The Math Behind VA-Dell PC Deal
By Bob Brewin | Thursday, August 16, 2007 | 11:32 AM
By Bob Brewin | Thursday, August 16, 2007 | 11:32 AM
Dell Federal said it won a $248 million contract from the Veterans Affairs Department in a deal which names the company as the department’s “exclusive” provider of desktop computers.
Dell said under a three-year lease agreement it will provide the VA with a minimum of 249,000 of its OptiPlex desktop computers and monitors, along with a variety of professional services including deployment, asset management and removal of the PCs – if VA so desires – at the end of the contract.
The math on this deal works out to about $1,000 a box. A quick check of the Dell Web site shows if anyone wanted to buy one OptiPlex PC, the price today runs from $342 to $497 plus another $249 for a monitor and $149 for the Vista operating system.
That puts the total retail price of a Dell OptiPlex PC with software and monitor at $730 at the low end and $995 at the high-end.
I’m sure the number crunchers at the VA view their $1,000 price per box for a three-year lease with professional services thrown in makes for a good deal, but I wonder why they leased instead of buying.
Does VA throw away its computers every three years?
As a side note, Dell's latest customer satisfaction numbers -- as measured by the just-released American Customer Satisfaction Index (and look for the heading "Personal Computers: New Problems for Apple, More Problems for Dell") -- fell "to one of the PC industry's lowest scores with a 74," reported the Austin American-Statesman in Austin, Texas, this week.
Comments
I am quite sure that this contract is much like all of the others generated by the VA. Little if any consideration is given to the potential cost to the taxpayer. The VA is a money pit that is hands off to all control or scrutiny due to the sensitive nature of the clients. We are still making amends for the poor treatment that the Viet Nam vets received. As a result we now have more disabled vets than at any other time in history. The final result is un-controlled, unjustified, and sympathy based expenditures at the VA.
Justin Time | Tuesday, August 21, 2007 | 09:10 AMDo we know what the break/fix requirements are in terms of Service Level Agreements that are rolled into the lease price?
Also, since Dell commonly does not perform its own breakfix services, do we know what subcontractor will provide these for the VA?
Peter Adler | Tuesday, August 21, 2007 | 08:12 AMThis is a disgrace. Inspite of strong opposition and a cost benifit analyis that clealy showed this was a bad deal, the VA proceeded. One has to ask why? Maybe congress should investigate.
Federal Executive | Tuesday, August 21, 2007 | 07:23 AMHere is the issue: Unless the refresh rate is on a 36 month cycle there really isn't a whole lot of benefit to lease vs. buy. If the intent is to compensate for substandard OEM components, then the VA should be looking to BUY from companies whose manufacturing and support are better than Dell's. More to the point, the question of disposal and services pertains. Given that the VA routinely deals in Personally Identifiable Information (SSNs and the like) the practice of having a contractor dispose of these computers seems to be somewhat dubious.
It seems, to me, as though the VA has bought more trouble, not less, through this contract.
Concerned citizen | Monday, August 20, 2007 | 11:48 AMI've had a VA Dell PC for over 5 years with no problems.
Robert | Monday, August 20, 2007 | 08:42 AMThe author is correct, I've been buying Dell Optiplexs for 750 total. I don't know how anyone could come up with a price of 2k. Think government contract. Go to the web site and see for yourself. Most bureaus have a site license for antivirus so they don't need it, and no one in DOI is authorized to use Vista yet so they don't need that. We have a 5 year contract with Microsoft for operating systems, so we don't need that either.
Robert L Sowders | Sunday, August 19, 2007 | 03:29 AMThis contract includes setup and most like data transfer as well. Adding programs to an upper mid-price OptiPlex,
I come up with over $2000 to build one. If the warranty, support, antivirus and setup are all part of the contract, then this is a good price.
Let's not throw stones until all the information is provided!
Mike | Friday, August 17, 2007 | 02:06 PMIts well known in this agency that Dell uses substandard components in the PC's sold to the government. My Dell is barely 2 years old and has suffered one motherboard and one hard drive failure. Just this past Monday it was dead and put in our PC support ICU, which revived it. The tech told me to expect the hard drive to fail sometime in the next couple weeks -so be sure to back everything up. Of course the VA's IT support groups will love them for job security.
Borg | Friday, August 17, 2007 | 10:20 AM(1) Did you calculate in the antivirus license expense per box?
(2) It is well knowen, that Dell's warranty policy is different for (A) lease users and (B) buy straight up users.
(3) Try caluclating the "nominal" pay out value to Dell, if the VA wants to purchase the machines, after the lease period ends? How much per machine to keep them, instead of return them?
Mark St. Denis | Thursday, August 16, 2007 | 12:04 PMABOUT THIS BLOG
Allan Holmes on what's happening and what's being discussed in the world of federal information technology.
feed