DoD's $17.5M IBM Contract for Accounting Services: Long Duration, Full and Open Competition

Contract Overview

Contract Amount: $17,540,785 ($17.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2005-12-01

End Date: 2011-06-16

Contract Duration: 2,023 days

Daily Burn Rate: $8.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20350

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $17.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: Key points: 1. Significant contract value of $17.5 million awarded to a major corporation. 2. Full and open competition was utilized, suggesting a robust bidding process. 3. The contract spanned a considerable duration (2005-2011), raising questions about ongoing need and potential for re-competition. 4. The sector is professional services, specifically accounting, which is critical for government operations.

Value Assessment

Rating: fair

The contract's duration and cost-plus-fixed-fee structure warrant scrutiny. While competition was present, the long timeframe may have allowed for price creep or less aggressive cost management over time compared to shorter, more frequent contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition is a positive indicator for price discovery. However, the extended period of performance (6 years) could diminish the competitive pressure over time, especially if IBM was the incumbent.

Taxpayer Impact: Taxpayer funds were used for accounting services. The long duration and cost-plus structure suggest potential for inefficiencies, though the competitive process aimed to mitigate this.

Public Impact

Ensures essential accounting services for the Department of the Navy. Supports a major technology and services provider, IBM. Long-term government contracts can impact market dynamics for accounting services.

Waste & Efficiency Indicators

Waste Risk Score: 86 / 10

Warning Flags

Long contract duration (6 years)
Cost-plus-fixed-fee pricing structure
No small business participation noted

Positive Signals

Full and open competition utilized
Significant contract value awarded

Sector Analysis

This contract falls within the professional services sector, specifically accounting. Government spending in this area is crucial for financial management and compliance. Benchmarks for similar accounting services contracts vary widely based on scope and duration.

Small Business Impact

There is no indication of small business participation in this contract. This suggests that the scope of work was likely tailored for larger, established firms, potentially missing opportunities to engage smaller, specialized accounting firms.

Oversight & Accountability

The long duration of this contract (2005-2011) suggests a need for robust oversight to ensure continued value and prevent cost overruns. Periodic reviews and performance assessments would have been critical.

Related Government Programs

Other Accounting Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Extended contract duration
Cost-plus-fixed-fee pricing
Lack of small business participation
Broadly defined service category

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. See the official description on USAspending.

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 $17.5 million.

What is the period of performance?

Start: 2005-12-01. End: 2011-06-16.

Was the extended duration of this contract necessary, or could the accounting services have been procured more frequently through shorter-term contracts to ensure better value and adapt to evolving ne

The necessity of the extended duration is unclear without further context on the specific accounting services required. While long-term contracts can offer stability and reduce administrative burden, they also risk becoming outdated or less cost-effective over time. Shorter contracts might have allowed for more frequent re-evaluation of needs and pricing, potentially leading to better value or opportunities for different providers.

What specific accounting services were provided under this contract, and how did their nature justify a six-year performance period with IBM?

The contract specifies 'Other Accounting Services' (NAICS 541219), which is broad. Without detailed task orders, it's difficult to ascertain the specific services. However, complex, long-term projects like system implementation, large-scale financial audits, or ongoing financial management support could potentially justify such a duration, especially if continuity and specialized expertise were paramount.

Given the cost-plus-fixed-fee structure and the long performance period, what mechanisms were in place to ensure IBM maintained cost efficiency and delivered optimal value throughout the contract's li

Cost-plus-fixed-fee contracts inherently carry a risk of cost inefficiency. Oversight mechanisms would typically include detailed audits, performance metrics, regular progress reports, and potentially incentive clauses tied to cost savings or performance improvements. The effectiveness of these mechanisms in ensuring value over the six-year period would depend on the rigor of the Department of the Navy's contract management and oversight.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline