CBP awards $34.2M for IBM/SAP support, raising questions on value and competition

Contract Overview

Contract Amount: $34,221,910 ($34.2M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2004-06-18

End Date: 2006-09-30

Contract Duration: 834 days

Daily Burn Rate: $41.0K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 51

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM/SAP SUPPORT FOR CBP

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Homeland Security obligated $34.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IBM/SAP SUPPORT FOR CBP Key points: 1. Spending on IBM/SAP support for CBP totals $34.2M. 2. Competition appears limited for this specific support contract. 3. Potential risks include vendor lock-in and lack of competitive pricing. 4. The sector is IT services, specifically software support.

Value Assessment

Rating: questionable

The contract value of $34.2M for two years of support seems high without clear benchmarks. The lack of detailed pricing information makes it difficult to assess value for money against industry standards for similar IBM/SAP support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded as a competitive delivery order, but the specific competition details are not provided. Limited competition can lead to higher prices and reduced innovation.

Taxpayer Impact: Taxpayer funds are being spent on IT support. Without robust competition, there's a risk of overpayment, impacting the efficient use of public funds.

Public Impact

Customs and Border Protection relies on this support for critical IT systems. The duration of the contract (over two years) suggests ongoing operational needs. Potential impact on border security operations if IT support is inadequate.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Potential for high costs
Vendor lock-in risk

Positive Signals

Essential IT support for a critical agency
Firm Fixed Price contract type

Sector Analysis

This contract falls within the IT services sector, specifically focusing on enterprise resource planning (ERP) software support. Spending benchmarks for similar ERP support contracts can vary widely based on the software complexity and vendor.

Small Business Impact

There is no indication that small businesses were involved in this contract, suggesting a focus on large enterprise IT providers.

Oversight & Accountability

Oversight is crucial to ensure the continued necessity and cost-effectiveness of this support. Regular reviews of performance and pricing against market rates are recommended.

Related Government Programs

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

Risk Flags

Lack of detailed competition information
Potential for high unit costs
Vendor lock-in
Limited transparency on pricing justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $34.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IBM/SAP SUPPORT FOR CBP

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 $34.2 million.

What is the period of performance?

Start: 2004-06-18. End: 2006-09-30.

What was the competitive landscape for this delivery order, and how was the price determined to be fair and reasonable?

The data indicates a 'COMPETITIVE DELIVERY ORDER' but lacks specifics on the number of bidders or the evaluation process. Understanding the competitive dynamics and the justification for the $34.2M price is essential to confirm fair market value and prevent potential overspending.

What are the risks associated with relying on a single vendor for critical IBM/SAP support, and are there mitigation strategies in place?

Reliance on a single vendor can lead to vendor lock-in, reduced bargaining power, and potential service disruptions if the vendor faces issues. Mitigation might involve strong contract management, performance incentives, and contingency planning for service continuity.

How does the cost of this contract compare to industry benchmarks for similar ERP software support, and does it represent good value for taxpayers?

Without specific service level agreements and detailed cost breakdowns, a direct comparison is challenging. However, the $34.2M price tag over two years warrants scrutiny to ensure it aligns with or is justified relative to market rates for comparable enterprise software support.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 51

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $100,000,000

Exercised Options: $100,000,000

Current Obligation: $34,221,910

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline