IBM awarded $32.1M task order for IT modernization by U.S. Customs and Border Protection

Contract Overview

Contract Amount: $32,098,869 ($32.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2008-03-12

End Date: 2010-12-30

Contract Duration: 1,023 days

Daily Burn Rate: $31.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: MODERNIZATION TASK ORDER M2

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20229

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $32.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MODERNIZATION TASK ORDER M2 Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. Task order for IT modernization services indicates a focus on upgrading government technology infrastructure. 3. The contract's cost-plus-incentive-fee structure aims to align contractor performance with government objectives. 4. Duration of over 1000 days suggests a significant, long-term project. 5. Awarded by U.S. Customs and Border Protection, highlighting critical infrastructure support. 6. The contract value of $32.1 million places it in the mid-tier range for federal IT procurements.

Value Assessment

Rating: good

The $32.1 million task order for IT modernization by IBM appears reasonable given the scope and duration. While specific benchmarks for this exact modernization effort are not provided, IT modernization contracts of this scale typically range from tens to hundreds of millions of dollars. The cost-plus-incentive-fee (CPIF) pricing structure suggests an effort to control costs while incentivizing performance, which is a common and generally effective approach for complex IT projects where exact costs may be difficult to predict upfront. Further analysis would require comparing specific deliverables and performance metrics against similar modernization projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This task order was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. This method typically fosters a competitive environment, encouraging multiple bidders to propose their best pricing and technical solutions. The number of bidders is not specified, but the 'full and open' designation suggests a robust competition that should have led to a fair market price. This approach is generally favored for its potential to yield the best value for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring that the government receives competitive offers, maximizing the value of taxpayer dollars spent.

Public Impact

The primary beneficiaries are U.S. Customs and Border Protection (CBP) personnel who will utilize modernized IT systems. Services delivered include IT modernization, likely encompassing software, hardware, and network infrastructure upgrades. The geographic impact is primarily within the District of Columbia, where the agency's headquarters are located, but may extend to CBP operations nationwide. Workforce implications could include the need for specialized IT skills for implementation and maintenance, potentially impacting federal IT staffing levels or reliance on contractor support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus contracts if not managed tightly.
Dependence on a single large contractor (IBM) for critical IT modernization could pose risks if performance falters.
Scope creep is a common risk in long-term IT modernization projects, potentially increasing the final cost.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield good value.
The CPIF contract type incentivizes contractor performance and cost control.
IBM is a large, established IT provider with significant experience in government contracting.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT services and modernization. The federal IT market is vast, with agencies consistently investing in upgrading legacy systems to improve efficiency, security, and capability. Comparable spending benchmarks for IT modernization projects vary widely based on scope, but multi-million dollar awards are common for significant system overhauls. This contract represents a specific investment by CBP within the broader federal IT spending landscape.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this task order. As it was awarded under full and open competition, it is unlikely that small businesses were exclusively targeted, though they may have participated as subcontractors. The impact on the small business ecosystem would depend on whether IBM engages small businesses for subcontracting opportunities to fulfill the requirements of this modernization effort.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Customs and Border Protection contracting officer and program managers. Accountability measures are built into the Cost Plus Incentive Fee (CPIF) structure, which links contractor payment to performance metrics and cost targets. Transparency is generally maintained through contract award databases and reporting requirements, though specific project details and performance data may be sensitive. Inspector General oversight from the Department of Homeland Security would also apply.

Related Government Programs

Federal IT Modernization Programs
Customs and Border Protection IT Infrastructure
Department of Homeland Security Technology Modernization
Large-Scale IT Service Contracts

Risk Flags

Potential for cost overruns in CPIF contracts.
Risk of scope creep in long-term IT projects.
Dependence on contractor performance for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $32.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MODERNIZATION TASK ORDER M2

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 $32.1 million.

What is the period of performance?

Start: 2008-03-12. End: 2010-12-30.

What is the track record of International Business Machines Corporation (IBM) with the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) for similar IT modernization c

IBM has a long-standing and extensive track record of contracting with federal agencies, including DHS and CBP. Historically, IBM has been awarded numerous contracts for a wide range of IT services, from infrastructure support to complex system development and modernization. For CBP specifically, IBM has likely been involved in various projects supporting border security, trade processing, and internal IT systems. Analyzing past performance on similar IT modernization task orders would involve reviewing CBP's contract award history for IBM, looking at metrics such as on-time delivery, budget adherence, and technical performance. While this specific task order is for $32.1 million, IBM's broader portfolio with DHS suggests a deep familiarity with the agency's operational needs and contracting processes. However, a detailed assessment would require examining specific past performance evaluations and any documented issues or successes on prior related contracts.

How does the $32.1 million value of this task order compare to other federal IT modernization contracts awarded around the same period (2008-2010)?

During the 2008-2010 period, federal IT modernization contracts varied significantly in value, driven by agency needs and project scope. A $32.1 million task order for IT modernization, while substantial, would be considered a mid-tier award within the broader federal IT landscape. Larger agencies like the Department of Defense or the Social Security Administration often awarded contracts in the hundreds of millions or even billions for major system overhauls. However, for specific components or targeted modernization efforts within agencies like DHS/CBP, $32.1 million represents a significant investment. Comparable contracts would include those for upgrading specific software systems, enhancing data center capabilities, or implementing new network infrastructure. The key differentiator is often the scope of modernization – whether it's a complete system replacement or an upgrade of specific functionalities. This task order's value suggests a focused but important modernization effort.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for IT modernization, and how might they be mitigated?

The primary risk with a Cost Plus Incentive Fee (CPIF) contract is the potential for cost overruns if the target cost is set too high or if the incentive structure is not well-defined. While CPIF aims to control costs by sharing savings or overruns between the government and contractor, it still involves the government bearing the actual costs incurred. For IT modernization, risks include unforeseen technical challenges, scope creep, and difficulties in accurately estimating the effort required. Mitigation strategies involve rigorous upfront cost estimation, clear definition of performance objectives and target costs, robust project management and oversight by the government, and regular performance reviews. The incentive fee structure itself is a mitigation tool, encouraging the contractor to manage costs effectively to achieve a higher fee. Strong communication channels and a collaborative approach between the government and contractor are also crucial for identifying and addressing risks proactively.

What does the 'FULL AND OPEN COMPETITION' designation imply about the potential effectiveness of this procurement in achieving value for money?

The 'FULL AND OPEN COMPETITION' designation is a strong indicator that this procurement was likely effective in achieving value for money. This means that all responsible sources were allowed to compete, fostering a competitive environment where multiple companies could submit proposals. Competition typically drives down prices as bidders strive to offer the most attractive terms and technical solutions to win the contract. It also allows the government to select the offer that represents the best overall value, considering not just price but also technical merit, past performance, and other factors. While the specific number of bidders isn't stated, the open competition process itself increases the likelihood that the government received competitive bids and selected a capable contractor at a fair market price, thereby maximizing the return on taxpayer investment for this IT modernization effort.

How might the duration of the contract (1023 days) impact the overall cost and success of the IT modernization project?

A contract duration of 1023 days (approximately 2.8 years) for an IT modernization project suggests a significant undertaking that requires sustained effort and management. Longer durations can increase the overall cost due to extended labor, overhead, and potential for price escalation over time, especially if the contract includes provisions for such adjustments. However, for complex IT modernization, a longer timeframe might be necessary to ensure thorough planning, development, testing, and phased implementation, reducing the risk of rushed work and errors. Success hinges on effective project management throughout this period. If managed well, the extended duration allows for adaptation to evolving technological landscapes and user needs. Conversely, poor management over a long period can lead to delays, budget overruns, and a system that is outdated by the time it is fully deployed. The CPIF structure would aim to incentivize efficient execution within this timeframe.

What are the potential implications for U.S. Customs and Border Protection's operational capabilities if this IT modernization task order is successfully implemented?

Successful implementation of this IT modernization task order could significantly enhance U.S. Customs and Border Protection's (CBP) operational capabilities. Modernized IT systems can lead to improved data processing speeds, better data accuracy, and enhanced analytical tools, which are crucial for border security, trade facilitation, and law enforcement activities. This could translate into more efficient cargo inspections, faster processing of travelers, improved intelligence gathering and sharing, and more robust cybersecurity defenses. Ultimately, modernized systems enable CBP to better manage the flow of people and goods across borders, adapt to emerging threats, and improve inter-agency collaboration, thereby strengthening national security and economic competitiveness.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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: $32,162,613

Exercised Options: $32,098,869

Current Obligation: $32,098,869

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline