DoD's $28M IT Services Contract Awarded to IBM Raises Value and Competition Questions

Contract Overview

Contract Amount: $28,005,033 ($28.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2017-06-26

End Date: 2018-06-30

Contract Duration: 369 days

Daily Burn Rate: $75.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: FORT LEE, PRINCE GEORGE County, VIRGINIA, 23801

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF Key points: 1. The contract's value appears reasonable given the scope of IT services, but detailed benchmarking is needed. 2. Full and open competition was utilized, suggesting a potentially competitive pricing environment. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance duration of over a year provides a substantial period for service delivery. 5. The contract falls within the broad IT services sector, a significant area of federal spending. 6. IBM's extensive experience in government contracting is a positive indicator, though past performance requires scrutiny.

Value Assessment

Rating: fair

The contract value of approximately $28 million for IT services over roughly one year is within a typical range for large federal IT procurements. However, without specific details on the services rendered (e.g., cloud migration, cybersecurity, software development), a precise value-for-money assessment is challenging. Benchmarking against similar contracts for comparable services from other large IT providers would be necessary to determine if the pricing was competitive. The firm-fixed-price nature of the award helps control costs, but the overall value proposition depends heavily on the quality and effectiveness of the services delivered by IBM.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. This method generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The fact that it was competed broadly suggests that multiple bidders likely participated, although the exact number of bidders is not provided. A robust competition typically benefits the government by driving down costs and encouraging innovation.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider array of innovative solutions. This approach ensures that the government is not locked into a single provider, promoting efficiency and cost-effectiveness in federal spending.

Public Impact

The Department of Defense benefits from enhanced IT services, potentially improving operational efficiency and national security. The contract supports the Defense Information Systems Agency (DISA) in its mission to provide IT support to the military. Workforce implications may include the utilization of skilled IT professionals employed by IBM, potentially in Virginia. The services delivered are expected to be critical for maintaining and upgrading the DoD's complex information technology infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the true value and effectiveness of the services provided.
The broad nature of 'Other Computer Related Services' could mask potential inefficiencies or scope creep if not tightly managed.
Reliance on a single large contractor like IBM, even with competition, can create vendor lock-in risks for future procurements.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
Firm-fixed-price contract type provides cost certainty for the government, mitigating risks of budget overruns.
IBM is a well-established contractor with significant experience in delivering complex IT solutions to the federal government.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically under 'Other Computer Related Services' (NAICS 541519). This category encompasses a wide range of IT support and consulting services. The federal IT market is vast, with agencies consistently investing in maintaining and modernizing their technological infrastructure. Comparable spending benchmarks for IT services can vary significantly based on the specific services, duration, and complexity, but contracts in the tens of millions are common for large-scale IT support and development efforts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by `sb: false`. Furthermore, the prime contractor, IBM, is a large corporation, suggesting that subcontracting opportunities for small businesses may be limited or dependent on IBM's internal subcontracting policies. Analysis of IBM's historical subcontracting performance would be needed to determine the extent of small business participation on this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Information Systems Agency (DISA). As a delivery order under a larger contract vehicle, oversight mechanisms would likely involve contract officers, program managers, and potentially contracting officer's representatives (CORs) to monitor performance, ensure compliance with terms, and verify service delivery. Transparency is generally facilitated through contract award databases, but detailed performance reports are often internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Professional Services
Information Technology Support Services
Cloud Computing Services
Cybersecurity Services
Software Development Services
Defense Information Technology Modernization Programs

Risk Flags

Potential for scope creep if 'Other Computer Related Services' are not precisely defined.
Value for money assessment is limited without detailed service breakdowns and benchmarking.
Number of bidders not specified, impacting assessment of competition's effectiveness on price.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF

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 (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $28.0 million.

What is the period of performance?

Start: 2017-06-26. End: 2018-06-30.

What specific IT services were delivered under this contract, and how do they align with DISA's strategic IT goals?

The contract description lists 'Other Computer Related Services' (NAICS 541519), which is a broad category. To assess alignment with DISA's strategic goals, a detailed breakdown of the services rendered is required. This could include areas such as network management, system integration, cybersecurity support, software maintenance, or IT consulting. Without this specificity, it's difficult to determine the direct impact on DISA's objectives, such as enhancing network resilience, improving data security, or facilitating digital transformation initiatives. Further analysis would involve reviewing task orders issued under this contract to understand the precise nature of the work performed and its contribution to DISA's mission-critical functions.

How does the $28 million contract value compare to similar IT services contracts awarded by DISA or the DoD to large IT providers?

Benchmarking the $28 million contract value requires comparing it against similar firm-fixed-price contracts for 'Other Computer Related Services' awarded by DISA or the DoD to large IT corporations like IBM, Accenture, or Booz Allen Hamilton. The duration of the contract (approximately 1 year) is a key factor. If similar contracts for comparable services over a similar period range from $20 million to $40 million, then this award would be considered within the expected market range. However, if comparable contracts are significantly lower, it might indicate potential overpricing or a less competitive bid than anticipated. Access to historical contract data and detailed service descriptions is crucial for an accurate comparison.

What was the number of bids received, and how did the competition level influence the final contract price?

The contract was awarded under 'FULL AND OPEN COMPETITION,' which theoretically allows for maximum bidder participation. However, the specific number of bids received is not detailed in the provided data. A high number of bids (e.g., 5 or more) typically suggests robust competition, which often leads to more favorable pricing for the government. Conversely, if only a few bids were submitted, the government might have had less leverage in price negotiations. Understanding the number of bidders is essential to gauge the effectiveness of the competition in driving down costs and ensuring value for taxpayer money. Without this data point, the impact of competition on price discovery remains speculative.

What is IBM's track record with similar DoD IT services contracts, particularly regarding performance and cost control?

IBM has a long history of contracting with the Department of Defense for a wide array of IT services. Assessing their track record for similar contracts requires examining past performance evaluations, any contract disputes, or instances of cost overruns on previous agreements. Data from sources like the Federal Procurement Data System (FPDS) or agency-specific performance management systems could provide insights. Positive indicators would include consistent high ratings on past performance questionnaires and a history of delivering services within budget and schedule. Conversely, any documented issues with performance quality, missed deadlines, or significant cost variances on comparable contracts would raise concerns about potential risks associated with this award.

What are the potential risks associated with a firm-fixed-price contract for complex IT services, and how are they mitigated?

Firm-fixed-price (FFP) contracts are generally preferred by the government for cost certainty. However, for complex IT services, there's a risk that the contractor may cut corners on quality or scope to maintain profitability if the initial price was underestimated. Conversely, if the price was overestimated due to uncertainty, the government might overpay. Mitigation strategies include clearly defining the scope of work, establishing robust performance standards and metrics, and implementing strong contract oversight. The government's COR plays a vital role in monitoring service delivery and ensuring that the quality meets requirements. For FFP contracts, the contractor bears most of the risk, but poorly defined SOWs can lead to disputes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer 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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HC102815R0025

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: $28,005,033

Exercised Options: $28,005,033

Current Obligation: $28,005,033

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102816D0007

IDV Type: IDC

Timeline