IBM's $31.6M contract for critical function information services awarded by Commerce Dept

Contract Overview

Contract Amount: $31,609,344 ($31.6M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Commerce

Start Date: 2017-01-01

End Date: 2019-06-30

Contract Duration: 910 days

Daily Burn Rate: $34.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::CT::IGF FOR CRITICAL FUNCTIONS

Place of Performance

Location: SUITLAND, PRINCE GEORGES County, MARYLAND, 20746

State: Maryland Government Spending

Plain-Language Summary

Department of Commerce obligated $31.6 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::CT::IGF FOR CRITICAL FUNCTIONS Key points: 1. Contract awarded on a non-competitive basis, raising questions about price discovery. 2. Fixed-price contract type suggests cost certainty for the government. 3. Contract duration of 910 days indicates a significant, ongoing need. 4. The contract falls under 'All Other Information Services' NAICS code. 5. Awarded by the U.S. Census Bureau, a key agency for data collection. 6. IBM is a large, established contractor with a history of federal awards.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding. Without comparison to other offers or market rates for similar services, it's difficult to definitively assess if the $31.6 million represents excellent value. The fixed-price nature, however, provides some cost predictability. Further analysis would require understanding the specific services rendered and their criticality to the Census Bureau's operations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means only one vendor, IBM, was solicited. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It suggests a potential reliance on a specific capability or technology that only IBM could provide, or a failure to adequately plan for competition.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no pressure from competing vendors to offer lower prices or more innovative solutions.

Public Impact

The U.S. Census Bureau benefits from this contract, likely for critical data processing and information management services. The services delivered are essential for the Bureau's operational continuity and data integrity. The geographic impact is primarily national, supporting the Census Bureau's nationwide data collection and dissemination efforts. Workforce implications may include the utilization of IBM's specialized personnel for information services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Sole-source awards can create vendor lock-in, making future procurements more difficult and potentially more expensive.
Transparency in the justification for sole-source award is crucial for public trust.

Positive Signals

IBM is a reputable contractor with extensive experience in large-scale IT projects.
The fixed-price contract type offers budget certainty for the awarding agency.
The contract supports critical functions of the U.S. Census Bureau, a vital government entity.

Sector Analysis

This contract falls within the broader Information Services sector, specifically under the 'All Other Information Services' category (NAICS 519190). This sector encompasses a wide range of services, including data processing, hosting, and related services. The market is characterized by large, established players like IBM, as well as numerous smaller, specialized firms. Federal spending in this area is substantial, supporting various agency IT infrastructure and data management needs. Comparable spending benchmarks are difficult to establish precisely without knowing the specific services, but large IT service contracts for government agencies often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the large incumbent contractor (IBM), it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued within this specific award. The focus was likely on fulfilling the critical function requirements through the primary contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the U.S. Census Bureau's internal contracting and program management offices. The Department of Commerce's Office of Inspector General (OIG) would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is dependent on the agency's policies regarding the release of contract details and performance reports, which can be limited for sole-source awards.

Related Government Programs

Census Bureau IT Modernization Programs
Federal Data Management Services
Information Technology Services Contracts
Critical Infrastructure Information Systems

Risk Flags

Sole-source award lacks competition
Potential for cost overruns due to lack of market pressure
Limited transparency on specific service details and justification for sole-source

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $31.6 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::CT::IGF FOR CRITICAL FUNCTIONS

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Commerce (U.S. Census Bureau).

What is the total obligated amount?

The obligated amount is $31.6 million.

What is the period of performance?

Start: 2017-01-01. End: 2019-06-30.

What specific services were provided under this contract to justify a sole-source award?

The provided data does not specify the exact services rendered under contract number 519190. However, given the NAICS code 'All Other Information Services' and the awarding agency being the U.S. Census Bureau, it is highly probable that the services involved critical data processing, management, storage, or dissemination functions essential for the Bureau's operations. These could include maintaining databases, ensuring data integrity, providing access to statistical information, or supporting the technological infrastructure required for national data collection efforts. The justification for a sole-source award would typically detail why only IBM possessed the unique capability, technology, or existing infrastructure necessary to meet these specific, critical needs without unacceptable delay or duplication of cost.

How does the $31.6 million cost compare to similar sole-source IT contracts awarded by the Census Bureau or other agencies?

Directly comparing the $31.6 million cost to similar sole-source IT contracts is challenging without more specific details on the services provided and the contract's duration and scope. However, for a contract spanning approximately two and a half years (January 2017 to June 2019) with a major IT provider like IBM, this figure is within a plausible range for significant IT services supporting critical government functions. Sole-source awards, by their nature, often lack direct price competition, making value assessment difficult. To provide a meaningful comparison, one would need to identify contracts with comparable NAICS codes, agency missions, and service complexities, while also accounting for the inherent price premiums often associated with non-competitive procurements.

What are the potential risks associated with a sole-source award of this magnitude to a single contractor like IBM?

The primary risks associated with a sole-source award of this magnitude include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or provide exceptional service beyond contractual minimums, and the risk of vendor lock-in. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, reliance on a single vendor for critical functions can create vulnerabilities if that vendor experiences financial difficulties, security breaches, or strategic shifts. The government also loses the opportunity to discover and engage with potentially more capable or cost-effective alternative providers in the market.

What performance metrics or oversight mechanisms were likely in place to ensure IBM delivered value for the $31.6 million?

While specific performance metrics are not detailed in the provided data, federal contracts, especially those for critical functions, typically include performance standards, Service Level Agreements (SLAs), and reporting requirements. The U.S. Census Bureau would have likely monitored IBM's adherence to these terms through contract officers and technical representatives. Oversight mechanisms would include regular progress reviews, acceptance testing of deliverables, and potentially audits. The fixed-price nature of the contract implies that IBM was responsible for managing its costs to deliver the agreed-upon services within the $31.6 million budget. The Department of Commerce's Office of Inspector General also provides an overarching layer of oversight.

How has federal spending on 'All Other Information Services' (NAICS 519190) evolved, and does this contract represent a typical spending pattern?

Federal spending on 'All Other Information Services' (NAICS 519190) can fluctuate based on agency needs, technological advancements, and specific program requirements. This $31.6 million contract awarded in 2017 represents a significant investment for a single task order. Analyzing historical spending trends for this specific NAICS code across the federal government would reveal overall market size and growth. Without that broader context, it's difficult to definitively state if this contract represents a 'typical' pattern. However, large agencies like the Census Bureau frequently award substantial IT and information service contracts, often in the multi-million dollar range, to support their core missions.

Industry Classification

NAICS: Information › Other Information Services › All Other Information Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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: $31,946,715

Exercised Options: $31,609,344

Current Obligation: $31,609,344

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline