DHS awards $23.7M IBM contract for Secure Flight Software, raising concerns over limited competition

Contract Overview

Contract Amount: $23,655,264 ($23.7M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2004-11-17

End Date: 2006-04-28

Contract Duration: 527 days

Daily Burn Rate: $44.9K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: SECURE FLIGHT SOFTWARE TSDB

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Homeland Security obligated $23.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: SECURE FLIGHT SOFTWARE TSDB Key points: 1. Significant contract value of $23.7 million for software development. 2. Sole provider IBM dominates the market for this specialized software. 3. Potential risk due to lack of competition and reliance on a single vendor. 4. IT sector contract focused on critical transportation security functions.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure for software development can lead to cost overruns. Without competitive bidding, it's difficult to assess if the $23.7 million price is optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not competed under Simplified Acquisition Procedures (SAP), suggesting it may have been a limited or sole-source award. This lack of competition limits price discovery and potentially increases costs.

Taxpayer Impact: The absence of robust competition may result in taxpayers paying a premium for this essential software.

Public Impact

Impacts national security by providing critical software for flight passenger screening. Affects air travel efficiency and passenger data security. Potential for increased costs to taxpayers due to limited competition.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Cost-plus-fixed-fee contract type
Sole-source potential

Positive Signals

Critical national security function
Established vendor with relevant expertise

Sector Analysis

This IT contract falls within the software development and data management sector, crucial for government operations. Benchmarks for similar large-scale software development contracts vary widely, but transparency in pricing is key.

Small Business Impact

The contract data does not indicate any specific provisions or set-asides for small businesses. The award to a large corporation like IBM suggests limited direct opportunity for SMBs in this specific procurement.

Oversight & Accountability

The contract's limited competition raises questions about oversight. Further review is needed to ensure the TSA received fair value and that procurement processes were appropriately justified.

Related Government Programs

Blank Magnetic and Optical Recording Media Manufacturing
Department of Homeland Security Contracting
Transportation Security Administration Programs

Risk Flags

Lack of competitive bidding
Potential for cost overruns (cost-plus-fixed-fee)
Vendor lock-in risk
Limited transparency in pricing justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $23.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. SECURE FLIGHT SOFTWARE TSDB

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 (Transportation Security Administration).

What is the total obligated amount?

The obligated amount is $23.7 million.

What is the period of performance?

Start: 2004-11-17. End: 2006-04-28.

What specific justifications were provided for not competing this contract more broadly, given its significant value?

The provided data indicates the contract was 'NOT COMPETED UNDER SAP,' which implies it might have been justified under specific exceptions or sole-source provisions. A thorough review would require access to the contract file to understand the detailed justification, such as unique capabilities, urgency, or lack of market availability from other sources.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs on this software development project?

Cost-plus-fixed-fee contracts allow the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee provides some incentive for efficiency, it can lead to cost overruns if the initial cost estimates are inaccurate or if scope creep occurs. The government bears the risk of cost increases beyond the estimate.

What are the long-term implications of relying on a single vendor for such a critical national security system?

Long-term reliance on a single vendor can create vendor lock-in, reduce negotiating leverage, and increase vulnerability if the vendor experiences financial difficulties or changes strategic direction. It also stifles innovation from potential competitors and may lead to higher prices over time due to a lack of market pressure.

Industry Classification

NAICS: Manufacturing › Manufacturing and Reproducing Magnetic and Optical Media › Blank Magnetic and Optical Recording Media Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $25,845,868

Exercised Options: $24,370,593

Current Obligation: $23,655,264

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline