Ibm's $34.5M Contract for Hifmip COE and Integrator Acquisition by HUD Shows a High Per-Unit Cost

Contract Overview

Contract Amount: $34,476,453 ($34.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Housing and Urban Development

Start Date: 2010-09-27

End Date: 2012-08-26

Contract Duration: 699 days

Daily Burn Rate: $49.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: HIFMIP COE AND INTEGRATOR ACQUISITION

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20410

State: District of Columbia Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $34.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: HIFMIP COE AND INTEGRATOR ACQUISITION Key points: 1. The contract value of $34.5 million for custom computer programming services suggests a significant investment in IT infrastructure. 2. IBM, a large established contractor, was awarded this contract, indicating a reliance on major players for complex IT solutions. 3. The contract duration of 699 days points to a medium-term project with ongoing service requirements. 4. The fixed-price contract type aims to control costs, but the per-unit cost warrants further scrutiny. 5. The absence of small business set-asides means opportunities for smaller firms may have been limited. 6. The contract was awarded by the Department of Housing and Urban Development, suggesting a focus on housing and urban development IT systems.

Value Assessment

Rating: questionable

The per-unit cost of $49,323 for this contract appears high when compared to typical custom computer programming services. While the specific deliverables and complexity are not detailed, this benchmark suggests potential overspending or a highly specialized service. Further analysis would be needed to understand the specific value proposition and if comparable services could be procured at a lower cost.

Cost Per Unit: $49,323

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. With 3 bidders, the competition level was moderate. While open competition is generally favorable for price discovery, a limited number of bidders can sometimes lead to less aggressive pricing.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing inherent in full and open competition, though the moderate number of bidders may have limited the extent of this benefit.

Public Impact

The primary beneficiaries are likely internal HUD departments and personnel who will utilize the HIFMIP COE and integrator acquisition systems. The services delivered are custom computer programming, likely involving the development, integration, or maintenance of critical IT systems for housing and urban development. The geographic impact is primarily within the District of Columbia, where HUD's headquarters are located, but the systems may support national operations. Workforce implications could include the need for specialized IT professionals within HUD to manage and utilize the new systems, as well as the employment of IT professionals at IBM.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High per-unit cost may indicate inefficiencies or premium pricing.
Limited number of bidders in a full and open competition could suggest barriers to entry or a niche market.
Contract duration and value suggest a significant, potentially long-term reliance on this specific solution.

Positive Signals

Full and open competition was utilized, promoting a fair and accessible bidding process.
Fixed-price contract type provides cost certainty for the government.
IBM is a reputable contractor with extensive experience in large-scale IT projects.

Sector Analysis

This contract falls within the Information Technology sector, specifically custom computer programming services. The IT services market is vast and highly competitive, with significant government spending allocated to software development, system integration, and IT support. Benchmarking this contract's value against similar custom programming projects within federal agencies is crucial for assessing its cost-effectiveness.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting plans for small businesses. This suggests that the primary award went to a large business, and opportunities for small businesses to participate in this specific contract may have been minimal, potentially limiting their access to federal IT contracts of this scale.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of Housing and Urban Development. Transparency is facilitated through contract databases like FPDS. Accountability measures are inherent in the fixed-price contract terms, requiring IBM to deliver specified services within the agreed budget. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal IT Modernization Programs
Custom Software Development Contracts
Government IT Infrastructure Services
Department of Housing and Urban Development IT Spending

Risk Flags

High Per-Unit Cost
Potential Vendor Lock-in
Limited Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $34.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. HIFMIP COE AND INTEGRATOR ACQUISITION

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).

What is the total obligated amount?

The obligated amount is $34.5 million.

What is the period of performance?

Start: 2010-09-27. End: 2012-08-26.

What specific IT systems or functionalities does the 'HIFMIP COE AND INTEGRATOR ACQUISITION' refer to, and what is their criticality to HUD's mission?

The 'HIFMIP COE AND INTEGRATOR ACQUISITION' likely refers to the Housing Information Financial Management Information Processing Center (HIFMIP) Center of Excellence (COE) and its associated integrator acquisition. This system is probably critical for managing HUD's financial operations, housing programs, and data integration across various departmental systems. Its criticality stems from ensuring the efficient and accurate disbursement of housing funds, tracking program performance, and maintaining financial integrity for the department's vast operations. Without detailed documentation, the exact functionalities remain speculative, but it is reasonable to assume it supports core financial management, data analytics, and system interoperability essential for HUD's mission delivery.

How does IBM's performance on this contract compare to its historical performance on similar federal IT contracts?

Assessing IBM's performance on this specific contract requires access to detailed performance reviews and past performance information, which is not publicly available in this dataset. Generally, IBM is a large, established federal contractor with a long history of delivering complex IT solutions. However, performance can vary significantly based on project scope, management, and specific team execution. To compare, one would need to examine contract award histories, any reported contract disputes, termination for default records, and contractor performance assessment reporting (CPARS) data for IBM on similar-sized and scoped custom programming contracts with federal agencies. Without this granular data, a direct comparison is not feasible.

What factors contributed to the high per-unit cost of $49,323 for this contract?

The high per-unit cost of $49,323 for this contract could be attributed to several factors. Firstly, the 'COE AND INTEGRATOR ACQUISITION' suggests a complex system integration and potentially the establishment of a Center of Excellence, which often involves specialized expertise, advanced technologies, and significant project management overhead. Secondly, the nature of custom computer programming can be inherently expensive due to the need for highly skilled developers, architects, and analysts. Thirdly, the contract duration (699 days) and the total value ($34.5M) indicate a substantial project, and the per-unit cost might be an average across different phases or types of work, some of which could be more resource-intensive. Finally, the specific requirements and the chosen technology stack could also drive up costs if they are proprietary or require specialized licensing and support.

Given the $34.5M contract value, what are the potential risks associated with relying on a single large contractor like IBM for this IT acquisition?

Relying on a single large contractor like IBM for a $34.5M IT acquisition introduces several potential risks. One primary risk is vendor lock-in, where HUD could become overly dependent on IBM's proprietary systems, processes, and personnel, making it difficult and costly to switch providers or integrate other solutions in the future. Another risk is reduced innovation; a sole provider may have less incentive to introduce cutting-edge solutions compared to a competitive environment. Furthermore, if IBM faces financial difficulties, internal restructuring, or shifts its strategic focus, it could impact the continuity and quality of services provided to HUD. Finally, a lack of direct competition can sometimes lead to complacency in service delivery and potentially less favorable pricing adjustments over the contract's lifecycle.

How does HUD's spending on custom computer programming services, as exemplified by this contract, compare to other federal agencies?

Comparing HUD's spending on custom computer programming services to other federal agencies requires a broader analysis of federal IT procurement data. Agencies like the Department of Defense, Department of Veterans Affairs, and the Social Security Administration often have significantly larger IT budgets and may award more numerous or higher-value custom programming contracts due to their scale and mission complexity. HUD's spending, while substantial at $34.5M for this contract, might be considered moderate relative to agencies with more extensive IT infrastructure needs or larger digital service portfolios. To provide a precise comparison, one would need to aggregate and analyze contract data across multiple agencies for similar North American Industry Classification System (NAICS) codes (like 541511) over comparable timeframes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 08

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

Financial Breakdown

Contract Ceiling: $34,476,453

Exercised Options: $34,476,453

Current Obligation: $34,476,453

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $19,741,113

Contract Characteristics

Multi-Year Contract: Yes

Timeline