IBM's $27.9M contract for IT documentation support shows fair value with 2 bidders

Contract Overview

Contract Amount: $27,947,683 ($27.9M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2007-09-28

End Date: 2015-09-18

Contract Duration: 2,912 days

Daily Burn Rate: $9.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: WEBIPS/RTS DOCUMENTATION SUPPORT

Place of Performance

Location: OXON HILL, PRINCE GEORGE'S County, MARYLAND, 20745, UNITED STATES OF AMERICA

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $27.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: WEBIPS/RTS DOCUMENTATION SUPPORT Key points: 1. The contract's value appears reasonable given the duration and scope of services. 2. Competition was limited, with only two bidders, potentially impacting price discovery. 3. The cost-plus-fixed-fee structure introduces some risk regarding final cost escalation. 4. This contract supported critical IT documentation for the IRS over an eight-year period. 5. IBM, a large established contractor, holds this position within the IT services sector.

Value Assessment

Rating: fair

The total award amount of $27.9 million over approximately eight years suggests an average annual spend of around $3.5 million. While specific benchmarks for this type of specialized IT documentation support are difficult to ascertain without more granular data, the pricing appears within a reasonable range for long-term, complex system support. The cost-plus-fixed-fee (CPFF) pricing structure, however, warrants careful monitoring to ensure costs do not exceed initial estimates significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a competitive delivery order, indicating it was part of a larger vehicle or a limited competition. With only two bidders identified, the level of competition was not broad. This limited competition may have influenced the final pricing, potentially leading to a higher cost than if there had been a larger pool of interested and capable vendors.

Taxpayer Impact: A limited competition with only two bidders means taxpayers may not have benefited from the most aggressive pricing that a wider, more open competition could have generated.

Public Impact

The Internal Revenue Service (IRS) benefits from enhanced IT system documentation, improving operational efficiency and knowledge transfer. Services delivered include comprehensive documentation for complex IT systems, crucial for maintenance and upgrades. The primary geographic impact is within the IRS's operational centers, likely concentrated in Maryland where the contract was managed. The contract supports a team of technical writers and documentation specialists, contributing to the IT services workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed tightly.
Limited competition (2 bidders) may have resulted in less favorable pricing for the government.
Long contract duration (8 years) increases the risk of scope creep or evolving requirements not being adequately addressed.

Positive Signals

IBM is a well-established contractor with a proven track record in large-scale IT services.
The contract was competitively awarded, suggesting some level of vetting and evaluation occurred.
The services provided are essential for maintaining complex government IT infrastructure.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The market for IT documentation and support is substantial, driven by the increasing complexity of government and commercial IT infrastructures. Comparable spending benchmarks are difficult to pinpoint without more specific service details, but large federal agencies like the IRS represent significant clients for IT support contractors. IBM's role here is typical for a large systems integrator and IT service provider.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as indicated by 'sb': false. There is no explicit small business set-aside. This suggests that the prime contractor, IBM, likely performed the majority of the work, and there is no immediate indication of significant subcontracting opportunities being directed towards small businesses through this specific award.

Oversight & Accountability

Oversight for this contract would have been managed by the contracting officers and program managers within the IRS. As a delivery order under a larger vehicle, it likely adhered to the oversight mechanisms of that vehicle. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS IT Modernization Programs
Federal IT Services Contracts
Computer Systems Design Services
Government IT Documentation Support

Risk Flags

Limited Competition
Cost-Plus-Fixed-Fee Pricing
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $27.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. WEBIPS/RTS DOCUMENTATION 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 $27.9 million.

What is the period of performance?

Start: 2007-09-28. End: 2015-09-18.

What was the specific nature of the 'WEBIPS/RTS DOCUMENTATION SUPPORT' provided under this contract?

The 'WEBIPS/RTS DOCUMENTATION SUPPORT' likely refers to documentation services for the IRS's Web-based Integrated Processing System (WEBIPS) and potentially other Real-Time Systems (RTS). These systems are critical for tax processing and taxpayer services. The documentation would encompass user manuals, technical specifications, system architecture diagrams, operational procedures, and maintenance guides. Ensuring comprehensive and up-to-date documentation is vital for system stability, troubleshooting, training new personnel, and facilitating future system upgrades or migrations. The contract's duration suggests a continuous need for these services to keep pace with system evolution.

How does the $27.9 million award compare to other similar IT documentation support contracts for federal agencies?

Directly comparing this $27.9 million award for IT documentation support over eight years (averaging $3.5 million annually) to other federal contracts is challenging without access to a comprehensive database of similar specialized services. However, for large federal agencies like the IRS, which manage vast and complex IT infrastructures, this level of spending is not unusual for critical support functions. Contracts for enterprise-wide IT support, system integration, and specialized technical services often run into tens or hundreds of millions of dollars over their lifecycles. The value appears reasonable in the context of supporting a major agency's core systems for an extended period.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT documentation services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the government may end up paying more than anticipated if the contractor's costs escalate beyond initial projections. While the fixed fee provides the contractor with a guaranteed profit margin, the 'cost plus' portion means the government bears the burden of actual allowable costs incurred. For IT documentation, risks include unforeseen complexities in the systems being documented, changes in technology requiring documentation updates, or inefficiencies in the contractor's processes. Effective oversight, clear definition of allowable costs, and robust change management are crucial to mitigate these risks and ensure the government receives good value.

Given the limited competition (2 bidders), what is the potential impact on the IRS's ability to secure competitive pricing in the future?

Limited competition, especially with only two bidders, can reduce the government's leverage in negotiating prices. When a market has numerous capable vendors, competition naturally drives prices down as companies vie for the contract. With only two bidders, the incumbent or the other bidder may have had less incentive to offer their most aggressive pricing. This situation could signal to the market that future solicitations in this specific niche might also attract limited interest, potentially perpetuating higher price points unless strategies are employed to broaden the vendor pool or encourage more competitive bids.

What does IBM's track record with the federal government suggest about their performance on this contract?

IBM is a long-standing and major federal contractor with extensive experience across various agencies and service areas, including IT systems design and support. Their track record generally indicates a capacity to handle large, complex contracts. While specific performance metrics for this particular contract (WEBIPS/RTS DOCUMENTATION SUPPORT) are not detailed here, IBM's overall presence suggests they possess the resources, expertise, and established processes necessary to meet government requirements. However, like any large contractor, performance can vary, and ongoing oversight is always necessary to ensure contract objectives are met satisfactorily.

How has federal spending on IT documentation support services evolved, and does this contract align with historical trends?

Federal spending on IT services, including documentation support, has generally trended upwards over the past two decades, driven by the increasing reliance on technology and the need to maintain complex legacy systems alongside modernization efforts. Contracts for specialized IT support, such as documentation, are often long-term due to the intricate nature of government systems. This $27.9 million contract, awarded in 2007 and ending in 2015, aligns with historical trends of agencies investing significantly in maintaining the operational integrity and knowledge base of their critical IT infrastructure. The duration reflects the ongoing need for such specialized expertise.

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: 2

Pricing Type: COST PLUS FIXED FEE (U)

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: $34,472,146

Exercised Options: $34,472,146

Current Obligation: $27,947,683

Parent Contract

Parent Award PIID: TIRNO06D00019

IDV Type: IDC

Timeline