IBM contract for analytics services awarded $30.3M by Treasury's IRS, spanning over 5 years

Contract Overview

Contract Amount: $30,351,014 ($30.4M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2016-04-26

End Date: 2021-06-26

Contract Duration: 1,887 days

Daily Burn Rate: $16.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF FOR OTHER FUNCTIONS - ANALYTICS AND RULES SERVICES

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $30.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF FOR OTHER FUNCTIONS - ANALYTICS AND RULES SERVICES Key points: 1. Value for money appears fair given the long-term nature and specialized services. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators are moderate, with a fixed-price contract type mitigating cost overrun risks. 4. Performance context is within the IRS's need for data analytics and rule services. 5. Sector positioning is within IT services, specifically computer-related services for government functions.

Value Assessment

Rating: fair

The contract's total value of $30.3 million over five years averages to approximately $6 million annually. Benchmarking this against similar government IT service contracts for analytics and data processing suggests a moderate price point. The firm-fixed-price structure provides cost certainty for the government, though it may not capture the full benefit of potential efficiencies if the contractor's costs are lower than anticipated. Without specific per-unit metrics or detailed service level agreements, a precise value-for-money assessment is challenging, but the price appears within a reasonable range for specialized IT services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a degree of competition, though the exact number of interested parties and the rigor of the evaluation process are not detailed. A competitive bidding process generally leads to better price discovery and potentially lower costs for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: A full and open competition allows taxpayers to be confident that the government sought the best possible value, as multiple vendors vied for the contract, driving down prices and improving service quality.

Public Impact

The Internal Revenue Service (IRS) benefits from enhanced analytics and rules services, improving operational efficiency. Taxpayer services may be indirectly improved through better data analysis and processing capabilities. The contract supports IT infrastructure and specialized services within the federal government. Workforce implications include the utilization of specialized IT skills for data analysis and system support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if services are highly specialized and integrated.
Dependence on a single contractor for critical analytics functions could pose a risk.
Ensuring continued innovation and adaptation to evolving IRS needs over the contract term.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Full and open competition suggests a competitive award process.
Long-term contract allows for stable service delivery and relationship building.

Sector Analysis

This contract falls within the broader Information Technology (IT) sector, specifically focusing on computer-related services and data analytics. The market for government IT services is substantial, with agencies increasingly relying on advanced analytics to manage operations, improve service delivery, and ensure compliance. Comparable spending benchmarks for similar analytics and IT support contracts within federal agencies often range from millions to tens of millions of dollars annually, depending on the scope and complexity.

Small Business Impact

The data does not indicate any specific small business set-aside provisions for this contract. As a large contract awarded to IBM, it is unlikely to have direct subcontracting opportunities specifically targeted at small businesses unless IBM voluntarily includes them in its subcontracting plan. The impact on the small business ecosystem would be minimal unless IBM actively engages small businesses for specialized components of the analytics services.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. Accountability measures are embedded in the contract's performance work statement and delivery schedules. Transparency is generally maintained through federal procurement databases like FPDS-NG. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

IRS IT Modernization Programs
Federal Data Analytics Initiatives
Government Cloud Computing Services
Cybersecurity and Information Assurance Contracts

Risk Flags

Contract Duration
Sole Source Potential
Vendor Lock-in Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $30.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF FOR OTHER FUNCTIONS - ANALYTICS AND RULES 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 $30.4 million.

What is the period of performance?

Start: 2016-04-26. End: 2021-06-26.

What is the specific nature of the 'Analytics and Rules Services' provided by IBM under this contract?

The contract, identified by NAICS code 541519 (Other Computer Related Services), suggests that IBM provides services related to the analysis of data and the development or implementation of rules-based systems for the IRS. This could encompass a wide range of activities, such as data mining, predictive modeling, business intelligence reporting, and the creation of algorithms or logic engines to automate decision-making processes or ensure compliance with tax regulations. The 'IGF FOR OTHER FUNCTIONS' designation implies these services support various operational aspects of the IRS beyond a single, narrowly defined program. The exact scope would be detailed in the contract's Statement of Work (SOW).

How does the $30.3 million award compare to historical IRS spending on similar analytics services?

To accurately compare, one would need to analyze historical IRS spending data for contracts with similar NAICS codes (e.g., 541519, 541512, 541511) and service descriptions related to data analytics, business intelligence, and IT support over the contract's performance period (2016-2021) and preceding years. Given the $30.3 million total award over five years, the average annual spend is approximately $6 million. This figure needs to be contextualized against the IRS's overall IT budget and the specific needs driving this contract. Without access to detailed historical IRS procurement data for comparable services, a precise comparison is difficult, but this amount appears moderate for a large federal agency's specialized IT needs.

What are the key performance indicators (KPIs) used to measure the success of IBM's services under this contract?

Key Performance Indicators (KPIs) for a contract like this would typically be defined in the Performance Work Statement (PWS) or Statement of Work (SOW). For analytics and rules services, common KPIs might include data accuracy rates, report generation timeliness, system uptime and availability, successful implementation of new rules or algorithms, user satisfaction scores, and adherence to security protocols. The contract's success would be measured by IBM's ability to meet these defined metrics, which are crucial for ensuring the IRS receives the intended value and benefits from the services provided. Failure to meet KPIs could result in penalties or impact future contract renewals.

What is IBM's track record with the IRS and other federal agencies for similar IT service contracts?

IBM has a long-standing and extensive track record of contracting with the IRS and numerous other federal agencies across various IT service domains. Historically, IBM has been a major player in providing large-scale IT solutions, including software development, system integration, cloud services, and data analytics. While specific performance details for every contract are not publicly available, IBM's continued success in winning significant federal contracts suggests a generally positive performance history and strong capabilities. However, like any large contractor, there may have been specific contracts or periods that faced scrutiny or performance challenges, which would require a deeper dive into contract databases and agency reports.

What are the potential risks associated with relying on a single contractor, like IBM, for critical analytics functions?

Relying on a single contractor for critical analytics functions presents several potential risks. Firstly, there's the risk of vendor lock-in, where the IRS becomes heavily dependent on IBM's proprietary systems or methodologies, making it difficult and costly to switch providers or integrate other solutions. Secondly, a lack of ongoing competition could reduce the incentive for IBM to innovate or offer the most cost-effective solutions over time. Thirdly, if IBM experiences financial instability, organizational changes, or strategic shifts, it could disrupt service delivery. Finally, knowledge transfer and continuity can be challenging if key IBM personnel leave the project, potentially impacting the IRS's institutional knowledge of the systems.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $33,998,753

Exercised Options: $33,960,078

Current Obligation: $30,351,014

Actual Outlays: $8,349,010

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $1,125,468

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00022

IDV Type: IDC

Timeline