ESL III VMware JnA_Redacted_1FEB24.pdf

NIWC Pacific 23-305

Source Selection Sensitive - See FAR 2.101 and 3.104

J&A No. 23-305 Originators Code: 55325

Limited Sources Justification for VMware and Determination To Award A Single-Award Blanket Purchase

Agreement (BPA) Under Federal Supply Schedule

1. Identification of Agency and Contracting Activity.

Department of the Navy (DON), Naval Information Warfare Center Pacific (NIWC PAC)

2. Nature and/or Description of the Action Being Approved.

This justification is to seek approval for the use of limited sources under Federal Acquisition Regulation (FAR) Part 8.405-6 Limiting Sources. The proposed action will limit sources to resellers on the GSA Multiple Award Schedule (MAS) who are authorized to sell brand name VMware perpetual software products, software maintenance products1 (hereafter referred to SnS), subscription software2 products, cloud services and incidental professional services on behalf of the Department of the Navy (DON) Enterprise Software Licensing (ESL). This action is a follow-on requirement of the current DON ESL BPA for VMware (N66001-19-A- 0055) that will expire on 17 March 2024.

Naval Information Warfare Systems, Pacific (NIWC PAC) will award a BPA with a period of performance of March 2024-March 2027 on behalf of the DON, which will allow orders to be issued against the BPA in a decentralized manner by warranted contracting officers across the DON. Additionally, an Enterprise License Agreement (ELA) within the BPA will be established to allow for additional efficiencies by consolidated orders for SnS and new licenses.

The proposed strategy is to secure licensing at discounts below GSA fixed prices and incorporate additional Intellectual Property (IP) Terms and Conditions (Ts&Cs) consistent with Department of Defense (DoD) Enterprise Software Initiative (ESI) best practices.

Ordering authority under this LSJ expires 31 March 2027.

1 VMware licenses are subscription and perpetual; however, as referenced in the Secretary of the Navy Instruction (SECNAVINST) 5230.151, maintenance (hereafter referred to as Support and Subscriptions [SnS]) must continue to be purchased over the life of the software to ensure patches and updates are received and to avoid adverse impact on the DON’s mission.

2 Software Subscription means a Subscription that contains Software Access, Software Maintenance and Support for a period of time.

DEPARTMENT OF THE NAVY

NAVAL INFORMATION WARFARE CENTER PACIFIC

53560 HULL STREET

SAN DIEGO, CA 92152-5001

Although the overall value of this BPA is value of this LSJ as noted above, it excludes the VMware Horizon Suite of Licenses cloud services and professional services portion of the BPA's estimated value (see Table 3.1).

If not competed on a brand-agnostic basis, orders for new VMware Horizon Suite, Infrastructure-as-a-Service (IaaS) cloud services, and professional services will require individual Limited Sources Justifications (LSJs) to be executed at the order level. Orders for all other products and services will not require a separate LSJ, which will reduce the administrative effort under this BPA.

Single-Award Determination

The proposed action will also authorize a single-award DON ESL Blanket Purchase Agreement (BPA), in accordance with FAR 8.405-3(a)(3)(ii) and (iii) to a VMware reseller having a valid General Services Administration (GSA) MAS contract that is authorized to sell the required brand name VMware products and services. Specifically, this BPA will make available products and services with established firm-fixed maximum prices established in the BPA in accordance with FAR 8.405-3(a)(3)(ii)(B)(1) &(2).

The intent of this effort is to continue the existing construct, which aggregates the multiple orders across the DON into one Enterprise Agreement. This will provide the lowest available pricing; best-in-class terms and conditions; and meet DON mandated requirements.

The decision to continue with a single-award strategy was primarily driven by the need to maximize discounts. The single-award BPA approach proved successful for the last two DON ESL BPAs because it incentivized the reseller to extend its best pricing up front on the assumption that the full volume of DON requirements would be realized over the ordering period regardless of the volume on individual orders.

3. Description of Supplies/Services Required to Meet Agency Needs.

The DON commonly utilizes VMware Commercial Off-The-Shelf (COTS) software products to support IT operations. The requirement is to establish a DON ESL single-award Firm Fixed Price BPA for VMware software licenses and SnS.

Capability requirements associated with this action include server and infrastructure virtualization, and management and automation of virtualized environment. The capability being procured must:

• Fully integrate with currently deployed DON virtualization engineering baselines.

• Provide for explicit segmentation of operational applications contained within a single platform without need for a "host" operating system.

4. Authority and Supporting Rationale (see 8.405-6(b)(1)).

The authority supporting this justification to conduct the acquisition on a brand-name basis is FAR 8.405-6(b) – “Items peculiar to one manufacturer”.

VMware virtualization software allows multiple virtual machines to run on a single physical machine, with each virtual machine sharing the resources of one physical computer across multiple environments. Virtualization relies on software to simulate hardware functionality and create a virtual computer system. Different virtual machines can run different operating systems and multiple applications on the same physical computer. This enables IT organizations to run more than one virtual system and multiple operating systems and applications on a single server.

The resulting benefits include economies of scale and greater efficiency. Virtualization has proved to be one of the most effective ways to reduce IT expenses while boosting efficiency and agility.

VMware in CANES The Consolidated-Afloat Network and Enterprise Services (CANES) is the largest program of record procuring VMware in the DON. VMware's vSphere platform is currently the hypervisor on all CANES vessels and is scheduled to remain the hypervisor in the 6th Generation (HW3/SW5) deployment. In addition, VMware's vSAN suite is the software defined storage solution for CANES because of its ability to pool together direct - attached storage devices across the vSphere cluster to create a distributed, shared data store. There are scheduled to be 180 ships and submarines in the CANES program at the end of FY2023 and these vessels will require VMware brand software and its management, storage, and networking tools over the 3-year period of performance of this Agreement.

The risk of changing the hypervisor with a non-VMware solution is high risk due to the interdependence of vSphere and vSAN with 3rd party tools used in the approved architecture (accredited via an Authority to Operate). Other features required by CANES are VMware's Dynamic Distributed Resource Scheduler (DRS), vMotion and Storage vMotion (live migration), high availability, and Fault Tolerance (fail-over), which are all standard features in the vSphere suite.

VMware in USMC The United States Marine Corps (USMC) is the 2nd largest user of the current ELA. The USMC has relied on VMware software for its virtualization and data center consolidation efforts since 2009. For USMC's Major Information Systems such as the Marine Corps Enterprise Network, additional virtualization software requires VMware brand solutions in order to ensure (a) interoperability within the current install base, (b) scalability of virtualized workloads, and (c) availability of the higher-level management tools such as VMware's DRS to load-balance large-scale workloads.

VMware STIGs for RMF Accredited Systems

VMware's vSphere is the only commercial hypervisor and vSAN is the only virtual storage solution with Defense Information Systems Agency (DISA) approved Security Technical Implementation Guides (STIGs), which are the configuration standards for DoD Information Assurance (IA) and IA-enabled devices/systems. VMware has developed STIGs with DISA for every major release since 2008;

require a Risk Management Framework (RMF) accreditation, which requires that systems be hardened to standard STIG benchmarks per Department of Defense Instruction 8510.01. Without these DISA approved STIGs, alternate hypervisors have a more complicated approval process and are often limited in their use on accredited networks.

VMware is the sole owner of its Intellectual Property (IP) inclusive of its software source code.

VMware is the only company that can provide maintenance and support on its software subscriptions. Software maintenance is necessary to provide the patches, updates, and hotfixes to sustain VMware software products running on DoD networks. Maintaining VMware software products is required to decrease unacceptable operational and security vulnerability risks to the IT assets of the DoD.

For all of the above reasons, the DON's virtualization ecosystem is

This is made up of VMware's flagship hypervisor (vSphere) and its associated software tools. The remaining and application virtualization, which is most often fulfilled by Citrix's XenDesktop and Virtual Apps and Desktops. VMware's competing product, VMware Horizon Suite, is out of scope of this LSJ for new license purchases.

5. Determination of Best Value Consistent with FAR 8.404(d).

This single-award BPA will be established using the competitive procedures outlined in FAR 8.405-3(b). Best value will be determined on the basis of low price, having a current Letter of Supply from VMware, and assent to the BPA terms and conditions per FAR 8.405-3(a)(2).

Based on the information provided herein, the Contracting Officer has determined that the proposed action is in the best interest of the Government and will allow the BPA to be established on the basis of best value consistent with the principles described in FAR 8.404(d).

6. Description of Market Research.

Market research was conducted in accordance with FAR Part 10, to include inputs from multiple teams across DoN, to include PEO Digital, PEO C4I’s PMW 160 (which manages the software configuration for CANES), Marine Corps Supporting Establishment Systems (MCSES) that manages the USMC VMware requirements, and DoN CIO to ensure there is a continued need for VMware software products across the DoD. Additionally, the DON conducted in-depth Program Management Reviews with both VMware and its current reseller regarding sales trends. Other market research revealed there are three VMware authorized resellers with GSA Schedules that can satisfy the DoD’s requirements for VMware software products and SnS products. They are: Carahsoft Technology, Dell Federal and Promark. All are “Other than Small” businesses.

Based on this research, it was determined that there is a reasonable expectation of competition from at least three vendors per FAR 8.405-3(b)(I)(ii)(B)(2). Furthermore, this requirement will be solicited via the GSA e-Buy tool in accordance with FAR 8.405-3(b)(1)(ii)(B)(I) to " ...afford all schedule contractors offering the required supplies or services under the appropriate multiple award schedule(s) an opportunity to submit a quote."

Additional market research was conducted with regard to available sources of VMware products. The acquisition team reviewed “go-to-market” strategy, which showed that VMware products are only available for purchase through VMware’s authorized distributors and not directly from the software publisher. VMware’s business model is to designate distributors as exclusive distributors of the complete software and services catalog.

7. Any Other Facts Supporting the Justification.

In addition, this requirement is for commercial software manufactured by a large business software publisher. Inasmuch as the Non-Manufacturer Rule applies to NAICS Code 511210, no small business could represent that they comply with this rule for any portion set-aside for small business concerns.

8. Actions Taken to Remove Barriers to Competition.

The DEFENSEWERX and NAVALX are researching the use of open source virtualization and machine emulator software (i.e.: oVirt, ProxMox, QEMU) for agility and use at scale on the common operating systems of Windows, Linux and Solaris. There is no established schedule for publishing findings.

The DON is continually engaged in researching the software and software support service markets to identify better pricing and terms and conditions for use in the development of enterprise-level asset management contracts and ESL Agreements. Additionally, as part of their ongoing market research, the DON continuously conducts market surveys, attends various conferences and forums (including the various Information Management/Information Technology Symposiums), meets with industry and Government agencies, and participates in discussions with the DoD ESI Working Group.