract Overview

Contract Amount: $130,164,826 ($130.2M)

Contractor: DLT Solutions, LLC

Awarding Agency: Department of Defense

Start Date: 2021-12-27

End Date: 2026-12-26

Contract Duration: 1,825 days

Daily Burn Rate: $71.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DEPARTMENT OF NAVY RED HAT II ENTERPRISE LICENSE AGREEMENT

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $130.2 million to DLT SOLUTIONS, LLC for work described as: DEPARTMENT OF NAVY RED HAT II ENTERPRISE LICENSE AGREEMENT Key points: 1. The contract's value of $130M over five years suggests a significant investment in enterprise software licensing. 2. The fixed-price contract type offers cost certainty for the government, but may limit flexibility. 3. The 'Other Computer Related Services' NAICS code indicates a broad scope, potentially encompassing software, hardware, and support. 4. The contract duration of 1825 days aligns with typical enterprise software lifecycle management. 5. The award was made under full and open competition, suggesting a robust market for these services. 6. The contract's performance period spans across fiscal years, requiring sustained budget allocation. 7. The vendor, DLT Solutions, LLC, is a known entity in the government contracting space for IT solutions.

Value Assessment

Rating: good

The total contract value of $130M over five years averages to approximately $26M annually. Benchmarking this against similar enterprise software license agreements for large federal agencies is challenging without more specific service details. However, the firm fixed-price nature suggests that the pricing was determined to be fair and reasonable at the time of award, based on the anticipated scope of services and software.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a competitive environment, though the exact number of interested parties and the rigor of the competition would require further investigation into the solicitation process. A competitive award generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces and ensures the government receives the best value for its investment.

Public Impact

The Department of the Navy benefits from access to enterprise software licenses and related services, crucial for its IT infrastructure. This contract supports the operational readiness and technological capabilities of naval forces. The services delivered likely encompass software maintenance, support, and potentially upgrades for Red Hat enterprise products. The geographic impact is national, supporting Navy operations across various locations. Workforce implications may include the need for IT personnel trained in Red Hat technologies within the Navy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specific Red Hat products become deeply integrated into Navy systems.
The broad NAICS code could mask specific service components that might be subject to price fluctuations.
Reliance on a single vendor for enterprise licenses necessitates careful contract management to ensure ongoing value.
The significant contract value warrants close monitoring for scope creep or unmanaged cost increases.

Positive Signals

Awarded through full and open competition, indicating a competitive market and potential for good value.
Firm fixed-price contract provides cost certainty for the government over the performance period.
The contract duration aligns with typical enterprise software refresh cycles.
DLT Solutions, LLC has a track record in government IT contracting, suggesting familiarity with federal procurement processes.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on enterprise software licensing and related services. The market for enterprise Linux distributions and associated support is dominated by a few key players, with Red Hat being a significant one. Federal agencies often procure these licenses through large enterprise agreements to standardize their IT infrastructure and ensure security and compliance. Comparable spending benchmarks would typically involve analyzing other large federal IT procurements for similar software suites and support services, often in the hundreds of millions of dollars over several years.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities if DLT Solutions, LLC chooses to engage them. Without specific subcontracting plans detailed in the award, it's difficult to assess the direct impact on the small business ecosystem. However, large prime contracts like this can sometimes create downstream opportunities for specialized small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program office within the Department of the Navy. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified software licenses and services. Transparency is generally facilitated through contract databases like FPDS, which provide public access to award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Department of Defense Enterprise Software Agreements
General Services Administration Schedule IT Contracts
Other Department of the Navy IT Procurements
Enterprise License Agreements for Operating Systems
Software Maintenance and Support Contracts

Risk Flags

Potential for vendor lock-in
Broad NAICS code requires clear definition of services
Reliance on a single software provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $130.2 million to DLT SOLUTIONS, LLC. DEPARTMENT OF NAVY RED HAT II ENTERPRISE LICENSE AGREEMENT

Who is the contractor on this award?

The obligated recipient is DLT SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $130.2 million.

What is the period of performance?

Start: 2021-12-27. End: 2026-12-26.

What is the specific scope of 'Red Hat II Enterprise License Agreement' and what services are included?

The 'Red Hat II Enterprise License Agreement' likely refers to a specific iteration or master agreement for Red Hat's enterprise software products and support services procured by the Department of the Navy. While the provided data does not detail the exact services, typical offerings under such agreements include licenses for Red Hat Enterprise Linux (RHEL), Red Hat OpenShift, and other Red Hat middleware products. It also commonly encompasses technical support, maintenance, software updates, and access to Red Hat's knowledge base and training resources. The 'II' designation might indicate a follow-on or renewed agreement. The broad NAICS code '541519' (Other Computer Related Services) suggests the scope extends beyond just software licenses to include related IT services, potentially configuration, integration, or specialized support.

How does the $130M contract value compare to historical spending on Red Hat products by the Department of the Navy or DoD?

Without access to historical spending data specifically for Red Hat products by the Department of the Navy or the broader Department of Defense, a direct comparison is difficult. However, $130 million over five years, averaging $26 million annually, represents a substantial investment. Large federal agencies often consolidate their software licensing through enterprise agreements to achieve economies of scale and standardize their IT environments. Given Red Hat's prominent position in the enterprise Linux market, this level of spending is plausible for an agency of the Navy's size and technological needs. Further analysis would require querying historical contract databases for similar awards to the Navy or DoD for Red Hat products or comparable enterprise software solutions.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for an enterprise license agreement of this nature, typical SLAs would focus on the availability and responsiveness of technical support, the timeliness of software updates and patches, and potentially uptime guarantees for associated services if applicable. KPIs might include metrics related to the successful deployment of licensed software, adherence to security protocols, and the overall satisfaction of end-users within the Navy. These details would normally be outlined in the contract's statement of work (SOW) or performance work statement (PWS).

What is the risk associated with relying on a single vendor like Red Hat for critical enterprise software?

The primary risk associated with relying on a single vendor like Red Hat for critical enterprise software is vendor lock-in. This occurs when the agency becomes heavily dependent on the vendor's proprietary technologies, making it difficult and costly to switch to alternative solutions in the future. Other risks include potential price increases upon contract renewal, limited negotiation leverage if the vendor is the sole provider of essential features, and vulnerability to the vendor's business decisions (e.g., product discontinuation, changes in support models). To mitigate these risks, agencies often employ strategies such as maintaining open standards where possible, negotiating favorable contract terms, and conducting regular market research to stay aware of competitive alternatives.

How does the 'Other Computer Related Services' NAICS code (541519) inform the potential scope and risks of this contract?

The NAICS code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide range of IT services not specified elsewhere. For this contract, it suggests that the $130 million award may cover more than just the Red Hat software licenses themselves. It could include installation, configuration, integration, maintenance, technical support, and potentially consulting services related to Red Hat products. The breadth of this code presents both opportunities and risks. It offers flexibility for the Navy to procure a comprehensive suite of services. However, it also introduces risk if the specific services are not clearly defined in the contract's Statement of Work (SOW), potentially leading to scope creep, cost overruns, or disputes over deliverables. Clear definition and diligent oversight of the services rendered under this code are crucial.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0018921QR023

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2411 DULLES CORNER PARK STE 800, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $167,510,987

Exercised Options: $130,164,826

Current Obligation: $130,164,826

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC98B

IDV Type: GWAC

Timeline