DHS buys Microsoft enterprise license from Dell

Dell Computer Corp. has won a contract from the Homeland Security Department to supply an enterprise license for Microsoft software.

The six-year agreement provides for a payment of between $110 million and $120 million, Dell spokeswoman Michelle Mosmeyer said. The contract covers about 144,000 users, who will receive access to Microsoft server, operating system and application software, other sources said.

"The contract is for Dell to manage the total desktop and server solution, including operating system, server and office automation software like Word," a source said. "Dell will also manage all upgrades, updates and patches" for the Microsoft systems, the source said. Dell will not sell hardware to HSD under the pact.

Dell of Round Rock, Texas, will carry out the asset management of the Microsoft software, sources said. Dell will not receive additional funds for managing upgrades of the software, the sources said.

The department will receive a substantial cost reduction from its existing software licenses by consolidating deals to purchase Microsoft software, which range in scale from the Transportation Security Administration's staff of about 40,000 users to the Federal Law Enforcement Training Center's license covering fewer than 1,000, the sources said.

The department reached the agreement earlier this month, after inviting nine bidders, including GTSI Corp. of Chantilly, Va., and MarkSoft Management Resources Inc. of Canterbury, N.H., to present proposals.

The winning bidder's payoff is in knowing where the DHS users are located and other information valuable for marketing products to the department, one source speculated.

Part of the department's discount came from its willingness to provide the funds at the beginning of the contract. "That is altogether different from a blanket purchase agreement," a source said, because under BPAs the contractor only receives funds as the customer adds users to the license.

The department plans to negotiate additional enterprise licenses with Oracle Corp. of Redwood Shores, Calif., and Symantec Corp. of Cupertino, Calif., among other major software vendors, sources said (see previous GCN coverage at www.gcn.com/22_12/outsourcing/22175-1.html).

DHS and the vendors plan to announce the agreement this week, sources said.