DoD's $22.8M IBM Cloud Services Contract Awarded Under Full and Open Competition

Contract Overview

Contract Amount: $22,867,537 ($22.9M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-28

End Date: 2021-11-01

Contract Duration: 1,860 days

Daily Burn Rate: $12.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF APCE CLOUD SERVICES

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35808

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $22.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::CT::IGF APCE CLOUD SERVICES Key points: 1. Contract awarded to a single, large incumbent provider, suggesting potential for limited price negotiation. 2. Fixed-price contract type may offer cost certainty but could limit flexibility for evolving cloud needs. 3. The contract duration of 1860 days (approx. 5 years) aligns with typical IT service lifecycles. 4. Awarded by the Department of the Army, indicating a focus on defense-related IT infrastructure. 5. The North American Industry Classification System (NAICS) code 518210 points to a market for computing infrastructure and data processing services. 6. The contract was awarded as a Delivery Order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: fair

Benchmarking the value of this specific $22.8 million contract is challenging without access to the underlying IDIQ vehicle's details or comparable cloud service pricing. However, the fixed-price nature suggests the government aimed for cost predictability. The award to a major provider like IBM indicates a reliance on established capabilities, which can sometimes come at a premium compared to smaller, more specialized providers. Further analysis would require comparing the per-unit service costs (e.g., per gigabyte of storage, per compute hour) against market rates for similar cloud services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The fact that it resulted in a single delivery order suggests that while competition was allowed, IBM was ultimately selected as the most advantageous offer. The number of bidders is not specified, but full and open competition generally promotes a more competitive environment, potentially leading to better pricing and terms for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple vendors to offer their best pricing and services, driving down costs and increasing the likelihood of securing a cost-effective solution.

Public Impact

The Department of the Army benefits from access to critical cloud computing infrastructure and services. This contract supports the operational readiness and technological advancement of military forces. The services provided likely enhance data storage, processing, and accessibility for defense applications. The geographic impact is national, supporting defense operations across various locations, though the physical data centers may be concentrated. Workforce implications include reliance on IBM's technical expertise for cloud management and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a large provider like IBM, making future transitions costly.
Fixed-price contracts can lead to the government overpaying if service requirements change significantly or if costs decrease post-award.
Lack of specific performance metrics or service level agreements (SLAs) in the provided data makes it difficult to assess service quality.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Fixed-price contract type provides budget certainty for the Department of the Army.
The contract is with a reputable and established cloud service provider (IBM).

Sector Analysis

The market for cloud computing services is a rapidly growing sector within the IT industry, driven by demand for scalable, flexible, and cost-effective data storage and processing solutions. Government agencies, including defense departments, are increasingly migrating to cloud environments to modernize infrastructure and improve operational efficiency. This contract fits within the broader category of government IT spending on computing infrastructure, data processing, and hosting services, a market valued in the billions of dollars annually.

Small Business Impact

The provided data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to IBM, it is unlikely that significant subcontracting opportunities for small businesses were mandated or realized, unless specified in the broader IDIQ terms not detailed here. This suggests that the primary benefits of this contract accrue to large, established IT service providers rather than the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The contract type (firm fixed price) implies a focus on delivery and adherence to the agreed-upon scope. Transparency is generally facilitated through contract databases like FPDS, where this award is recorded. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

General Services Administration (GSA) IT Schedule Contracts
Department of Defense Cloud Computing Strategy Initiatives
Amazon Web Services (AWS) Government Contracts
Microsoft Azure Government Contracts

Risk Flags

Potential for vendor lock-in
Limited transparency on specific service costs
Reliance on a single large provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::CT::IGF APCE CLOUD SERVICES

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $22.9 million.

What is the period of performance?

Start: 2016-09-28. End: 2021-11-01.

What was the specific performance period and delivery timeline for this contract?

The contract was awarded on September 28, 2016, and had an estimated completion date of November 1, 2021. This provides a duration of approximately 5 years and 1 month (1860 days). This timeline is typical for significant IT service contracts, allowing for implementation, operation, and potential transition phases. The delivery order structure suggests it was part of a larger framework agreement, and this specific order covered services within that defined period.

How does the $22.8 million award compare to other cloud service contracts awarded by the Department of Defense?

The $22.8 million award is a moderate-sized contract within the vast IT spending of the Department of Defense. DoD frequently awards multi-billion dollar contracts for cloud services, often through large IDIQ vehicles like JEDI (though that was later canceled) or its successor, the Joint Warfighting Cloud Capability (JWCC). Compared to these mega-contracts, this specific award appears to be for a defined scope or service level within a broader strategy. However, without knowing the specific services rendered and the underlying IDIQ pricing structure, a direct value-for-money comparison is difficult. It represents a significant investment but is not at the scale of enterprise-wide cloud migrations.

What specific cloud services were provided under this contract?

The NAICS code 518210, 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services,' indicates the general category of services. While the specific details are not in the provided data, this typically includes services such as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), data storage, computing power, and potentially managed hosting services. Given the provider is IBM, it likely involved their cloud offerings (e.g., IBM Cloud) to support various Department of the Army applications and data management needs.

What is the track record of International Business Machines Corporation (IBM) in providing cloud services to the federal government?

IBM has a long-standing history of providing IT services and solutions to the federal government, including extensive experience in cloud computing. They offer a range of cloud services, from public to private and hybrid cloud solutions, often tailored to meet government security and compliance requirements (e.g., FedRAMP). IBM has secured numerous contracts across various federal agencies for cloud infrastructure, software, and consulting services. Their track record includes supporting critical government missions, though like any large provider, they have also faced scrutiny regarding contract performance and pricing on specific awards.

Were there any specific risks identified or mitigation strategies employed for this contract?

The provided data does not explicitly list identified risks or mitigation strategies for this specific contract. However, common risks associated with large IT service contracts, especially cloud services, include vendor lock-in, cybersecurity threats, data breaches, cost overruns (less likely with fixed-price but possible if scope changes), and performance issues. Given the award was under full and open competition to a major provider, the government likely assessed these risks during the procurement process. Mitigation might involve robust Service Level Agreements (SLAs), security protocols, and contingency planning, details of which would be within the full contract documentation.

How does this contract align with the Department of the Army's broader IT modernization goals?

This contract aligns with the Department of the Army's broader IT modernization goals by providing essential cloud infrastructure. Modernizing IT often involves migrating from legacy on-premises systems to more flexible, scalable, and secure cloud environments. Utilizing services like those provided by IBM enables the Army to potentially improve data accessibility, enhance collaboration, deploy new applications faster, and reduce the burden of managing physical data centers. This supports objectives related to digital transformation, operational agility, and readiness in a rapidly evolving technological landscape.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $22,867,537

Exercised Options: $22,867,537

Current Obligation: $22,867,537

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $10,254,449

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ12D0002

IDV Type: IDC

Timeline