IBM's $12.1M Treasury contract for IT services awarded in 2006, spanning over 7 years

Contract Overview

Contract Amount: $12,097,180 ($12.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2006-09-13

End Date: 2013-08-08

Contract Duration: 2,521 days

Daily Burn Rate: $4.8K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 22

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IDA-INTELIGENCE DATA ANALYSIS

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $12.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IDA-INTELIGENCE DATA ANALYSIS Key points: 1. Value for money assessed through comparison to similar IT services contracts. 2. Competition dynamics indicate a competitive delivery order, suggesting potential for price discovery. 3. Risk indicators include contract type (Cost Plus Fixed Fee) which can sometimes lead to cost overruns. 4. Performance context is a long-duration IT services contract, requiring sustained delivery. 5. Sector positioning within IT services, a critical area for government operations.

Value Assessment

Rating: fair

The contract's total value of $12.1 million over 7 years averages approximately $1.7 million annually. Benchmarking this against similar IT services contracts requires detailed analysis of scope and deliverables. The Cost Plus Fixed Fee (CPFF) contract type suggests that while IBM had an incentive to control costs, the government bears some risk if costs exceed projections. Without specific performance metrics and comparison data, a definitive value-for-money assessment is challenging, but the duration and type suggest a need for careful oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

This contract was awarded as a competitive delivery order, indicating that multiple vendors likely competed for this specific task order under a broader contract vehicle. The presence of 22 offers suggests a robust competitive environment for this particular service. A competitive award generally leads to better price discovery and potentially more favorable terms for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: A competitive award means taxpayers likely benefited from a more efficient pricing structure, as vendors vied to offer the best value to secure the business.

Public Impact

Federal agencies, specifically the IRS, benefited from enhanced computer systems design and related services. The services delivered were crucial for the operational efficiency and data management of the Internal Revenue Service. The contract's primary geographic impact was within Maryland, where the services were likely performed or managed. The contract supported a workforce skilled in IT systems design and implementation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can incentivize cost escalation if not managed tightly.
Long contract duration (over 7 years) increases the risk of scope creep or technological obsolescence.
Specific performance metrics and outcomes are not detailed, making it hard to gauge effectiveness.
Limited information on the specific IT systems supported and their criticality.

Positive Signals

Awarded through a competitive process, suggesting a degree of market validation.
The contract was awarded to a major IT provider (IBM), implying established capabilities.
The contract was successfully completed, indicating delivery of services over its term.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically Computer Systems Design Services. This is a broad and essential category for government operations, encompassing a wide range of services from software development to IT infrastructure management. The market for IT services is highly competitive, with numerous large and small businesses offering specialized solutions. Government spending in this area is consistently high, reflecting the increasing reliance on technology for service delivery and internal operations.

Small Business Impact

The provided data indicates that small business participation was not a primary focus for this contract (ss: false, sb: false). As a large contract awarded to a major corporation, the primary impact on small businesses would likely be through subcontracting opportunities, which are not detailed here. Without specific subcontracting plans or goals, it's difficult to assess the extent to which this contract supported the small business ecosystem.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Treasury, specifically the Internal Revenue Service. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring would be expected to ensure costs remained within reasonable bounds and that deliverables were met. Transparency would be facilitated through contract reporting mechanisms, though specific details on IG involvement or public reporting are not provided.

Related Government Programs

IT Services Contracts
Computer Systems Design
Department of the Treasury Contracts
IRS IT Modernization Efforts
Large-Scale IT Service Delivery

Risk Flags

Contract Type Risk (CPFF)
Long Contract Duration
Technological Obsolescence Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $12.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IDA-INTELIGENCE DATA ANALYSIS

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 $12.1 million.

What is the period of performance?

Start: 2006-09-13. End: 2013-08-08.

What was the specific nature of the 'Computer Systems Design Services' provided under this contract?

The contract, NAICS code 541512, specifies 'Computer Systems Design Services.' This typically involves planning and designing computer systems that integrate hardware, software, and communication technologies. Services can include analysis of user needs, development of system specifications, system architecture design, and consulting services. For the IRS, this could have involved designing or upgrading systems for tax processing, taxpayer data management, or internal IT infrastructure to improve efficiency and security over the contract's lifespan from 2006 to 2013.

How does the $12.1 million total award compare to similar IT services contracts awarded by the Treasury or IRS during that period?

Comparing the $12.1 million total award requires context on the specific services rendered and the contract duration. The contract spanned over seven years (2006-2013), averaging roughly $1.7 million annually. During this period, the IRS and Treasury engaged in numerous IT modernization efforts. Larger, multi-year IT contracts could range from tens to hundreds of millions of dollars. This $12.1 million figure suggests a significant but not exceptionally large-scale project, likely focused on specific system design or integration rather than a complete enterprise-wide overhaul. A precise comparison would necessitate analyzing contracts with similar scope, duration, and service categories (e.g., system integration, software development) awarded within the federal government at that time.

What were the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this specific engagement?

The primary risk with a CPFF contract for the government is cost overrun. While the contractor (IBM) is paid its actual allowable costs plus a fixed fee representing profit, the 'fixed fee' component is negotiated upfront. If the actual costs significantly exceed the initial estimates used to determine the fixed fee, the government still pays the actual costs. For IBM, the risk is that their actual costs might exceed their estimates, reducing their effective profit margin if the fixed fee doesn't adequately cover unforeseen expenses. Effective oversight is crucial to ensure costs are reasonable and allocable, and that the fixed fee remains appropriate for the work performed.

Given the 2006 award date, how might technological advancements have impacted the relevance and effectiveness of the designed systems by 2013?

Technology evolves rapidly, and a seven-year contract duration (2006-2013) presents a significant challenge. Systems designed in 2006 could be considered outdated by 2013, especially in areas like cloud computing, mobile integration, and advanced data analytics which saw substantial growth during that period. The effectiveness of the designed systems would depend on the contract's flexibility to incorporate newer technologies or design for future adaptability. If the systems were designed with modularity and scalability in mind, they might have remained relevant. However, there's a inherent risk that the designed solutions might not have kept pace with the latest advancements, potentially requiring further investment or redesign shortly after the contract's completion.

What does the number of offers (22) suggest about the market for IT systems design services for the IRS in the mid-2000s?

The fact that 22 offers were received for this competitive delivery order strongly indicates a vibrant and competitive market for IT systems design services relevant to the IRS in the mid-2000s. This high number of bidders suggests that numerous companies possessed the capabilities and interest to pursue government contracts of this nature. It implies that the barriers to entry for qualified IT service providers were not prohibitively high, and that competition was likely robust. This level of competition generally benefits the government by driving down prices and encouraging innovation as contractors strive to differentiate themselves.

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: 22

Pricing Type: COST PLUS FIXED FEE (U)

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: $15,997,822

Exercised Options: $13,012,762

Current Obligation: $12,097,180

Parent Contract

Parent Award PIID: TIRNO06D00019

IDV Type: IDC

Timeline