Treasury's $17.1M IT contract for computer systems design awarded to IBM without competition

Contract Overview

Contract Amount: $17,140,871 ($17.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2009-08-31

End Date: 2010-01-31

Contract Duration: 153 days

Daily Burn Rate: $112.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE)

Sector: IT

Official Description: CREATE TASK ORDER 0001

Place of Performance

Location: NEW CARROLLTON, PRINCE GEORGE'S County, MARYLAND, 20784

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $17.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: CREATE TASK ORDER 0001 Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential cost savings through competition. 2. The duration of 153 days suggests a focused, short-term need for these services. 3. The North American Industry Classification System (NAICS) code 541512 indicates a focus on computer systems design, a common IT service. 4. The contract was awarded to a large, established vendor, IBM, suggesting a reliance on existing relationships or specialized capabilities. 5. The absence of a small business set-aside indicates this was not specifically targeted to smaller enterprises. 6. The contract's value, while significant, needs to be benchmarked against similar IT services contracts to assess value for money.

Value Assessment

Rating: questionable

Benchmarking the value of this $17.1 million contract is challenging without more detailed service descriptions and performance metrics. However, awarding a contract of this size without competition inherently limits the government's ability to ensure the best possible price. Comparing it to similar sole-source IT services contracts would be necessary to determine if the pricing is reasonable. The lack of competitive bidding means there's no market validation of the proposed costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary unique capabilities or when circumstances necessitate an immediate award. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. Without multiple bids, it's harder to ensure the most cost-effective solution was secured.

Public Impact

The primary beneficiary of this contract is the Internal Revenue Service (IRS), which receives computer systems design services. These services are crucial for the IRS's operational efficiency and technological infrastructure. The contract's geographic impact is centered in Maryland (ST: MD), where the services are likely performed or managed. The workforce implications involve IT professionals, likely employed by IBM, who will be engaged in system design and implementation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition raises concerns about whether the most innovative or cost-effective solution was obtained.
Short contract duration (153 days) might indicate a reactive need rather than strategic, long-term planning.

Positive Signals

Award to a reputable vendor like IBM suggests a focus on reliability and established expertise.
The specific NAICS code indicates a clear focus on a defined IT service area.

Sector Analysis

The IT services sector is vast and highly competitive, with companies like IBM offering a wide range of solutions. This contract falls under computer systems design, a critical component of IT infrastructure development and maintenance. Comparable spending benchmarks for IT systems design services can vary widely based on complexity, duration, and vendor. However, sole-source awards in this category often warrant closer scrutiny to ensure fair pricing.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to IBM, a large corporation, suggests that subcontracting opportunities for small businesses might exist, but this is not guaranteed and would depend on IBM's specific subcontracting plan. The absence of a set-aside means that the primary award was not directed towards fostering small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's Inspector General, with specific program managers within the IRS responsible for monitoring performance and deliverables. Transparency is limited due to the sole-source nature of the award, as fewer details are usually made public compared to competed contracts. Accountability would be managed through contract clauses and performance reviews.

Related Government Programs

IT Systems Modernization
Computer Systems Design Services
IRS Technology Modernization Initiatives
Federal IT Services Procurement

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of detailed service description hinders comprehensive value assessment.
Potential for higher costs due to absence of competitive bidding.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $17.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. CREATE TASK ORDER 0001

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 $17.1 million.

What is the period of performance?

Start: 2009-08-31. End: 2010-01-31.

What specific computer systems design services were procured under this contract?

The contract data indicates the NAICS code 541512, which covers Computer Systems Design Services. This generally includes designing, developing, and integrating hardware and software systems. Specific services could range from network architecture design, software development and implementation, IT infrastructure planning, to system integration and consulting. Without further details from the contract's statement of work, it's difficult to pinpoint the exact nature of the design services. However, given the agency (IRS) and the value, it likely pertains to critical systems supporting tax administration or internal operations.

How does the $17.1 million cost compare to similar IT systems design contracts awarded by the Treasury or IRS?

Direct comparison of the $17.1 million cost is difficult without knowing the specific scope, duration, and complexity of the services rendered. However, as a sole-source award, it inherently lacks a competitive benchmark. To assess value, one would need to compare it against other sole-source or competitively awarded contracts for similar IT systems design services within the federal government, particularly those awarded by agencies with comparable IT needs to the IRS. Factors like the 153-day duration suggest a potentially high daily rate if the scope was limited, warranting further investigation into the unit costs or labor categories involved.

What are the risks associated with awarding a $17.1 million IT contract on a sole-source basis?

The primary risk of a sole-source award is the potential for inflated costs due to the lack of competitive pressure. Without multiple bids, the government cannot be certain it received the best possible price or the most innovative solution. There's also a risk of vendor lock-in, where the agency becomes overly reliant on a single provider. Furthermore, it can create an uneven playing field for other capable vendors who were not given an opportunity to compete. For a contract of this magnitude, ensuring robust justification for the sole-source award and diligent oversight is crucial to mitigate these risks.

What is IBM's track record with the Department of the Treasury and the IRS for IT services?

IBM is a major federal contractor with a long history of providing IT services across numerous government agencies, including the Department of the Treasury and the IRS. While this specific contract was a sole-source award for computer systems design, IBM has likely been involved in various IT projects for these agencies over the years. A comprehensive analysis would require reviewing IBM's past performance evaluations, other contract awards, and any documented issues or successes related to their work with the Treasury and IRS to fully understand their track record in this context.

What does the short contract duration of 153 days imply about the nature of the services provided?

A contract duration of 153 days (approximately 5 months) suggests that the services procured were likely for a specific, short-term project or task. This could involve a particular phase of a larger system design, a rapid prototyping effort, a specialized consultation, or addressing an urgent operational need. It implies that the scope of work was well-defined and achievable within this timeframe, rather than a long-term, ongoing IT support or development engagement. This short duration also means that the total contract value is spread over a relatively brief period, potentially indicating a high intensity of work or specialized, high-cost resources.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE) (2)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 08

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $65,135,669

Exercised Options: $17,231,557

Current Obligation: $17,140,871

Contract Characteristics

Multi-Year Contract: Yes

Parent Contract

Parent Award PIID: TIRNO09D00025

IDV Type: IDC

Timeline