HUD's $42M accounting services contract with IBM awarded via full and open competition

Contract Overview

Contract Amount: $42,063,374 ($42.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Housing and Urban Development

Start Date: 2005-09-01

End Date: 2011-09-30

Contract Duration: 2,220 days

Daily Burn Rate: $18.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PERFORMANCE WORK STATEMENT FOR ACCOUNTING AND FINANCIAL OPERATIONS SERVICES

Place of Performance

Location: ANNANDALE, FAIRFAX County, VIRGINIA, 22003

State: Virginia Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $42.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: PERFORMANCE WORK STATEMENT FOR ACCOUNTING AND FINANCIAL OPERATIONS SERVICES Key points: 1. Contract value represents a significant investment in essential financial operations. 2. Full and open competition suggests a robust market for these services. 3. The contract duration of over 18 years indicates a long-term need and potential for stable contractor performance. 4. Fixed-price contract type shifts performance risk to the contractor. 5. The North American Industry Classification System (NAICS) code 541219 points to a specialized accounting service niche. 6. Award to a large, established contractor like IBM may indicate a focus on reliability and extensive capabilities.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more granular data on the specific services provided and the period of performance. However, a contract of this magnitude over nearly two decades suggests a substantial need. The firm-fixed-price structure is generally favorable for the government, as it caps costs. Without comparable contract data for similar accounting and financial operations services, a precise value-for-money assessment is difficult, but the long duration implies a consistent, albeit potentially high, expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of 6 bidders suggests a competitive marketplace for these accounting and financial operations services. This level of competition is generally positive for price discovery and ensures the government receives offers from multiple qualified vendors, potentially leading to more favorable pricing.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Federal agencies, specifically HUD, benefit from streamlined and reliable accounting and financial operations. Essential financial management services are delivered, ensuring compliance and operational efficiency. The geographic impact is primarily national, supporting HUD's nationwide operations. Workforce implications include the potential for specialized accounting roles within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 18 years) could lead to vendor lock-in and reduced flexibility for future needs.
Reliance on a single large contractor may limit opportunities for smaller, specialized firms.
Potential for cost creep if the scope of work expands beyond initial expectations, despite fixed-price structure.

Positive Signals

Award through full and open competition indicates a fair and transparent procurement process.
Firm-fixed-price contract type provides cost certainty for the government.
Long-term contract suggests a stable and reliable service provider for critical financial functions.
Award to a well-established contractor like IBM may indicate a high level of expected performance and expertise.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically accounting services. The market for government accounting services is substantial, with numerous firms competing for federal contracts. The NAICS code 541219 indicates a focus on specialized accounting functions beyond basic bookkeeping. Comparable spending benchmarks would involve analyzing other large federal contracts for similar comprehensive accounting and financial operations support.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. This suggests that the primary award went to a large business, and opportunities for small businesses would likely depend on IBM's subcontracting strategy, which is not detailed here. The absence of small business considerations in the award data may limit direct benefits to the small business ecosystem for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by contracting officers and program managers within HUD. Accountability measures are inherent in the firm-fixed-price contract type, which incentivizes the contractor to meet performance standards to avoid financial penalties or contract termination. Transparency is generally facilitated through contract award databases, though detailed performance reports may not always be publicly accessible.

Related Government Programs

Federal Financial Management
Government Accounting Services
Department of Housing and Urban Development Operations
Information Technology and Financial Systems Support

Risk Flags

Long contract duration may indicate potential for complacency or reduced innovation over time.
Lack of explicit small business subcontracting data raises questions about broader economic impact.
Performance details are not available in the summary, making a full assessment of value difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $42.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. PERFORMANCE WORK STATEMENT FOR ACCOUNTING AND FINANCIAL OPERATIONS SERVICES

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 $42.1 million.

What is the period of performance?

Start: 2005-09-01. End: 2011-09-30.

What specific accounting and financial operations services were included in the scope of this contract?

The provided data indicates the contract was for 'ACCOUNTING AND FINANCIAL OPERATIONS SERVICES' under NAICS code 541219 (Other Accounting Services). While the specific details of the Performance Work Statement (PWS) are not fully elaborated in the summary data, such services typically encompass a broad range of financial management functions. This could include accounts payable and receivable processing, payroll support, general ledger management, financial reporting, budget execution, internal controls, and potentially audit liaison support. The extensive duration of the contract (over 18 years) suggests a comprehensive and ongoing need for these critical financial functions within HUD.

How does the awarded amount of approximately $42 million compare to similar federal contracts for accounting services?

Comparing the $42 million award to similar federal contracts requires access to a broader dataset of government procurements. However, for a contract spanning over 18 years (2220 days), the average annual value is roughly $2.3 million ($42,063,373.59 / 18.5 years). This figure falls within a moderate to large range for specialized federal accounting services. Contracts for comprehensive financial operations support, especially those involving complex systems and extensive reporting requirements, can easily reach tens or hundreds of millions of dollars over their lifecycle. The value is also influenced by the specific agency's needs and the level of service required.

What are the key performance indicators (KPIs) typically associated with contracts for accounting and financial operations services?

Key performance indicators (KPIs) for accounting and financial operations services contracts often focus on accuracy, timeliness, compliance, and efficiency. Examples include: accuracy rates for financial reporting and transaction processing (e.g., percentage of errors), timeliness of payments (e.g., average days to pay invoices), compliance with federal regulations (e.g., number of audit findings), and turnaround times for financial reports. For this IBM contract with HUD, KPIs would likely be detailed in the Performance Work Statement (PWS) and monitored by HUD's contracting officer's representatives (CORs) to ensure the contractor meets its obligations.

What is the significance of the contract being awarded as a 'Delivery Order' under a larger contract vehicle?

The 'AW' field indicating 'DELIVERY ORDER' suggests that this specific award of approximately $42 million was likely placed against a pre-existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar contract vehicle. This means that IBM likely held a master contract with the government, and this delivery order represents a specific task or order placed under that larger framework. Delivery orders allow agencies to procure services or supplies as needed, often with pre-negotiated terms and pricing, providing flexibility and streamlining the acquisition process for specific requirements.

How does the firm-fixed-price (FFP) contract type impact risk and cost control for HUD?

A Firm-Fixed-Price (FFP) contract type is generally advantageous for the government, like HUD, because it shifts the majority of the performance risk to the contractor, IBM. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This provides HUD with cost certainty, as they know the total amount they will pay, assuming the contractor meets all performance requirements. IBM is responsible for managing its costs to remain profitable within the agreed-upon price. This structure incentivizes IBM to be efficient and control its expenses, as any cost overruns would reduce their profit margin or result in a loss.

What does the NAICS code 541219 ('Other Accounting Services') imply about the nature of the services provided?

The North American Industry Classification System (NAICS) code 541219, 'Other Accounting Services,' indicates that the services procured go beyond basic bookkeeping or tax preparation. This code typically encompasses establishments primarily engaged in providing accounting services, such as auditing, tax return preparation, payroll systems, and management consulting services related to accounting. For a contract of this size and duration with HUD, it suggests a need for comprehensive financial management support, potentially including financial system implementation or maintenance, complex reporting, internal control assessments, and advisory services, rather than just routine transaction processing.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Other Accounting Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12902 FEDERAL SYSTEMS PAR, FAIRFAX, VA, 22033

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

Financial Breakdown

Contract Ceiling: $42,063,374

Exercised Options: $42,063,374

Current Obligation: $42,063,374

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS23F8126H

IDV Type: FSS

Timeline