IBM awarded $2.1M for FERC Application Layer Modernization Support Services

Contract Overview

Contract Amount: $2,106,630 ($2.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Energy

Start Date: 2025-05-01

End Date: 2026-04-30

Contract Duration: 364 days

Daily Burn Rate: $5.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: APPLICATION LAYER MODERNIZATION (ALM) SUPPORT SERVICES - CALL ORDER 2

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20426

State: District of Columbia Government Spending

Plain-Language Summary

Department of Energy obligated $2.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: APPLICATION LAYER MODERNIZATION (ALM) SUPPORT SERVICES - CALL ORDER 2 Key points: 1. Contract awarded via BPA Call, indicating a pre-competed framework. 2. Firm Fixed Price contract type suggests cost certainty for the government. 3. Duration of 364 days aligns with typical project-based service needs. 4. Small business set-aside was not utilized for this procurement. 5. The contract is for custom computer programming services. 6. Awarded to a single contractor, IBM, under full and open competition.

Value Assessment

Rating: good

The contract value of $2.1 million for one year of Application Layer Modernization (ALM) support services appears reasonable given the specialized nature of custom computer programming. Benchmarking against similar IT modernization contracts for federal agencies suggests that pricing for such services can vary widely based on complexity and contractor expertise. Without specific details on the scope of work, a precise value-for-money assessment is challenging, but the firm fixed-price structure provides a degree of cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a Blanket Purchase Agreement (BPA) Call, which itself was established through full and open competition. While the specific call order competition details are not provided, the underlying BPA mechanism generally allows for competitive ordering among pre-qualified vendors. The fact that IBM was selected suggests they were among the most competitive bidders on the BPA or for this specific call order.

Taxpayer Impact: Full and open competition ensures that the government can access a wide range of potential contractors, fostering a competitive environment that typically leads to better pricing and service quality for taxpayers.

Public Impact

Benefits the Federal Energy Regulatory Commission (FERC) by supporting critical application layer modernization. Ensures continued operation and potential enhancement of essential IT systems. Services delivered are focused on custom computer programming, impacting internal IT infrastructure. Geographic impact is primarily within the District of Columbia, where FERC is headquartered. Workforce implications include the need for skilled programmers and IT specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if ALM expertise is highly specialized and difficult to transfer.
Reliance on a single vendor for critical modernization could pose risks if performance degrades.
Scope creep could lead to cost overruns if not managed tightly under the fixed-price contract.

Positive Signals

IBM has a long-standing track record in providing IT services to the federal government.
The use of a BPA Call suggests a streamlined and potentially cost-effective procurement process.
Firm Fixed Price contract provides budget certainty for the duration of the award.

Sector Analysis

This contract falls within the IT services sector, specifically custom computer programming. The federal IT services market is vast, with agencies continually investing in modernizing legacy systems and developing new applications. Comparable spending benchmarks for IT modernization projects vary significantly based on agency size, complexity of systems, and the specific technologies involved. This contract represents a small portion of overall federal IT spending but is crucial for FERC's operational efficiency.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are limited unless they are part of IBM's supply chain or are awarded separate contracts for related services. The absence of a small business focus in this particular award does not necessarily reflect the overall small business utilization strategy of FERC or the Department of Energy.

Oversight & Accountability

Oversight for this contract will likely be managed by the Federal Energy Regulatory Commission's contracting officers and program managers. Accountability measures are embedded within the firm fixed-price contract terms, requiring IBM to deliver specified services within the agreed-upon budget and timeline. Transparency is facilitated through contract award databases, though detailed performance metrics are typically internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

IT Modernization Services
Custom Computer Programming
Application Development
IT Support Services
Cloud Migration Services

Risk Flags

Potential for vendor lock-in
Performance risk
Scope creep risk
Security vulnerabilities during modernization

Frequently Asked Questions

What is this federal contract paying for?

Department of Energy awarded $2.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. APPLICATION LAYER MODERNIZATION (ALM) SUPPORT SERVICES - CALL ORDER 2

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Energy (Federal Energy Regulatory Commission).

What is the total obligated amount?

The obligated amount is $2.1 million.

What is the period of performance?

Start: 2025-05-01. End: 2026-04-30.

What is the specific scope of 'Application Layer Modernization (ALM) Support Services' being provided by IBM?

The provided data indicates the contract is for 'APPLICATION LAYER MODERNIZATION (ALM) SUPPORT SERVICES - CALL ORDER 2' under NAICS code 541511 (Custom Computer Programming Services). While the exact scope is not detailed, ALM typically involves updating, refactoring, or replacing the software components that handle business logic and data manipulation within an application. This could include tasks such as migrating monolithic applications to microservices, updating programming languages and frameworks, improving API functionalities, enhancing data processing capabilities, and ensuring compatibility with newer infrastructure or cloud environments. The 'Call Order 2' suggests this is a specific task order under a larger Blanket Purchase Agreement (BPA).

How does the $2.1 million award compare to typical IT modernization contracts for similar agencies?

The $2.1 million award for one year of ALM support services is on the lower end for significant IT modernization projects, which can often run into tens or hundreds of millions of dollars for large-scale overhauls. However, for specific application layer modernization tasks or support for a particular set of applications within an agency like FERC, this amount can be appropriate. Factors influencing cost include the complexity of the applications, the number of developers/specialists required, the duration of the engagement, and the specific modernization approach (e.g., re-platforming vs. re-architecting). Without more granular details on the scope, direct comparison is difficult, but it suggests a focused effort rather than a comprehensive agency-wide modernization.

What are the key risks associated with this contract for the Federal Energy Regulatory Commission?

Key risks include potential vendor lock-in, where FERC becomes heavily reliant on IBM's specific expertise for ALM, making future transitions difficult or costly. Performance risk is another concern; if IBM fails to deliver the modernization effectively or on time, it could disrupt FERC's operations. Scope creep is also a risk, especially if the initial requirements are not clearly defined, potentially leading to cost overruns despite the firm fixed-price structure. Finally, security risks related to the modernization of application layers must be meticulously managed to protect sensitive energy sector data.

What is IBM's track record with federal IT contracts, particularly in modernization?

International Business Machines Corporation (IBM) has an extensive and long-standing track record of providing a wide array of IT services and solutions to the U.S. federal government across numerous agencies. This includes significant experience in areas relevant to application layer modernization, such as legacy system modernization, cloud migration, custom software development, and enterprise resource planning (ERP) implementations. IBM has been involved in numerous large-scale IT transformation projects for defense, civilian, and intelligence agencies. Their history suggests a capacity to handle complex IT challenges, though specific performance on individual contracts can vary.

How does the 'Full and Open Competition' for the underlying BPA impact value for taxpayers?

The 'Full and Open Competition' used to establish the Blanket Purchase Agreement (BPA) under which this call order was issued is a significant benefit for taxpayers. This process ensures that a wide range of qualified vendors had the opportunity to compete for a position on the BPA. By selecting multiple vendors through open competition, the government can leverage competitive pricing and a diverse set of capabilities. When a specific call order is placed, agencies can often solicit further competition among BPA holders or select the best-value provider, ultimately driving down costs and improving the quality of services received, thereby maximizing taxpayer value.

What is the historical spending pattern for Application Layer Modernization Support Services at FERC?

Analyzing historical spending patterns for ALM support services at FERC would require access to detailed historical contract databases and budget allocations. Without such specific data, it's difficult to provide a precise historical context. However, federal agencies, including FERC, have consistently allocated funds towards IT modernization efforts over the years as technology evolves and legacy systems require updates. Spending on ALM can fluctuate based on strategic IT priorities, budget cycles, and the lifecycle of existing applications. This $2.1 million award represents a specific investment in modernization for a particular period, and its scale relative to past spending would depend on FERC's broader IT investment strategy.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 NEW ORCHARD RD, ARMONK, NY, 10504

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

Financial Breakdown

Contract Ceiling: $10,749,587

Exercised Options: $2,106,630

Current Obligation: $2,106,630

Actual Outlays: $1,082,448

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 89603021A0004

IDV Type: BPA

Timeline