DoD's $40.3M ServiceNow Contract with Carahsoft Faces Scrutiny Over Fair Pricing and Competition

Contract Overview

Contract Amount: $40,276,631 ($40.3M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of Defense

Start Date: 2021-09-30

End Date: 2024-09-29

Contract Duration: 1,095 days

Daily Burn Rate: $36.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 8508547097 SERVICENOW REQUIREMENT

Place of Performance

Location: VIRGINIA BEACH, VIRGINIA BEACH CITY County, VIRGINIA, 23462

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $40.3 million to CARAHSOFT TECHNOLOGY CORP for work described as: 8508547097 SERVICENOW REQUIREMENT Key points: 1. The contract awarded to Carahsoft Technology Corp for ServiceNow is valued at $40.3 million. 2. Competition was full and open, but the pricing assessment requires further review. 3. Potential risks include the lack of small business participation and the firm-fixed-price structure. 4. The sector is IT, specifically Software Publishers.

Value Assessment

Rating: questionable

The contract's pricing needs closer examination against industry benchmarks for ServiceNow licenses and support. While a firm-fixed-price contract provides cost certainty, it may not reflect the most competitive rates achievable through dynamic negotiation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a broad outreach for potential vendors. However, the specific price discovery mechanisms used during this competition are not detailed, raising questions about whether the final price truly reflects the best value.

Taxpayer Impact: Taxpayer funds are being utilized for this significant software procurement. Ensuring competitive pricing and value for money is crucial to maximize the impact of these expenditures.

Public Impact

Federal agencies rely on platforms like ServiceNow for critical IT operations and workflow management. The cost of software licenses and support can represent a substantial portion of IT budgets. Ensuring fair pricing and effective competition in software procurement is vital for responsible government spending. Lack of small business participation in large contracts can limit market diversity and innovation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of small business participation
Potential for overpricing without detailed price analysis
Firm-fixed-price may not be optimal for software renewals

Positive Signals

Awarded under full and open competition
Clear contract duration and delivery order structure

Sector Analysis

This contract falls within the Information Technology sector, specifically Software Publishers. Spending in this area is substantial across government, with significant portions allocated to enterprise software solutions like ServiceNow, which are critical for modernizing government operations.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (ss: false, sb: false). This suggests that the prime contractor, Carahsoft, is not a small business, and no subcontracting plan for small businesses was identified or required.

Oversight & Accountability

The contract was awarded as a delivery order under a larger agreement, implying some level of pre-existing oversight. However, the specific details of ongoing performance monitoring and cost oversight for this particular order are not provided, necessitating further review.

Related Government Programs

Software Publishers
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Lack of detailed pricing justification
Absence of small business subcontracting
Potential for non-competitive pricing despite open competition
Firm-fixed-price may not be optimal for long-term software needs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.3 million to CARAHSOFT TECHNOLOGY CORP. 8508547097 SERVICENOW REQUIREMENT

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $40.3 million.

What is the period of performance?

Start: 2021-09-30. End: 2024-09-29.

What is the benchmark pricing for ServiceNow licenses and support services of this magnitude within the federal government?

Determining the precise benchmark pricing for ServiceNow licenses and support requires access to proprietary pricing databases and historical federal contract data. However, typical federal IT procurement best practices involve comparing proposed prices against GSA Schedule pricing, other agency contracts for similar software, and potentially conducting market research to understand prevailing rates. Without this comparative data, it's difficult to definitively assess if $40.3 million represents fair market value.

How does the firm-fixed-price structure impact the government's ability to benefit from potential price reductions or volume discounts over the contract's duration?

A firm-fixed-price (FFP) contract locks in the price at the time of award, offering budget certainty for the government. However, it can limit the government's ability to benefit from future price reductions or volume discounts that might become available, especially for software licenses that are often subject to market fluctuations or vendor-offered incentives. If the vendor's costs decrease or if the government's usage increases significantly, an FFP contract may not allow for price adjustments downwards.

What specific metrics are used to measure the effectiveness and performance of ServiceNow in meeting the Defense Logistics Agency's operational needs?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) used to evaluate the effectiveness of ServiceNow for the Defense Logistics Agency. Typically, effectiveness would be measured against operational goals such as improved workflow efficiency, reduced processing times for specific tasks, enhanced data management capabilities, user satisfaction rates, and system uptime/availability. A thorough review would require examining the contract's Performance Work Statement (PWS) and any associated Service Level Agreements (SLAs).

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

Solicitation ID: SP470121Q0125

Offers Received: 2

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: $40,943,499

Exercised Options: $40,276,631

Current Obligation: $40,276,631

Actual Outlays: $20,935,150

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F0119Y

IDV Type: FSS

Timeline