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Security

SAP won a $903 million Pentagon cloud contract. Only $100,000 of it is guaranteed.

SAP National Security Services, the US public-sector subsidiary of SAP, won a contract from the Pentagon's Defense Logistics Agency worth up to $903 million over seven years, GovCon Wire reported on 2 October.

ERP LEADERS news desk · · First reported by GovCon Wire (Jane Edwards) · Edition no. 26
Photo: Tex Jobe, U.S. Army Corps of Engineers/Wikimedia, Public domain · original

The agency awarded it on 21 September without competition.

The contract covers cloud hosting and software subscriptions, plus managed services for the agency's ERP, the system that runs its finance and supply. It includes RISE with SAP Private Cloud Edition, SAP's subscription package for its ERP. The first contract year runs to 22 September 2027. After that the agency can extend it six times, one year each.

The agency orders work one task at a time, at a fixed price or by committing in advance to consume a set amount. The $100,000 minimum is about 0.01% of the $903 million ceiling. Anything above it depends on the orders the agency places and on each yearly extension.

The GovCon Wire report carried no comment from SAP or the agency.

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SAP

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For your next steering committee

Questions for your own programme. They are not findings about any company in this story.

  1. 1Ask which exit clauses your largest software and services contracts carry, and when each can be used.
  2. 2Ask what leaving would cost, in money and in months.
  3. 3Ask who reads the contract when a dispute starts, and whether they have read it before.

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