Treasury's $10.45M IBM Mainframe Software Renewal Lacks Competition

Contract Overview

Contract Amount: $10,451,349 ($10.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2005-10-06

End Date: 2009-03-31

Contract Duration: 1,272 days

Daily Burn Rate: $8.2K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM MAINFRAME SYSTEM SOFTWARE RENEWAL

Place of Performance

Location: HYATTSVILLE, PRINCE GEORGES County, MARYLAND, 20782

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $10.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IBM MAINFRAME SYSTEM SOFTWARE RENEWAL Key points: 1. High cost for software renewal, exceeding $10 million. 2. Sole-source procurement limits competitive pricing and innovation. 3. Long contract duration (1272 days) may lock in potentially inflated prices. 4. Reliance on a single vendor for critical mainframe software poses a risk.

Value Assessment

Rating: questionable

The $10.45 million price for IBM mainframe system software renewal is difficult to assess without comparable contract data. Given the non-competitive nature, it's possible the pricing is not optimized.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This was a non-competitive delivery order, indicating a sole-source procurement. This method bypasses competitive bidding, potentially leading to higher prices and reduced value for taxpayers.

Taxpayer Impact: Taxpayers may be overpaying due to the lack of competitive pressure on pricing for this essential software.

Public Impact

Government reliance on proprietary IBM mainframe software continues. Potential for cost savings if competitive alternatives were explored. Ensuring continued operation of critical financial systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
High dollar value
Long contract duration
Vendor lock-in

Positive Signals

Maintained critical system functionality
Firm fixed price contract

Sector Analysis

This contract falls under IT services, specifically software licensing and maintenance for mainframe systems. Benchmarks for such specialized software renewals are highly variable and vendor-dependent.

Small Business Impact

This contract does not appear to involve small businesses, as it is a direct renewal with a large corporation (IBM) and was procured sole-source.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the Department of the Treasury obtained the best possible value and that future procurements consider competitive options.

Related Government Programs

Computer and Software Stores
Department of the Treasury Contracting
Financial Management Service Programs

Risk Flags

Lack of competition
Potential for overpricing
Vendor lock-in
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $10.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IBM MAINFRAME SYSTEM SOFTWARE RENEWAL

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Financial Management Service).

What is the total obligated amount?

The obligated amount is $10.5 million.

What is the period of performance?

Start: 2005-10-06. End: 2009-03-31.

What is the justification for the sole-source award, and have alternatives been considered?

The justification for a sole-source award is typically based on unique capabilities or lack of alternatives. For this IBM mainframe software, it's possible that only IBM provides the necessary support or upgrades. However, a thorough market analysis should be conducted to confirm the absence of viable competitive solutions or workarounds to ensure taxpayer funds are used efficiently.

How does the per-unit cost compare to similar mainframe software licenses or maintenance agreements?

Without specific unit details (e.g., number of licenses, specific software modules), a direct per-unit cost comparison is challenging. However, given the sole-source nature and the significant total value, it is prudent to assume the per-unit cost might be higher than if competition were present. Benchmarking against industry standards for similar IBM mainframe software would be necessary.

What is the long-term strategy for managing mainframe software costs and vendor dependency?

The long-term strategy should focus on reducing vendor dependency and exploring cost-saving measures. This could involve negotiating more favorable long-term agreements, investigating open-source alternatives where feasible, or planning for gradual migration to modern platforms. Proactive planning is crucial to mitigate risks associated with sole-source reliance and escalating costs.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $10,451,349

Exercised Options: $10,451,349

Current Obligation: $10,451,349

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline