DHS Spends $23.6M on IBM Equipment, Software & Hardware Maintenance Under Full and Open Competition

Contract Overview

Contract Amount: $23,604,717 ($23.6M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2004-01-27

End Date: 2008-09-30

Contract Duration: 1,708 days

Daily Burn Rate: $13.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: TO 12 EQPT,SOFTWARE & HARDWARE MAINTENANCE

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22311

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $23.6 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: TO 12 EQPT,SOFTWARE & HARDWARE MAINTENANCE Key points: 1. Significant expenditure on IT maintenance for a major government agency. 2. IBM is a dominant player in the IT sector, indicating potential for high contract values. 3. Risk of vendor lock-in and potential for cost overruns in long-term maintenance contracts. 4. IT sector spending is consistently high, making benchmarks crucial for value assessment.

Value Assessment

Rating: fair

The contract value of $23.6 million over approximately 4.5 years suggests a substantial investment. Without specific per-unit cost data or comparison to similar maintenance contracts for comparable IBM systems, assessing the pricing fairness is challenging. The Cost Plus Incentive Fee structure implies some flexibility but requires careful monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the specific details of the bidding process and the number of bidders are not provided, making it difficult to fully assess the competitive pressure on pricing.

Taxpayer Impact: While competition was utilized, the total expenditure of $23.6 million represents a significant allocation of taxpayer funds for IT maintenance.

Public Impact

Ensures continued operation of critical IT infrastructure for U.S. Customs and Border Protection. Supports national security and border control operations through reliable technology. Potential for taxpayer savings through competitive bidding, though long-term costs need scrutiny.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed cost breakdown for maintenance services.
Potential for scope creep in IT maintenance contracts.
Reliance on a single vendor (IBM) for maintenance could limit future flexibility.

Positive Signals

Awarded under full and open competition.
Clear contract duration and delivery order structure.
Use of incentive fee structure to potentially control costs.

Sector Analysis

This contract falls within the Information Technology sector, specifically IT services and maintenance. Government spending on IT is substantial, with benchmarks often focusing on cost per user, system uptime, and the total cost of ownership for hardware and software maintenance agreements.

Small Business Impact

The data indicates the primary awardee is IBM, a large corporation. There is no explicit information suggesting significant subcontracting opportunities for small businesses within this specific contract award.

Oversight & Accountability

The contract was awarded by the Department of Homeland Security, a large agency with established oversight mechanisms. However, the effectiveness of oversight for Cost Plus Incentive Fee contracts relies heavily on detailed performance metrics and regular audits to ensure value for money.

Related Government Programs

Department of Homeland Security Contracting
U.S. Customs and Border Protection Programs

Risk Flags

Lack of detailed cost breakdown.
Potential for vendor lock-in with IBM.
Limited insight into specific performance metrics for incentive fee.
Long-term maintenance costs can escalate if not managed proactively.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $23.6 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. TO 12 EQPT,SOFTWARE & HARDWARE MAINTENANCE

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $23.6 million.

What is the period of performance?

Start: 2004-01-27. End: 2008-09-30.

What was the average annual cost per year for this maintenance contract, and how does it compare to industry benchmarks for similar IBM systems?

The total contract value is $23.6 million over approximately 4.5 years, averaging roughly $5.24 million per year. Direct comparison to industry benchmarks is difficult without knowing the specific IBM equipment and software covered, the scope of maintenance services (e.g., 24/7 support, response times), and the number of systems maintained. However, this annual figure represents a significant investment that warrants benchmarking against similar government and commercial IT maintenance agreements.

What were the key performance indicators (KPIs) used in the Cost Plus Incentive Fee structure, and how effectively did they incentivize IBM to control costs and maintain service levels?

The provided data does not specify the key performance indicators (KPIs) tied to the incentive fee structure. For a Cost Plus Incentive Fee contract to be effective, KPIs should be clearly defined, measurable, and directly related to cost savings and service quality. Without this information, it's impossible to assess how well IBM was incentivized to manage costs or maintain optimal service levels for the Department of Homeland Security.

Given the full and open competition, what was the competitive landscape, and did it lead to demonstrable cost savings compared to a sole-source or limited competition scenario?

The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. While this process generally promotes competitive pricing, the data doesn't reveal the number of bids received or the price differences between them. Therefore, it's challenging to quantify the exact cost savings achieved through competition versus what might have occurred under other procurement methods. However, the competitive award itself is a positive indicator for potential value.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $23,604,717

Exercised Options: $23,604,717

Current Obligation: $23,604,717

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline