SSA Spends $55M on IBM Mainframe Hardware Refresh and Capacity Expansion

Contract Overview

Contract Amount: $55,055,875 ($55.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Social Security Administration

Start Date: 2018-06-08

End Date: 2019-03-31

Contract Duration: 296 days

Daily Burn Rate: $186.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: REFRESH ZEC12 MAINFRAME HARDWARE WITH Z14 HARDWARE, PURCHASE ADDITIONAL Z13 MIPS CAPACITY, AND PURCHASE VARIOUS MAINFRAME INFRASTRUCTURE ITEMS.

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Social Security Administration obligated $55.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: REFRESH ZEC12 MAINFRAME HARDWARE WITH Z14 HARDWARE, PURCHASE ADDITIONAL Z13 MIPS CAPACITY, AND PURCHASE VARIOUS MAINFRAME INFRASTRUCTURE ITEMS. Key points: 1. Significant investment in critical IT infrastructure for the Social Security Administration. 2. Sole-source procurement from IBM raises questions about competition and potential cost savings. 3. Hardware refresh and capacity increase aim to maintain essential government services. 4. Focus on mainframe technology highlights its continued importance in large-scale data processing.

Value Assessment

Rating: questionable

The contract value of $55.1 million for mainframe hardware and MIPS capacity is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar IBM mainframe procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to IBM. This limits price discovery and may result in higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for this significant hardware purchase could lead to overspending, impacting taxpayer funds.

Public Impact

Ensures continued operation of critical Social Security Administration systems. Potential for higher costs due to sole-source award affects taxpayer value. Reliance on a single vendor for essential hardware poses a long-term risk. Modernization of mainframe infrastructure supports data processing needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
Lack of price competition
Potential for overpayment

Positive Signals

Mainframe modernization
Ensures service continuity

Sector Analysis

The Social Security Administration relies heavily on mainframe systems for its vast data processing needs. This procurement reflects the ongoing investment required to maintain and upgrade this critical infrastructure, which is common in large government agencies.

Small Business Impact

This contract was awarded directly to IBM, a large corporation. There is no indication of subcontracting opportunities for small businesses in the provided data.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the SSA obtained the best possible value. Further review of the justification for not competing the award is recommended.

Related Government Programs

Electronic Computer Manufacturing
Social Security Administration Contracting
Social Security Administration Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing.
Lack of transparency in price discovery.
Vendor lock-in risk.
Dependence on a single hardware provider.

Frequently Asked Questions

What is this federal contract paying for?

Social Security Administration awarded $55.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. REFRESH ZEC12 MAINFRAME HARDWARE WITH Z14 HARDWARE, PURCHASE ADDITIONAL Z13 MIPS CAPACITY, AND PURCHASE VARIOUS MAINFRAME INFRASTRUCTURE ITEMS.

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Social Security Administration (Social Security Administration).

What is the total obligated amount?

The obligated amount is $55.1 million.

What is the period of performance?

Start: 2018-06-08. End: 2019-03-31.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that cannot be met by other vendors. Without the specific justification document, it's impossible to confirm the rationale. However, for critical infrastructure like mainframes, vendor lock-in and specialized expertise can sometimes lead agencies to sole-source.

What is the potential cost impact of this sole-source award on taxpayers?

Sole-source contracts often carry a higher risk of inflated prices because there is no competitive pressure to drive costs down. Taxpayers may be paying a premium for the hardware and MIPS capacity compared to what could have been achieved through a competitive bidding process. The exact overpayment, if any, would require a market price analysis.

How does this hardware refresh align with the SSA's long-term IT strategy?

Refreshing mainframe hardware and increasing MIPS capacity suggests a continued reliance on the existing mainframe architecture. This indicates that the SSA's long-term strategy likely involves maintaining and optimizing its current core systems rather than a complete migration away from mainframes in the short to medium term. This ensures operational stability for essential services.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $55,055,875

Exercised Options: $55,055,875

Current Obligation: $55,055,875

Actual Outlays: $55,875

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SS001660010

IDV Type: IDC

Timeline