Prime Contractor Success


Defense Information Systems Agency (DISA) requires Prime Contractors to provide datacenter capacity service on an as used basis.  DISA may scale up or down, but will only pay for the capacity it actually consumes.

Problem Statement

Prime Contractor required to provide more than $130M in IT assets, but charge DISA only for what it actually uses –risking that DISA’s eventual usage will be sufficient to cover costs.

The ESCgov Financing Solution:

Low Cost: helping Prime to win the contract

Flexible: payments based on customer usage

Low risk: ESCgov mitigates the risk of underutilization or termination

Solid economics: Positive cash flow and profitability from day 1, and improved ROI using 3rd party funds.

Superior performance: Top CPAR ratings

Growth of Business: Prime teamed with ESCgov to win the original contract and two consecutive recompetes, and has teamed with ESCgov to win similar business from other public sector customers.

Software Company Success

Major Government agency requires long term use of commercial software but has limited funds available in the current period.

Problem Statement
With limited government budget, the software company must decide to either discount the software down to the amount of the available budget or sell a limited one-year term license and try again next year.  Neither option works as one would violate discounting practices while the other fails to meet its own business requirements or the requirements of the customer.

The ESCgov Solution:

Recognizes the long term need for the software

Structures a base year with numerous option years for the customer

ESCgov Purchases all required software up-front (qualifying for a larger discount)

-Software company books the sale, which is many times larger than the current-year government budget

– Government obtains immediate use of all needed software at an advantageous annual price, made possible by a large (up-front) purchase by ESCgov.

Hardware Company Success

Major Government agency outsources data center operations; Prime contractor squeezes IT company to accept payments based on the government’s eventual usage.

Problem Statement
IT company torn between accepting consumption-based payments (a violation of its pricing and revenue recognition policy) or losing out on a major sales opportunity by refusing to cave to the demands of the prime contractor.

The ESCgov Solution:

Purchase in place:  ESCgov purchases the existing inventory (already at the datacenter) and pays the hardware company

ESCgov purchases additional inventory from the hardware company to satisfy growing demand over the life of the prime contract

ESCgov provides all required inventory to the prime in return for usage-based payments stemming from the government user.

-Hardware company books all sales to ESCgov under the terms required for revenue recognition

– Prime contractor acquires use of the assets from ESCgov under the consumption-based terms it attempted to obtain from the hardware company.