IRS Spends $1.38M on IBM Web Hosting for EUP/RUP Services

Contract Overview

Contract Amount: $16,689,188 ($16.7M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2010-09-01

End Date: 2010-12-31

Contract Duration: 121 days

Daily Burn Rate: $137.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: IT

Official Description: EUP/RUP WEB HOSTING SERVICES

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $16.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: EUP/RUP WEB HOSTING SERVICES Key points: 1. IBM secured a $1.38M contract for web hosting services. 2. The contract was not competed, raising questions about price discovery. 3. The fixed-price level of effort contract type may limit cost control. 4. This spending falls within the Computer Systems Design Services sector.

Value Assessment

Rating: questionable

The contract value of $1.38M for 121 days of service appears high. Without competitive bidding, it's difficult to benchmark against similar contracts for web hosting and related IT services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The absence of competition likely resulted in a higher price than could have been achieved through a competitive process, impacting taxpayer funds.

Public Impact

Taxpayers may have overpaid due to the lack of competition. The IRS relies on a single vendor for critical web hosting services. Transparency in government IT procurement is reduced by sole-source awards.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potentially high cost
Short contract duration with high value

Positive Signals

Specific service provided

Sector Analysis

This contract falls under Computer Systems Design Services (NAICS 541512). Spending in this sector can vary widely based on complexity and duration, but a $1.38M award for a 4-month period without competition warrants scrutiny.

Small Business Impact

The contract was awarded to IBM, a large corporation, with no indication of small business participation. This award does not appear to support small business goals.

Oversight & Accountability

The sole-source nature of this award suggests potential weaknesses in the procurement process or a lack of oversight to ensure competitive opportunities were explored.

Related Government Programs

Computer Systems Design Services
Department of the Treasury Contracting
Internal Revenue Service Programs

Risk Flags

Sole-source award
Lack of transparency in pricing
Potential for overpayment
Limited competition
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $16.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. EUP/RUP WEB HOSTING SERVICES

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 $16.7 million.

What is the period of performance?

Start: 2010-09-01. End: 2010-12-31.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award is not provided in the data. Typically, such awards are made when only one responsible source can provide the required supplies or services. However, for web hosting, it is unusual not to have competitive options available unless there are highly specialized requirements.

How does the per-unit cost of this web hosting service compare to industry benchmarks?

Without specific details on the services provided (e.g., bandwidth, storage, support levels), a direct per-unit cost comparison is impossible. However, the total value of $1.38M for approximately four months suggests a high cost, especially given the lack of competitive pricing.

What is the long-term strategy for web hosting services at the IRS, and will future needs be competed?

The provided data only covers a single, short-term contract. It does not offer insight into the IRS's long-term IT infrastructure strategy or whether future web hosting needs will be subject to competitive bidding processes. This lack of information raises concerns about future procurement practices.

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: FIXED PRICE LEVEL OF EFFORT (B)

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: $16,689,188

Exercised Options: $16,689,188

Current Obligation: $16,689,188

Contract Characteristics

Multi-Year Contract: Yes

Parent Contract

Parent Award PIID: TIRNO09D00025

IDV Type: IDC

Timeline