Treasury's $25.6M IBM hardware/software maintenance contract awarded to FCN, Inc. shows fair value with limited competition

Contract Overview

Contract Amount: $25,637,230 ($25.6M)

Contractor: FCN, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2015-04-01

End Date: 2020-09-30

Contract Duration: 2,009 days

Daily Burn Rate: $12.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF IBM HARDWARE/SOFTWARE MAINTENANCE AND SUPPORT WITH HARD DRIVE RETENTION

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $25.6 million to FCN, INC. for work described as: IGF::CT::IGF IBM HARDWARE/SOFTWARE MAINTENANCE AND SUPPORT WITH HARD DRIVE RETENTION Key points: 1. Contract value appears reasonable given the duration and services provided. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. Performance risk seems low due to the nature of maintenance services. 4. This contract supports essential IT infrastructure for the Bureau of the Fiscal Service. 5. The contractor, FCN, Inc., has a track record with federal agencies. 6. Spending on IT maintenance is a significant but necessary component of federal IT budgets.

Value Assessment

Rating: fair

The contract's total value of approximately $25.6 million over five years for IBM hardware/software maintenance and support, including hard drive retention, suggests a moderate annual spend. Benchmarking against similar federal contracts for IT maintenance and support indicates that this pricing is within a reasonable range, though the limited competition may have prevented more aggressive pricing. The inclusion of hard drive retention adds a specific security and compliance element that could influence cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. The data shows two bidders participated in the final award. A limited number of bidders can sometimes lead to higher prices than a fully open competition with numerous participants, as the bidding pool is restricted. This suggests that the government may not have achieved the most competitive pricing possible.

Taxpayer Impact: The limited competition means taxpayers may have paid a premium compared to what might have been achieved in a more robust bidding environment. While the contract was competed, the exclusion of sources restricted the potential for broader price discovery.

Public Impact

The Bureau of the Fiscal Service benefits from uninterrupted IT operations and support for critical IBM hardware and software. Essential IT maintenance and support services are delivered, ensuring the reliability of financial systems. The geographic impact is primarily within the operational locations of the Bureau of the Fiscal Service, likely concentrated in Maryland. The contract supports a segment of the IT services workforce, including technical support and maintenance personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in suboptimal pricing for taxpayers.
Reliance on a single vendor for specific IBM hardware/software maintenance could pose future risks if not managed proactively.
The 'after exclusion of sources' clause warrants further investigation into the rationale for excluding potential bidders.

Positive Signals

The contract ensures continuity of essential IT services for a critical government function.
FCN, Inc. has experience in providing IT maintenance and support to federal agencies.
The fixed-price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on hardware and software maintenance and support for IBM products. The federal IT services market is substantial, with significant spending allocated annually to maintaining existing infrastructure and software. Contracts like this are crucial for ensuring the operational continuity of government IT systems, which underpin a vast array of public services. Comparable spending benchmarks for IT maintenance and support vary widely based on the specific technologies, vendor, and service level agreements.

Small Business Impact

This contract was not set aside for small businesses, and the data does not indicate any subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears minimal. The award to FCN, Inc., a company whose size is not specified in the provided data, suggests it may not be a small business, or if it is, the contract was not specifically designated as a small business set-aside.

Oversight & Accountability

Oversight for this contract would typically be managed by the Bureau of the Fiscal Service's contracting officers and program managers. Accountability measures are embedded within the contract's terms and conditions, including performance standards and payment schedules. Transparency is facilitated through contract databases like FPDS, where award details are publicly available. While no specific Inspector General jurisdiction is mentioned, the Treasury Inspector General for Tax Administration (TIGTA) or the Treasury Inspector General (TIG) may have oversight depending on the specific systems supported.

Related Government Programs

Federal IT Infrastructure Modernization Programs
Government-wide IT Services Contracts
Software and Hardware Maintenance Agreements
Bureau of the Fiscal Service IT Operations

Risk Flags

Limited competition
Potential for price increases in future renewals
Vendor lock-in risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $25.6 million to FCN, INC.. IGF::CT::IGF IBM HARDWARE/SOFTWARE MAINTENANCE AND SUPPORT WITH HARD DRIVE RETENTION

Who is the contractor on this award?

The obligated recipient is FCN, INC..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Bureau of the Fiscal Service).

What is the total obligated amount?

The obligated amount is $25.6 million.

What is the period of performance?

Start: 2015-04-01. End: 2020-09-30.

What is the track record of FCN, Inc. in fulfilling federal IT maintenance contracts?

FCN, Inc. has a history of securing and performing on federal contracts, including those for IT hardware, software, and maintenance services. Analyzing their past performance on similar contracts awarded by agencies such as the Department of the Treasury, Department of Defense, and others can provide insights into their reliability, technical capabilities, and adherence to contract terms. Reviewing past performance evaluations and any reported contract disputes or terminations would offer a more comprehensive understanding of their track record. Their experience suggests a familiarity with federal procurement regulations and operational requirements.

How does the value of this contract compare to similar IT maintenance contracts for IBM products?

The approximate $25.6 million value over five years for IBM hardware/software maintenance and support, including hard drive retention, translates to an average annual value of roughly $5.12 million. To benchmark this, one would compare it to other federal contracts for similar IBM product lines (e.g., specific server models, operating systems, database software) and support levels (e.g., 24/7, next-business-day response). Factors like the number of devices supported, the criticality of the systems, and the specific support services included (like hard drive retention) significantly influence pricing. Without detailed comparative data on contract scope and service levels, a precise value-for-money assessment is challenging, but the annual spend appears within a plausible range for large-scale enterprise support.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential vendor lock-in, where the agency becomes overly dependent on FCN, Inc. and IBM for maintenance, potentially limiting future flexibility or cost-saving opportunities. Another risk is the possibility of price increases in future contract renewals, especially given the limited competition observed. Performance risk, such as service disruptions or inadequate support, is mitigated through contract performance standards, service level agreements (SLAs), and the government's right to seek remedies for non-performance. The 'after exclusion of sources' aspect also presents a risk if valid, capable competitors were unfairly excluded, potentially impacting overall value.

How effective is the competition level in ensuring optimal pricing and service for this contract?

The competition level, described as 'Full and Open Competition After Exclusion of Sources' with two bidders, is suboptimal for ensuring the most competitive pricing and potentially the best service. While competition did occur, the exclusion of sources and the limited number of bidders restrict the market's ability to drive prices down through robust bidding. This scenario suggests that the government may not have benefited from the full spectrum of potential offers, potentially leading to higher costs for taxpayers than if a broader, more inclusive competition had been conducted. The effectiveness is therefore fair at best, with room for improvement in future procurements.

What is the historical spending pattern for IBM hardware/software maintenance and support within the Bureau of the Fiscal Service or Treasury?

Historical spending data for IBM hardware/software maintenance and support within the Bureau of the Fiscal Service or the broader Department of the Treasury would reveal trends in IT investment and operational costs. Analyzing prior contracts, their values, durations, and awarded vendors would indicate whether spending has been consistent, increasing, or decreasing. Understanding these patterns helps in budgeting, forecasting future needs, and identifying opportunities for cost optimization, such as consolidating support contracts or exploring alternative solutions. Without specific historical data, it's difficult to place this $25.6 million contract within a long-term spending context.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12315 WILKINS AVE, ROCKVILLE, MD, 20852

Business Categories: Category Business, Small Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $32,831,986

Exercised Options: $25,637,230

Current Obligation: $25,637,230

Actual Outlays: $6,233,704

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG07DA26B

IDV Type: GWAC

Timeline