SSA Spends $64M on IBM Mainframe Refresh, Lacking Competition

Contract Overview

Contract Amount: $64,000,000 ($64.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Social Security Administration

Start Date: 2022-09-09

End Date: 2026-03-31

Contract Duration: 1,299 days

Daily Burn Rate: $49.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM Z14 TO Z16 MAINFRAME HARDWARE REFRESHMENTS

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Social Security Administration obligated $64.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IBM Z14 TO Z16 MAINFRAME HARDWARE REFRESHMENTS Key points: 1. Significant expenditure on critical IT infrastructure. 2. Sole reliance on IBM for mainframe hardware. 3. Potential for cost savings through competitive bidding. 4. Long-term hardware refresh cycle impacts budget predictability.

Value Assessment

Rating: questionable

The $64 million price tag for IBM mainframe hardware is substantial. Without competitive benchmarking, it's difficult to assess if this price is optimal compared to potential alternatives or previous refresh cycles.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to IBM. This lack of competition limits price discovery and may lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be overpaying due to the absence of competitive pressure on pricing for this essential hardware.

Public Impact

Ensures continued operation of critical Social Security Administration systems. Potential for service disruption if hardware fails and cannot be replaced promptly. Investment in technology that supports millions of Americans' benefits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
High dollar value
Sole-source award
Long-term commitment

Positive Signals

Maintains critical IT infrastructure
Ensures service continuity

Sector Analysis

This purchase falls within the IT hardware sector, specifically mainframe computers, which are crucial for large-scale data processing. Benchmarks for mainframe refreshes vary widely based on model and scale, but competitive procurement typically yields better pricing.

Small Business Impact

This contract does not appear to involve small businesses, as it is a direct award to a large corporation for specialized hardware.

Oversight & Accountability

The lack of competition raises questions about oversight. Future procurements should explore competitive strategies to ensure value for money and accountability.

Related Government Programs

Electronic Computer Manufacturing
Social Security Administration Contracting
Social Security Administration Programs

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for overpayment
Vendor lock-in risk
Limited transparency on total cost

Frequently Asked Questions

What is this federal contract paying for?

Social Security Administration awarded $64.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IBM Z14 TO Z16 MAINFRAME HARDWARE REFRESHMENTS

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 $64.0 million.

What is the period of performance?

Start: 2022-09-09. End: 2026-03-31.

What is the total cost of ownership for this mainframe refresh over its lifecycle, including maintenance and support?

The total cost of ownership is not fully detailed in the provided data. The $64 million covers hardware refreshments, but ongoing maintenance, software licensing, and potential upgrade costs over the contract's duration (ending March 2026) are not specified. A comprehensive TCO analysis would be necessary to understand the full financial commitment.

What are the risks associated with relying solely on IBM for mainframe hardware, especially in terms of vendor lock-in and future pricing?

Sole reliance on IBM creates significant vendor lock-in, limiting the SSA's ability to negotiate favorable terms or explore alternative solutions. This dependence can lead to inflated prices in future refresh cycles and potential disruptions if IBM's product roadmap or pricing strategies change unfavorably.

How does this hardware refresh contribute to the SSA's overall IT modernization strategy and long-term effectiveness?

This refresh ensures the continued operational effectiveness of critical systems by updating aging mainframe hardware. However, without details on how it integrates with broader modernization efforts, its contribution to long-term agility and innovation is unclear. It primarily addresses immediate hardware needs rather than strategic transformation.

Industry Classification

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

Product/Service Code: IT AND TELECOM - DATA CENTER

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: $64,000,000

Exercised Options: $64,000,000

Current Obligation: $64,000,000

Actual Outlays: $63,910,400

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SS001660010

IDV Type: IDC

Timeline