Navy ERP Special Projects Support contract awarded to IBM for over $31M, utilizing full and open competition

Contract Overview

Contract Amount: $31,196,446 ($31.2M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2020-12-14

End Date: 2022-02-23

Contract Duration: 436 days

Daily Burn Rate: $71.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: NAVY ERP SPECIAL PROJECTS SUPPORT

Place of Performance

Location: WASHINGTON NAVY YARD, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20374

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $31.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: NAVY ERP SPECIAL PROJECTS SUPPORT Key points: 1. Contract value of $31.2M for specialized IT support services. 2. Awarded through full and open competition, suggesting a competitive bidding process. 3. Services provided by a large, established technology contractor (IBM). 4. Contract duration of 436 days indicates a medium-term project. 5. Cost Plus Fixed Fee contract type may incentivize cost management by the contractor. 6. Specialized IT services (NAICS 541519) are critical for complex enterprise resource planning systems.

Value Assessment

Rating: good

The contract value of $31.2 million for specialized IT support over approximately 14 months appears reasonable given the nature of ERP projects. Benchmarking against similar large-scale IT support contracts for federal agencies suggests that pricing for such specialized services can vary significantly based on scope and duration. Without detailed task orders, a precise value-for-money assessment is challenging, but the fixed fee component aims to provide some cost predictability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specialized IT support requirement. While two bidders is better than a sole-source award, a higher number of bidders would typically lead to more robust price discovery and potentially lower costs for the government.

Taxpayer Impact: Full and open competition, even with two bidders, generally benefits taxpayers by encouraging competitive pricing and ensuring the government receives services from qualified contractors at a fair market value.

Public Impact

The Department of the Navy benefits from specialized IT support for its Enterprise Resource Planning (ERP) systems. Services delivered likely include system maintenance, upgrades, and project management for critical defense software. The geographic impact is primarily within the District of Columbia, where the contract is registered. Workforce implications include the utilization of skilled IT professionals from IBM to support complex government systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Fixed Fee contracts if not closely monitored.
Reliance on a single large contractor for critical ERP support could pose a risk if performance issues arise.
The limited number of bidders (2) might indicate a niche market or high barriers to entry for competitors.

Positive Signals

Awarded through full and open competition, ensuring a fair process and access to qualified vendors.
IBM is a well-established contractor with extensive experience in large-scale IT projects.
The fixed fee component provides a degree of cost certainty for the government.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer-related services for enterprise resource planning systems. The federal IT services market is substantial, with agencies heavily reliant on contractors for system development, maintenance, and support. This contract represents a portion of the Department of Defense's significant investment in maintaining and upgrading its complex IT infrastructure, including mission-critical ERP solutions.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the contractor, IBM, is a large corporation, making it unlikely that significant subcontracting opportunities for small businesses would be a primary focus of this specific award. The absence of small business participation metrics suggests this contract primarily serves large business capabilities.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures are embedded within the Cost Plus Fixed Fee structure, requiring the contractor to justify costs against the fixed fee. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics and specific task order details may not always be publicly accessible.

Related Government Programs

Navy ERP Program
Department of Defense IT Modernization Initiatives
Federal Enterprise Resource Planning Systems Support
Defense Business Systems

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to prevent cost overruns.
Limited number of bidders (2) may indicate reduced competitive pressure.
Reliance on a single large contractor for specialized support could pose a risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. NAVY ERP SPECIAL PROJECTS SUPPORT

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $31.2 million.

What is the period of performance?

Start: 2020-12-14. End: 2022-02-23.

What is IBM's track record with similar large-scale federal IT support contracts, particularly for ERP systems?

IBM has a long and extensive history of supporting federal agencies with large-scale IT projects, including numerous contracts related to Enterprise Resource Planning (ERP) systems. They have been a prime contractor for various defense and civilian agencies, providing services ranging from system implementation and integration to ongoing maintenance, modernization, and support. Their experience often includes managing complex, mission-critical systems similar to those used by the Department of the Navy. While specific performance data for individual contracts is often proprietary or not publicly detailed, IBM's continued presence as a major federal IT contractor suggests a generally satisfactory performance history across its portfolio. However, like any large contractor, there can be instances of performance issues or contract disputes on specific awards, which would require deeper investigation into individual contract histories.

How does the $31.2 million contract value compare to other federal spending on ERP support services?

The $31.2 million contract value for Navy ERP Special Projects Support is a significant but not extraordinary amount within the context of federal IT spending, particularly for ERP systems. Large federal agencies often spend hundreds of millions, and sometimes billions, of dollars annually on the development, implementation, and maintenance of their ERP solutions. This particular contract, awarded over approximately 14 months (from December 2020 to February 2022), represents a focused effort on specific projects within the broader ERP landscape. When compared to the total federal IT budget or specific agency ERP modernization initiatives, this contract's value is moderate. It is crucial to benchmark against contracts with similar scope, duration, and complexity to determine true value for money, but the figure itself is consistent with specialized support for complex enterprise systems.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type for IT services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract type for IT services is the potential for cost overruns, although the fixed fee component aims to mitigate this. In a CPFF structure, the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. The risk for the government lies in the contractor not managing costs efficiently, as the fixed fee remains constant regardless of the actual costs incurred. This can incentivize contractors to incur higher costs if oversight is not rigorous, potentially leading to the government paying more than anticipated. Conversely, the contractor bears the risk if costs exceed expectations, as their profit is capped. Effective oversight, detailed cost tracking, and clear performance metrics are essential to manage the risks and ensure value for the government under a CPFF arrangement.

How effective is full and open competition in ensuring competitive pricing for specialized IT services like ERP support?

Full and open competition is generally the most effective method for ensuring competitive pricing for specialized IT services like ERP support, as it allows all qualified vendors to participate. This broad participation increases the likelihood of receiving multiple bids, which drives down prices through market forces. However, the effectiveness is contingent on the actual number of capable bidders and the complexity of the requirement. For highly specialized services, the pool of qualified contractors may be limited, potentially reducing the competitive pressure even under a full and open solicitation. In this case, with two bidders, the competition was present but perhaps not as robust as it could be, suggesting that while the process aimed for competition, the market dynamics for this specific niche might have constrained the number of offers received.

What historical spending patterns exist for Navy ERP support services, and how does this contract fit within them?

Historical spending patterns for Navy ERP support services indicate a consistent and significant investment in maintaining and upgrading its complex enterprise resource planning systems. The Department of the Navy, like other large military branches, relies heavily on integrated systems for financial management, logistics, personnel, and readiness. Spending in this area typically involves large, multi-year contracts for system development, integration, maintenance, and specialized project support. This $31.2 million contract for 'Special Projects Support' fits within these patterns as a component of ongoing efforts to manage and enhance the Navy's ERP infrastructure. It likely addresses specific, perhaps emergent or advanced, project needs that fall outside the scope of routine maintenance contracts, reflecting the dynamic nature of large-scale IT system management.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $191,000,000

Exercised Options: $191,000,000

Current Obligation: $31,196,446

Actual Outlays: $10,194,267

Subaward Activity

Number of Subawards: 356

Total Subaward Amount: $125,467,304

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0018916D0018

IDV Type: IDC

Timeline