DHS Spends $41M on ACS Development and Maintenance by IBM, Raising Questions on Value and Competition

Contract Overview

Contract Amount: $41,108,422 ($41.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2014-07-01

End Date: 2015-07-07

Contract Duration: 371 days

Daily Burn Rate: $110.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: IT

Official Description: IGF::CT::IGF AUTOMATED COMMERCIAL SYSTEM (ACS) DESIGN, DEVELOPMENT, PROGRAMMING, TESTING, IMPLEMENTATION, AND MAINTENANCE

Place of Performance

Location: SPRINGFIELD, LOUDOUN County, VIRGINIA, 20598

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $41.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::CT::IGF AUTOMATED COMMERCIAL SYSTEM (ACS) DESIGN, DEVELOPMENT, PROGRAMMING, TESTING, IMPLEMENTATION, AND MAINTENANCE Key points: 1. The contract awarded to IBM for the Automated Commercial System (ACS) represents a significant investment of over $41 million. 2. While the contract was awarded under full and open competition, the specific nature of the 'delivery order' warrants further scrutiny regarding price discovery. 3. The duration of the contract (371 days) and the labor hour pricing model suggest potential for cost overruns if not managed tightly. 4. The sector is IT, specifically software development and maintenance, a critical area for government operations.

Value Assessment

Rating: questionable

The $41 million price tag for a one-year contract is substantial. Without detailed breakdowns of labor hours and rates, it's difficult to benchmark against similar IT development and maintenance contracts. The 'labor hours' pricing model can lead to higher costs if not carefully managed and monitored.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive. However, the use of a 'delivery order' within this framework might limit the ability to compare bids effectively and ensure the most competitive pricing was achieved for the specific services rendered.

Taxpayer Impact: Taxpayer funds are being utilized for a critical IT system. The effectiveness of the competition and the pricing structure will directly impact the value for money received by taxpayers.

Public Impact

The Automated Commercial System (ACS) is crucial for U.S. Customs and Border Protection's trade facilitation and enforcement. A $41 million investment in IT infrastructure highlights the government's reliance on technology for core functions. The contract's duration and pricing model could impact the overall cost-effectiveness of the ACS system. Transparency in how the $41 million was allocated across design, development, programming, testing, implementation, and maintenance is important for public understanding.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Labor hour pricing can inflate costs.
Limited insight into specific task costs.
Potential for scope creep without strict oversight.

Positive Signals

Awarded under full and open competition.
Addresses a critical government function (ACS).

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on software development, programming, and maintenance. Spending benchmarks in this area vary widely based on project complexity, but $41 million for a year-long effort on a critical system like ACS suggests a significant undertaking.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. The award to a large corporation like IBM suggests that small business participation may have been limited or non-existent.

Oversight & Accountability

Oversight is crucial for labor-hour contracts to prevent cost overruns and ensure deliverables meet requirements. The effectiveness of DHS's oversight mechanisms in managing this $41 million contract is key to ensuring accountability and value for taxpayer money.

Related Government Programs

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

Risk Flags

Labor hour pricing model risk
Potential for cost overruns
Limited transparency on specific cost components
Effectiveness of competition for delivery order needs verification

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $41.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::CT::IGF AUTOMATED COMMERCIAL SYSTEM (ACS) DESIGN, DEVELOPMENT, PROGRAMMING, TESTING, IMPLEMENTATION, AND 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 $41.1 million.

What is the period of performance?

Start: 2014-07-01. End: 2015-07-07.

What was the specific breakdown of labor hours and rates that contributed to the $41 million cost, and how were these validated to ensure fair pricing?

The provided data lacks a detailed breakdown of labor hours and rates. Typically, for labor-hour contracts, agencies validate proposed rates against industry standards and historical data. The contracting officer is responsible for ensuring the total cost does not exceed the ceiling price and that the labor rates are fair and reasonable. Further documentation would be needed to assess the validation process for this specific contract.

Given the 'delivery order' nature, what mechanisms were in place to ensure competitive pricing and prevent potential cost escalation throughout the contract period?

While awarded under full and open competition, the 'delivery order' implies a specific task order issued against a broader contract vehicle. Effective price discovery relies on the clarity of the statement of work, the competitiveness of the bids received for that specific order, and robust negotiation by the contracting officer. Mechanisms to prevent escalation include strict change order controls and performance monitoring.

How effectively did the ACS system, developed and maintained under this contract, contribute to the efficiency and security goals of U.S. Customs and Border Protection?

Assessing the system's effectiveness requires performance metrics and user feedback, which are not included in the provided data. The ACS is vital for processing trade data and enforcing regulations. Its success would be measured by factors like data accuracy, processing speed, system uptime, and its ability to support evolving trade and security requirements.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

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: $41,118,422

Exercised Options: $41,108,422

Current Obligation: $41,108,422

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline