DoD awards IBM $33.4M for electronic computer manufacturing, with a 5-year contract duration

Contract Overview

Contract Amount: $33,434,567 ($33.4M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2020-06-30

End Date: 2025-06-29

Contract Duration: 1,825 days

Daily Burn Rate: $18.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM SOFTWARE

Place of Performance

Location: CHAMBERSBURG, FRANKLIN County, PENNSYLVANIA, 17201

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $33.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IBM SOFTWARE Key points: 1. Contract value of $33.4 million over five years suggests a significant investment in IT infrastructure. 2. The contract was awarded under full and open competition, indicating a potentially competitive bidding process. 3. A firm-fixed-price contract type generally shifts risk to the contractor, potentially benefiting the government. 4. The duration of 1825 days (5 years) allows for long-term planning and sustained support. 5. The specific NAICS code 334111 points to the manufacturing of electronic computers, a core component of IT infrastructure. 6. The award to a large, established corporation like IBM may indicate a need for specialized expertise or proven reliability.

Value Assessment

Rating: good

Benchmarking the value of this contract requires more specific data on the types of electronic computers and associated services procured. However, a $33.4 million award over five years for manufacturing and potentially related support services appears within a reasonable range for a large federal IT contract. The firm-fixed-price structure is generally favorable for cost control. Further analysis would involve comparing per-unit costs for specific hardware components or service levels against market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' suggesting that all responsible sources were permitted to submit bids. This typically leads to a more robust selection process and potentially better pricing due to market forces. The number of bidders is not specified, but the designation implies a competitive environment was sought.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a marketplace where contractors vie for government business, driving down costs and improving service quality.

Public Impact

The Department of Defense benefits from the acquisition of essential electronic computer hardware and potentially related manufacturing services. This contract supports the operational readiness and technological capabilities of the U.S. military. The geographic impact is primarily centered around the contractor's manufacturing facilities and the delivery locations for the hardware, likely within the U.S. Workforce implications include employment at IBM's manufacturing plants and potentially in support roles related to the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the exact nature of the 'electronic computer manufacturing' could obscure potential cost overruns if scope creep occurs.
Reliance on a single large contractor, even with open competition, might limit future flexibility or innovation if not managed proactively.
The long contract duration could lead to technology obsolescence if not managed with upgrade clauses or performance monitoring.

Positive Signals

The firm-fixed-price contract type provides cost certainty for the government.
Awarding to a well-established entity like IBM suggests a focus on reliability and proven performance.
The five-year duration allows for stable planning and execution of the contract requirements.

Sector Analysis

This contract falls within the Information Technology sector, specifically related to the manufacturing of electronic computers. The market for federal IT procurement is vast, with significant annual spending on hardware, software, and services. This contract represents a portion of the DoD's overall investment in maintaining and upgrading its computing infrastructure, which is critical for national security. Comparable spending benchmarks would depend on the specific type and quantity of computers being manufactured.

Small Business Impact

The 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 will be mandated unless specified within the contract's performance requirements. The focus appears to be on a large-scale procurement from a major manufacturer, rather than fostering small business participation through set-asides.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Defense and the Defense Information Systems Agency (DISA). As a firm-fixed-price contract, oversight would focus on ensuring delivery of specified goods and adherence to contract terms. Transparency is facilitated by public contract databases, but detailed performance metrics and specific oversight activities are typically internal to the agency. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Procurement
Electronic Computer Manufacturing Contracts
Information Technology Hardware Acquisition
Defense Information Systems Agency Contracts

Risk Flags

Potential for technology obsolescence over the 5-year duration.
Lack of specific details on computer types and applications.
Reliance on a single large contractor may limit future flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IBM SOFTWARE

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 $33.4 million.

What is the period of performance?

Start: 2020-06-30. End: 2025-06-29.

What specific types of electronic computers are being manufactured under this contract, and what are their intended applications within the Department of Defense?

The provided data identifies the NAICS code as 334111, which pertains to the 'Electronic Computer Manufacturing' industry. This typically includes the production of desktop computers, servers, laptops, and related components. However, the specific types of computers procured under this $33.4 million contract with IBM are not detailed. Within the Department of Defense, such hardware could be intended for a wide range of applications, from tactical field operations and intelligence analysis to administrative functions and research and development. Without further details on the contract's statement of work, it's difficult to ascertain the precise models or configurations and their specific end-uses. Further inquiry would be needed to understand if these are standard commercial off-the-shelf (COTS) products or custom-built systems tailored for defense requirements.

How does the awarded amount of $33.4 million compare to historical spending on similar electronic computer manufacturing contracts by the DoD or DISA?

Comparing the $33.4 million award to historical spending requires access to detailed historical contract data for similar procurements. The Department of Defense, and specifically agencies like the Defense Information Systems Agency (DISA), regularly procure significant amounts of IT hardware. A five-year contract duration for this amount averages approximately $6.68 million per year. This figure needs to be contextualized by the specific type and volume of computers. For instance, if this contract is for high-performance computing servers or specialized ruggedized laptops, the annual spend might be considered moderate. If it's for standard desktop units, it could represent a substantial volume. Benchmarking against previous contracts for similar goods, considering inflation and technological advancements, would provide a clearer picture of whether this represents a competitive price point or a significant investment.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this firm-fixed-price contract?

For a firm-fixed-price (FFP) contract, the primary risk for the government is ensuring the contractor meets all specified requirements within the agreed-upon price. Key performance indicators would likely revolve around delivery schedules, quality of manufactured goods (e.g., defect rates, adherence to specifications), and potentially warranty or support services if included. Risk mitigation strategies for the government often involve a robust source selection process, clear and unambiguous contract language, and diligent contract administration. For IBM, the risk lies in managing production costs to remain profitable under the fixed price. Potential risks for the government could include the contractor cutting corners on quality to maintain profit margins, or technology becoming obsolete during the contract's five-year term if not managed proactively. The contract's terms would ideally include clauses for inspection, acceptance, and remedies for non-performance.

Given the award to IBM, what is the contractor's track record with the Department of Defense for similar IT hardware procurements?

IBM is a long-standing and major technology provider that has historically held numerous contracts with the Department of Defense and other federal agencies. Their track record typically includes the supply of a wide array of IT hardware, software, and services. For electronic computer manufacturing specifically, IBM has been involved in producing various computing systems. The DoD often relies on established vendors like IBM for critical infrastructure due to perceived reliability, security compliance, and established support networks. A review of past performance information (if available through federal databases like the Contractor Performance Assessment Reporting System - CPARS) would provide specific insights into IBM's past delivery performance, quality, and overall satisfaction levels on similar DoD contracts. However, the general assumption is that a company of IBM's size and tenure would have extensive experience in fulfilling large government hardware orders.

What is the potential impact of this contract on the broader IT hardware manufacturing market, particularly concerning competition and innovation?

This contract, awarded under full and open competition to IBM, signifies a substantial procurement within the IT hardware sector. While it demonstrates market demand from a major government entity, the award to a single, large incumbent like IBM might have mixed impacts on broader market dynamics. On one hand, it validates the capabilities of established manufacturers. On the other hand, it could potentially limit opportunities for smaller, innovative firms to break into this specific segment of government contracting unless they are part of IBM's supply chain or compete on future, differently structured procurements. The emphasis on 'electronic computer manufacturing' suggests a focus on core hardware production. The long-term impact on innovation would depend on whether the contract incentivizes or hinders the adoption of newer technologies throughout its five-year duration, and whether IBM leverages its R&D capabilities to deliver cutting-edge solutions within the contract's scope.

Industry Classification

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

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: 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: $36,778,024

Exercised Options: $33,434,567

Current Obligation: $33,434,567

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC15B

IDV Type: GWAC

Timeline