CBP Modernization Architecture Contract Awarded to IBM for $20M, Raising Questions on Value and Competition

Contract Overview

Contract Amount: $20,004,962 ($20.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2004-05-06

End Date: 2014-06-05

Contract Duration: 3,682 days

Daily Burn Rate: $5.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: CBP MODERNIZATION FOUNDATION ARCHITECTURE AND ENGINEERING

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA (CITY) County, VIRGINIA, 22311

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $20.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: CBP MODERNIZATION FOUNDATION ARCHITECTURE AND ENGINEERING Key points: 1. The contract awarded to IBM for $20M focuses on foundational architecture and engineering for CBP modernization. 2. IBM is a major player, but the specific competition method needs scrutiny for potential price discovery limitations. 3. The 'Cost Plus Award Fee' structure can incentivize cost overruns if not tightly managed, posing a risk. 4. The IT sector is characterized by rapid change, making long-term architecture contracts subject to obsolescence risk.

Value Assessment

Rating: questionable

The $20M value for architecture and engineering services over a decade (2004-2014) is substantial. Without benchmarks for similar large-scale federal IT modernization projects, assessing its value is difficult. The 'Cost Plus Award Fee' structure warrants close monitoring to ensure costs align with performance and avoid excessive spending.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition,' suggesting multiple bids were considered. However, the effectiveness of this competition in driving down costs and ensuring the best technical solution for such a complex, long-term project requires further examination. The specific evaluation criteria and award decision process are key.

Taxpayer Impact: The significant investment raises questions about taxpayer return on investment, especially if the modernization goals were not fully met or if costs exceeded initial projections.

Public Impact

Impacts border security operations and efficiency through IT modernization. Potential for improved data management and inter-agency communication. Long-term IT investments can be vulnerable to technological obsolescence. Success hinges on effective project management and adaptation to evolving threats.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee structure can lead to cost overruns.
Long contract duration increases risk of technological obsolescence.
Lack of specific performance metrics makes value assessment difficult.
Potential for vendor lock-in with foundational architecture.

Positive Signals

Awarded under Full and Open Competition.
Addresses critical modernization needs for CBP.
IBM's extensive experience in large-scale IT projects.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on large-scale system architecture and engineering for a critical government agency. Spending benchmarks in this area vary widely based on project scope, complexity, and duration, but $20M over ten years for foundational work is significant.

Small Business Impact

The data indicates this contract was not awarded to small businesses (sb: false). Large prime contractors like IBM typically subcontract portions of their work, which could offer opportunities for small businesses, but this is not explicitly detailed in the provided information.

Oversight & Accountability

Oversight is crucial for 'Cost Plus Award Fee' contracts to ensure performance targets are met and costs are controlled. The Department of Homeland Security and U.S. Customs and Border Protection would be responsible for monitoring IBM's progress and expenditures throughout the contract's lifecycle.

Related Government Programs

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

Risk Flags

Cost Plus Award Fee structure.
Long contract duration (10 years).
Potential for technological obsolescence.
Lack of detailed performance metrics in provided data.
Significant contract value requires robust oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $20.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. CBP MODERNIZATION FOUNDATION ARCHITECTURE AND ENGINEERING

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 $20.0 million.

What is the period of performance?

Start: 2004-05-06. End: 2014-06-05.

What specific modernization goals did this $20M contract aim to achieve for CBP, and how were these goals measured against the final outcomes?

The contract focused on foundational architecture and engineering, implying it laid the groundwork for broader modernization efforts. Measuring success would involve assessing the robustness, scalability, and security of the architecture developed. Without detailed project reports, it's difficult to ascertain if the specific goals were met or how they translated into tangible improvements in CBP operations or efficiency.

Given the 'Cost Plus Award Fee' structure, what mechanisms were in place to mitigate the risk of cost overruns and ensure efficient use of taxpayer funds?

Effective mitigation requires clearly defined award fee criteria tied to measurable performance objectives, cost ceilings, and rigorous oversight. Regular audits and reviews by DHS and CBP would be essential to scrutinize expenditures and ensure IBM met performance benchmarks. The absence of detailed reporting makes it hard to confirm the adequacy of these controls.

How did the 'Full and Open Competition' process ensure the most cost-effective and technically superior solution was selected for this long-term, foundational IT project?

Full and Open Competition theoretically allows for the widest range of potential solutions. However, for complex, long-term architecture projects, the evaluation criteria are critical. Ensuring the selection process adequately weighed technical merit, long-term viability, and cost-effectiveness against competing proposals is key to understanding the value derived from the competition.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $25,039,925,011

Exercised Options: $24,996,795,962

Current Obligation: $20,004,962

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline