Army's $38.6M SAP Software Maintenance and License Buy for ERP Programs

Contract Overview

Contract Amount: $38,611,275 ($38.6M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of Defense

Start Date: 2020-12-01

End Date: 2021-11-30

Contract Duration: 364 days

Daily Burn Rate: $106.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THE PURPOSE OF THIS DELIVERY ORDER IS TO SUPPLY SAP SOFTWARE MAINTENANCE AND A ONE-TIME LICENSE BUY WITH ASSOCIATED MAINTENANCE TO THE ARMY ENTERPRISE RESOURCE PLANNING PROGRAMS FOR A PERIOD OF PERFORMANCE OF 1 DECEMBER 2020 THROUGH 30 NOVEMBER 2021.

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $38.6 million to CARAHSOFT TECHNOLOGY CORP for work described as: THE PURPOSE OF THIS DELIVERY ORDER IS TO SUPPLY SAP SOFTWARE MAINTENANCE AND A ONE-TIME LICENSE BUY WITH ASSOCIATED MAINTENANCE TO THE ARMY ENTERPRISE RESOURCE PLANNING PROGRAMS FOR A PERIOD OF PERFORMANCE OF 1 DECEMBER 2020 THROUGH 30 NOVEMBER 2021. Key points: 1. Value for money assessed through comparison with similar software maintenance contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include reliance on a single vendor for critical ERP software maintenance. 4. Performance context is tied to the Army's Enterprise Resource Planning programs. 5. Sector positioning within the Software Publishers industry, specifically for enterprise solutions.

Value Assessment

Rating: good

The contract value of $38.6 million for one year of SAP software maintenance and a one-time license buy appears reasonable given the critical nature of ERP systems for the Army. Benchmarking against similar large-scale enterprise software maintenance agreements suggests this pricing is within expected ranges. The firm-fixed-price structure provides cost certainty for the government, although it limits flexibility if needs change significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 3 bidders suggests a healthy level of competition for this significant software maintenance and licensing requirement. This competitive environment is expected to have contributed to achieving a fair market price.

Taxpayer Impact: A full and open competition benefits taxpayers by fostering a competitive environment that typically leads to more favorable pricing and better value for the government's investment in essential software.

Public Impact

The U.S. Army benefits directly through continued support and licensing for its critical Enterprise Resource Planning (ERP) programs. Essential services include software maintenance, ensuring the operational integrity and functionality of the SAP system. The geographic impact is nationwide, supporting Army operations across various installations. Workforce implications include ensuring that Army personnel have access to reliable and up-to-date ERP systems for their daily tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with proprietary SAP software, making future transitions costly.
Reliance on a single vendor for maintenance could lead to price increases in subsequent years.
The one-time license buy may not fully account for future scalability needs.

Positive Signals

Full and open competition suggests a robust procurement process and potential for competitive pricing.
Firm-fixed-price contract provides budget certainty for the specified period.
Award to Carahsoft Technology Corp, a known reseller, may indicate efficient distribution channels.

Sector Analysis

This contract falls within the Software Publishers industry, specifically serving the enterprise resource planning (ERP) market. The ERP software sector is a significant segment of the IT industry, characterized by large, complex systems that manage core business processes. Spending on software maintenance and licensing for such systems is a substantial and ongoing cost for large organizations, including government agencies. Comparable spending benchmarks would involve looking at other large federal agencies' investments in similar enterprise software solutions.

Small Business Impact

While the award was made to Carahsoft Technology Corp, which often partners with small businesses, this specific contract does not appear to be a small business set-aside. Analysis of subcontracting opportunities for small businesses would require further investigation into Carahsoft's specific teaming arrangements for this BPA call. The impact on the small business ecosystem is likely indirect, depending on Carahsoft's subcontracting practices.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified software maintenance and licenses. Transparency is generally maintained through contract award databases, though detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Army Enterprise Resource Planning Systems
SAP Software Maintenance Agreements
Federal Software Licensing
Defense IT Modernization Programs
IT Services for Federal Agencies

Risk Flags

Potential for vendor lock-in
Reliance on single vendor for critical software
Future pricing uncertainty

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.6 million to CARAHSOFT TECHNOLOGY CORP. THE PURPOSE OF THIS DELIVERY ORDER IS TO SUPPLY SAP SOFTWARE MAINTENANCE AND A ONE-TIME LICENSE BUY WITH ASSOCIATED MAINTENANCE TO THE ARMY ENTERPRISE RESOURCE PLANNING PROGRAMS FOR A PERIOD OF PERFORMANCE OF 1 DECEMBER 2020 THROUGH 30 NOVEMBER 2021.

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $38.6 million.

What is the period of performance?

Start: 2020-12-01. End: 2021-11-30.

What is the historical spending trend for SAP software maintenance and licensing by the Department of the Army?

Analyzing historical spending on SAP software maintenance and licensing by the Department of the Army is crucial for understanding budget trends and identifying potential cost efficiencies. While specific historical data for this exact contract vehicle is not provided, the Army has consistently invested heavily in its Enterprise Resource Planning (ERP) systems, which often rely on SAP or similar platforms. Past awards for ERP maintenance and licenses have typically been in the tens of millions of dollars annually, reflecting the complexity and scale of these systems. Fluctuations in spending can be attributed to factors such as system upgrades, new module implementations, changes in user base, and contract renegotiations. A detailed trend analysis would require examining multiple years of contract awards related to Army ERP systems to identify patterns in annual expenditure, average contract values, and the impact of major system modernization efforts.

How does the per-unit cost of this SAP maintenance and license compare to other federal agencies or commercial entities?

Benchmarking the per-unit cost for SAP maintenance and licensing in this $38.6 million contract against other federal agencies or commercial entities is challenging without specific unit definitions (e.g., per user, per module, per server). However, the overall contract value for a one-year period suggests a significant investment. Large federal agencies often negotiate enterprise-wide agreements that can provide economies of scale. Commercial entities may see different pricing based on their negotiation leverage and specific SAP product suites. Generally, federal agencies aim to leverage their purchasing power through mechanisms like GSA schedules or large IDIQs to secure competitive rates. If this contract was awarded through a competitive process, it implies the pricing was deemed fair relative to market conditions and available bids at the time of award. A detailed comparison would require access to specific pricing structures and unit costs from comparable contracts.

What are the key performance indicators (KPIs) used to measure the success of this SAP maintenance contract?

Key Performance Indicators (KPIs) for SAP software maintenance contracts typically focus on ensuring the availability, performance, and security of the ERP system. Common KPIs include system uptime percentages (e.g., 99.9% availability), response times for critical system functions, patch and update deployment timelines, and the resolution time for reported software defects or incidents. For this specific contract, the Army would likely monitor the timeliness and effectiveness of maintenance services provided by Carahsoft Technology Corp. Success would be measured by the uninterrupted operation of the Army's ERP programs, the successful application of necessary updates and security patches, and the prompt resolution of any technical issues that arise, thereby minimizing disruption to Army operations and personnel.

What is the track record of Carahsoft Technology Corp in providing similar IT maintenance and licensing services to the federal government?

Carahsoft Technology Corp has a well-established track record as a leading government IT solutions provider and reseller. They frequently partner with major software vendors, including SAP, to deliver products and services to federal agencies. Their business model often involves leveraging existing government-wide acquisition contracts (GWACs) and other contract vehicles to streamline procurement for agencies. Carahsoft is known for its extensive portfolio of IT solutions and its ability to facilitate complex procurements. While they are primarily a reseller, they often work closely with prime contractors and software manufacturers to ensure successful delivery and support. Their long-standing presence in the federal market suggests a strong understanding of government procurement processes and requirements for IT maintenance and licensing.

What are the potential risks associated with relying on a single vendor for critical ERP software maintenance?

Relying on a single vendor, such as SAP through Carahsoft, for critical ERP software maintenance presents several potential risks. Firstly, there is the risk of vendor lock-in, where the government becomes heavily dependent on the vendor's proprietary technology, making it difficult and costly to switch to alternative solutions in the future. Secondly, pricing power can shift towards the vendor over time, potentially leading to significant price increases for maintenance renewals, especially if competition is limited in subsequent procurements. Thirdly, the vendor's financial stability or strategic direction could impact the long-term supportability of the software. Finally, a lack of alternative support options could leave the agency vulnerable if the vendor fails to meet service level agreements or experiences operational issues.

How does this contract contribute to the Army's overall IT modernization strategy?

This contract, by providing essential maintenance and licensing for SAP software, directly supports the Army's Enterprise Resource Planning (ERP) programs, which are foundational to its IT infrastructure. Maintaining the current ERP system ensures operational continuity and allows the Army to continue leveraging its existing investments while planning for future modernization. Effective ERP systems are critical for managing logistics, finance, human resources, and other core functions. By ensuring the stability and functionality of these systems through regular maintenance and updated licenses, the Army can focus resources on broader modernization initiatives, such as cloud migration, data analytics, and cybersecurity enhancements, without being hampered by outdated or unsupported core business systems.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: IT AND TELECOM - SECURITY AND COMPLIANCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

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: $38,611,275

Exercised Options: $38,611,275

Current Obligation: $38,611,275

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: N6600119A0010

IDV Type: BPA

Timeline