IBM awarded $38.7M contract for IT services, with a 1095-day performance period

Contract Overview

Contract Amount: $38,749,028 ($38.7M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2023-11-30

End Date: 2026-11-29

Contract Duration: 1,095 days

Daily Burn Rate: $35.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: AUTHORITATIVE DATA ENVIRONMENT DOS

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $38.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: AUTHORITATIVE DATA ENVIRONMENT DOS Key points: 1. The contract value represents a significant investment in IT infrastructure and support. 2. Competition dynamics for this contract are assessed to understand pricing efficiency. 3. Risk indicators are evaluated based on contract type and performance history. 4. Performance context is established by comparing this award to similar IT service contracts. 5. The contract positions the Department of the Navy within the broader IT services sector. 6. The duration of the contract suggests a long-term need for these services.

Value Assessment

Rating: good

The contract value of $38.7 million for Computer Systems Design Services appears reasonable given the 3-year duration and the nature of the services. Benchmarking against similar IT support contracts awarded by the Department of Defense suggests that the pricing is within an expected range. The Cost Plus Fixed Fee (CPFF) contract type allows for flexibility while maintaining cost control through a fixed fee, which is a common approach for complex IT projects where exact costs can be difficult to predict upfront. Further analysis of the specific task orders and labor rates would provide a more granular assessment of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 2 bids suggests a moderate level of competition for this specific award. While more bidders could potentially drive prices lower, full and open competition generally ensures a fair process and allows the government to select the best value offer. The specific details of the bidding process and the evaluation criteria would further illuminate the effectiveness of the competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it promotes a competitive environment, which typically leads to more favorable pricing and a wider selection of qualified contractors, ultimately maximizing the value of government spending.

Public Impact

The Department of the Navy benefits from enhanced computer systems design and support services. This contract ensures the continued operation and potential modernization of critical IT infrastructure. The services delivered are essential for the Navy's operational readiness and administrative functions. The primary geographic impact is within Maryland, where the contract is managed. The contract supports skilled IT professionals, contributing to the federal IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to cost overruns if not closely monitored.
The limited number of bids (2) might indicate potential challenges in attracting a broader range of competitive offers for this type of service.
The specific details of the 'Computer Systems Design Services' are broad and require careful oversight to ensure alignment with Navy requirements.

Positive Signals

Awarded under full and open competition, ensuring a fair and transparent procurement process.
The contract has a defined performance period, allowing for structured project management and evaluation.
The fixed fee component of the CPFF contract provides a degree of cost certainty for the government.

Sector Analysis

The IT services sector is a vast and critical component of federal spending, encompassing a wide range of support, development, and maintenance activities. This contract for Computer Systems Design Services falls within the broader IT consulting and systems integration market. Federal spending in this area is consistently high, driven by the need to maintain and modernize complex technological infrastructures across all agencies. Comparable spending benchmarks for similar IT services contracts often range from tens to hundreds of millions of dollars, depending on the scope and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, International Business Machines Corporation, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. This suggests that the primary focus of this award was on securing the capabilities of a large, established IT provider, and the direct impact on the small business ecosystem through this specific contract may be limited unless subcontracting opportunities are pursued independently by the prime contractor.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract's performance work statement (PWS) and delivery schedules. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

IT Professional Services
Computer Systems Design
Department of Defense IT Contracts
Navy IT Modernization

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost escalations.
Limited number of bidders may warrant further investigation into market dynamics for this service category.
The broad nature of 'Computer Systems Design Services' necessitates clear performance metrics and deliverables.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. AUTHORITATIVE DATA ENVIRONMENT DOS

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 $38.7 million.

What is the period of performance?

Start: 2023-11-30. End: 2026-11-29.

What is the historical spending trend for Computer Systems Design Services by the Department of the Navy?

Historical spending data for Computer Systems Design Services by the Department of the Navy reveals a consistent and significant investment in this area over the past several fiscal years. While specific figures fluctuate based on evolving technological needs and project priorities, the Navy has generally allocated substantial budgets towards IT infrastructure, system design, integration, and support. This trend underscores the critical role these services play in maintaining operational readiness and supporting administrative functions. Analyzing trends over a 5-10 year period would show whether spending is increasing, decreasing, or remaining stable, providing context for the current $38.7 million award. Factors influencing these trends include technological advancements, cybersecurity requirements, and strategic modernization initiatives within the Navy's IT landscape.

How does the per-unit cost of this contract compare to similar IT services contracts awarded by other federal agencies?

A direct per-unit cost comparison for this contract is challenging without a detailed breakdown of the services rendered and the specific metrics used for unit costing (e.g., per hour, per system, per user). However, the total contract value of $38.7 million over 1095 days (3 years) suggests an average annual value of approximately $12.9 million. When benchmarked against similar large-scale IT services contracts for system design and integration awarded to major defense contractors by agencies like the Air Force or Army, this annual figure appears to be within a competitive range. Factors such as complexity, security requirements, and labor market rates in the service location (Maryland) influence these costs. A more precise comparison would require access to the specific task orders and labor categories billed under this contract.

What is the track record of International Business Machines Corporation (IBM) in performing similar government IT contracts?

International Business Machines Corporation (IBM) has a long and extensive track record of performing a wide array of IT services contracts for the U.S. federal government, including significant work with the Department of Defense. Their experience spans cloud computing, cybersecurity, data analytics, systems integration, and IT modernization across various agencies. IBM has consistently secured large-value contracts due to its broad technological capabilities and established presence in the government contracting space. While specific performance metrics for every contract are not publicly detailed, their continued success in winning competitive bids suggests a generally positive performance history. However, as with any large contractor, there may be instances of past performance issues or contract disputes that would require deeper investigation for a comprehensive assessment.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT services revolve around cost control and potential for contractor inefficiency. While the fixed fee provides the government with a degree of cost certainty on the profit margin, the 'cost plus' portion means the government reimburses the contractor for allowable costs incurred. If these costs escalate beyond initial estimates due to poor project management, unforeseen technical challenges, or scope creep, the total contract value can increase significantly. This necessitates robust government oversight to scrutinize all claimed costs and ensure they are reasonable, allocable, and necessary. Contractors may also have less incentive to control costs aggressively compared to fixed-price contracts, as their fee is fixed regardless of the total cost incurred, although the risk of disallowed costs can mitigate this.

How does the current contract value compare to the total federal spending on Computer Systems Design Services in the most recent fiscal year?

The current contract value of $38.7 million awarded to IBM is a component of the broader federal spending on Computer Systems Design Services. To contextualize this amount, one would need to examine the total federal outlays for NAICS code 541512 (Computer Systems Design Services) in the most recent fiscal year. Federal spending in this category typically amounts to tens of billions of dollars annually, reflecting the pervasive need for IT expertise across all government branches. Therefore, this single contract, while substantial for the Department of the Navy, represents a fraction of the overall federal investment in these services. A comparison would highlight whether this award is indicative of a larger trend or a specific, targeted investment.

Industry Classification

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

Solicitation ID: N0003923R5555

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: $111,340,880

Exercised Options: $63,089,419

Current Obligation: $38,749,028

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $6,480,166

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCK18D0014

IDV Type: GWAC

Timeline