IBM's $16.4M Treasury contract for TIPSS-3 MEF O&M support awarded competitively

Contract Overview

Contract Amount: $16,390,912 ($16.4M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2006-06-30

End Date: 2009-09-13

Contract Duration: 1,171 days

Daily Burn Rate: $14.0K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 21

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TIPSS-3 TO 2042 MEF O&M SUPPORT

Place of Performance

Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $16.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: TIPSS-3 TO 2042 MEF O&M SUPPORT Key points: 1. Contract awarded competitively, suggesting potential for good value. 2. Duration of 1171 days indicates a significant, long-term need. 3. Time and Materials pricing structure may pose cost control risks. 4. Contractor is a large, established entity with extensive federal experience. 5. Services fall under computer systems design, a common IT procurement category. 6. Geographic location in Maryland suggests a concentration of federal IT support.

Value Assessment

Rating: fair

The contract value of $16.4 million over approximately three years is moderate for IT support services. Benchmarking against similar large-scale IT operations and maintenance contracts is difficult without more specific service details. However, the Time and Materials (T&M) pricing model, while flexible, can sometimes lead to higher costs compared to fixed-price contracts if not managed closely. The number of bids (21) suggests a competitive environment that should have driven reasonable pricing, but the T&M nature warrants careful monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded competitively, with 21 bids received. A full and open competition with a significant number of bidders typically indicates a healthy market for the services and provides the government with a wide range of options. This level of competition is generally expected to lead to more favorable pricing and better quality services as contractors vie for the award. The presence of 21 bidders suggests that the requirements were well-defined and accessible to a broad base of qualified vendors.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely resulted in a more cost-effective solution and encouraged vendors to offer competitive pricing to secure the award.

Public Impact

Benefits the Department of the Treasury by ensuring the operational readiness of critical IT systems. Delivers essential computer systems design and maintenance services. Primarily impacts federal IT infrastructure and operations within the Treasury. Supports a workforce involved in IT system design, development, and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to cost overruns if not diligently managed.
The long duration of the contract could potentially lock the government into a specific solution or vendor.
Lack of specific performance metrics in the provided data makes it hard to assess efficiency.
The contract is not set aside for small businesses, potentially limiting opportunities for smaller firms.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Received 21 bids, suggesting strong market interest and vendor availability.
Contractor, IBM, is a large, established company with a proven track record in federal IT.
The contract supports critical IT operations for the Department of the Treasury.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a significant segment of the IT industry. This sector encompasses a wide range of services, including designing, developing, and supporting complex IT systems. The federal government is a major consumer of these services, with spending often concentrated in areas like defense, intelligence, and tax administration. Comparable spending benchmarks would typically involve analyzing IT operations and maintenance contracts awarded to large system integrators by various federal agencies.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business participation (sb: false). This means that large businesses were the primary focus of this procurement. While this allows for access to large, established contractors with extensive resources, it may limit opportunities for small businesses to participate in significant federal IT contracts. Subcontracting opportunities for small businesses are not detailed in the provided data but are a common avenue for their involvement in larger prime contracts.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS or Treasury Department. Accountability measures would be defined in the contract's statement of work and performance standards. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or identified during the contract's performance.

Related Government Programs

TIPSS (Treasury Information Processing Support Services)
IRS IT Modernization Programs
Federal Civilian IT Operations and Maintenance Contracts
Large-Scale IT Service Delivery Contracts

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Risk of technology obsolescence over the contract's duration.
Limited transparency on specific performance metrics.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $16.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. TIPSS-3 TO 2042 MEF O&M 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 the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $16.4 million.

What is the period of performance?

Start: 2006-06-30. End: 2009-09-13.

What is the specific nature of the MEF O&M support provided under TIPSS-3?

The MEF O&M support likely refers to Operations and Maintenance (O&M) for a specific system or platform within the Treasury, possibly related to the 'Modernization and Efficiency Framework' or a similar initiative. Without access to the full contract details or statement of work, the precise technical services are not fully discernible. However, given the NAICS code 541512 (Computer Systems Design Services), it would encompass activities such as system maintenance, troubleshooting, upgrades, and ensuring the continuous availability and performance of IT infrastructure and applications critical to the Treasury's mission.

How does the Time and Materials (T&M) pricing structure compare to other contract types for similar IT services?

Time and Materials (T&M) contracts are characterized by payment based on the actual labor hours expended and the cost of materials used. This contrasts with fixed-price contracts, where the price is set in advance, or cost-plus contracts, where costs are reimbursed plus a fee. T&M offers flexibility, which can be advantageous for projects with undefined scopes or evolving requirements. However, it carries a higher risk of cost overruns for the government, as there is less incentive for the contractor to control costs. For IT services where requirements are well-defined, fixed-price contracts are often preferred for better cost predictability and value.

What is IBM's track record with similar large-scale IT support contracts for federal agencies?

International Business Machines (IBM) has an extensive and long-standing track record of providing large-scale IT support and systems integration services to numerous federal agencies, including the Department of the Treasury. They have historically held numerous prime contracts across various domains, such as cloud computing, cybersecurity, data analytics, and legacy system modernization. Their experience typically involves managing complex projects, large workforces, and significant budgets. While specific performance details for every contract are not publicly available, IBM's continued presence as a major federal contractor suggests a generally positive performance history and capability to meet government requirements.

What are the potential risks associated with a 1171-day contract duration for IT O&M services?

A contract duration of 1171 days (approximately 3.2 years) for IT Operations and Maintenance (O&M) services presents several potential risks. Firstly, technology evolves rapidly; a long-term commitment might lock the government into outdated solutions or prevent the adoption of newer, more efficient technologies. Secondly, vendor lock-in can occur, making it difficult and costly to switch providers or bring services in-house later. Thirdly, the longer the contract, the greater the potential for scope creep or changes in requirements that, if not managed properly under a T&M structure, could lead to significant cost increases. Finally, long durations can sometimes reduce the urgency for continuous innovation and efficiency improvements by the incumbent contractor.

How does the $16.4 million contract value compare to overall federal IT spending in computer systems design services?

The $16.4 million contract value is relatively modest when compared to the overall federal IT spending landscape, particularly within the Computer Systems Design Services category (NAICS 541512). Federal agencies collectively spend billions of dollars annually on IT services, including design, development, integration, and maintenance. While this specific contract represents a significant investment for the IRS or Treasury for its particular scope, it is a small fraction of the total federal IT budget. For context, agencies like the Department of Defense, Health and Human Services, and Veterans Affairs often award contracts in the hundreds of millions or even billions for large IT programs.

What does the number of bids (21) indicate about the market for these specific IT services?

Receiving 21 bids for this contract indicates a highly competitive market for the specific IT services required by the Treasury. This suggests that the requirements were likely well-defined and accessible to a broad range of vendors, and that the contract opportunity was attractive enough to elicit significant interest. A large number of bidders generally benefits the government by increasing the likelihood of receiving competitive pricing, innovative solutions, and high-quality service offerings. It also implies that the barriers to entry for qualified companies were not prohibitively high, fostering a dynamic marketplace.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 21

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $51,505,928

Exercised Options: $38,306,437

Current Obligation: $16,390,912

Parent Contract

Parent Award PIID: TIRNO06D00019

IDV Type: IDC

Timeline