HHS Spends $16.18M on IBM Accounting Services via Non-Competitive Delivery Order

Contract Overview

Contract Amount: $16,176,095 ($16.2M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2007-04-01

End Date: 2008-02-29

Contract Duration: 334 days

Daily Burn Rate: $48.4K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: ACCOUNTING SERVICES

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $16.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: ACCOUNTING SERVICES Key points: 1. Significant contract value of over $16 million. 2. Sole-source award to IBM raises competition concerns. 3. Potential for higher costs due to lack of competition. 4. Accounting services are critical for government operations.

Value Assessment

Rating: questionable

The contract value of $16.18M for accounting services is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to similar government contracts for financial transaction processing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This was a non-competitive delivery order, meaning IBM was selected without a bidding process. This limits price discovery and may lead to less favorable pricing for the government.

Taxpayer Impact: The lack of competition could result in taxpayers paying more than necessary for these accounting services.

Public Impact

Taxpayers may be overpaying for essential accounting services. Lack of transparency in the procurement process. Potential impact on the efficiency of Medicare and Medicaid operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award
Lack of small business participation
Cost-plus award fee contract type

Positive Signals

Awarded to a well-known large business
Supports critical healthcare functions

Sector Analysis

This contract falls under financial transaction processing, a crucial but often overlooked sector within government IT and administrative functions. Benchmarks for such services can vary widely based on complexity and scope.

Small Business Impact

The data indicates no small business participation in this contract, which is a missed opportunity to support smaller businesses and potentially foster innovation through diverse vendor pools.

Oversight & Accountability

The non-competitive nature of this award warrants closer oversight to ensure the pricing is fair and the services provided are essential and effectively delivered.

Related Government Programs

Financial Transactions Processing, Reserve, and Clearinghouse Activities
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Non-competitive award
Lack of transparency in pricing
Potential for cost overruns
No small business participation
Cost-plus award fee structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $16.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. ACCOUNTING 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 Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $16.2 million.

What is the period of performance?

Start: 2007-04-01. End: 2008-02-29.

What was the justification for awarding this contract non-competitively?

The justification for a sole-source or non-competitive award typically involves specific circumstances, such as a unique capability only the awarded vendor possesses, an urgent need that precludes competition, or a follow-on contract where the original competition was justified. Without further documentation, the specific reason for IBM's selection remains unclear.

How does the cost-plus award fee structure impact overall spending?

A Cost-Plus Award Fee (CPAF) contract allows the contractor to recover allowable costs plus a fee that is composed of a base fee and an award amount. The award amount is determined by the government based on performance against pre-defined criteria. This structure can incentivize performance but also carries a risk of higher overall costs if award criteria are not strictly managed or if costs escalate.

What is the potential risk of vendor lock-in with this type of award?

Awarding significant contracts non-competitively, especially for essential services like accounting, can lead to vendor lock-in. This makes it difficult and costly to switch to a different provider in the future, potentially reducing leverage for future negotiations and increasing long-term costs for the government.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Financial Transactions Processing, Reserve, and Clearinghouse Activities

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

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,176,095

Exercised Options: $16,176,095

Current Obligation: $16,176,095

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 500030014

IDV Type: IDC

Timeline