IRS Spends $235M on IBM ESSO Order, Awarded via Full and Open Competition

Contract Overview

Contract Amount: $235,783,326 ($235.8M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2013-12-31

End Date: 2018-06-30

Contract Duration: 1,642 days

Daily Burn Rate: $143.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM ESSO ORDER FOR IRS

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $235.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IBM ESSO ORDER FOR IRS Key points: 1. Significant contract value of $235.8M awarded to a major IT vendor. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract spans over 4 years, indicating a long-term need for services. 4. The sector is IT, specifically computer and software stores, a common area for federal spending.

Value Assessment

Rating: good

The contract value of $235.8M for IBM ESSO services appears reasonable given the 4+ year duration and the nature of enterprise software orders. Benchmarking against similar large-scale IT procurements would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically leads to better price discovery and value for the government. The presence of multiple bidders is implied, fostering a competitive environment.

Taxpayer Impact: Full and open competition generally maximizes taxpayer value by ensuring the government receives competitive pricing and the best available solutions.

Public Impact

Taxpayers benefit from competitive pricing achieved through an open bidding process. The IRS gains access to essential IT services for its operations. IBM, a large technology provider, secures a substantial government contract. The duration of the contract suggests a sustained need for these IT solutions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the ESSO system becomes deeply integrated.
Reliance on a single vendor for critical IT infrastructure.
The specific nature of 'ESSO ORDER' is not detailed, raising questions about its criticality.

Positive Signals

Awarded through full and open competition.
Firm fixed price contract type helps control costs.
Long contract duration may indicate stable and predictable service delivery.

Sector Analysis

This contract falls within the Information Technology sector, specifically related to computer and software stores. Federal IT spending is a significant portion of the overall budget, with large contracts often going to major technology providers for enterprise-level solutions.

Small Business Impact

The contract was awarded to International Business Machines Corporation, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award.

Oversight & Accountability

The contract was awarded by the Department of the Treasury to the Internal Revenue Service. Oversight would typically involve contract management by the agency to ensure performance and adherence to terms. Further details on specific oversight mechanisms are not provided.

Related Government Programs

Computer and Software Stores
Department of the Treasury Contracting
Internal Revenue Service Programs

Risk Flags

Potential for vendor lock-in.
Reliance on a single large vendor.
Lack of detail on specific services ('ESSO ORDER').
Long contract duration increases long-term risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $235.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IBM ESSO ORDER FOR IRS

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 $235.8 million.

What is the period of performance?

Start: 2013-12-31. End: 2018-06-30.

What specific services or software does the 'IBM ESSO ORDER' encompass, and how critical are they to the IRS's core functions?

The 'ESSO ORDER' likely refers to IBM's Tivoli Security Operations (or similar security-related software). These services are often critical for managing user identities, access controls, and security event monitoring within large organizations like the IRS. Without specific details, it's hard to ascertain the exact criticality, but security and identity management are fundamental to government operations and data protection.

Given the $235M value and 4+ year duration, what are the potential long-term risks associated with this contract for the IRS?

Long-term risks include vendor lock-in, where the IRS becomes heavily reliant on IBM's proprietary technology, making future transitions difficult and costly. There's also the risk of escalating costs if the firm fixed price doesn't account for unforeseen technological shifts or if maintenance and support fees increase significantly over time. Furthermore, a prolonged reliance on a single vendor could stifle innovation if alternative, more advanced solutions emerge.

How effectively did the 'full and open competition' process ensure the best value and technological solution for the IRS in this instance?

Full and open competition is designed to maximize value by encouraging multiple vendors to bid, driving down prices and fostering innovation. While the process itself is a positive indicator, its effectiveness in this specific case depends on the number and quality of bids received, the evaluation criteria used, and whether the chosen solution truly met the IRS's evolving needs throughout the contract's lifespan. Without bid details, we assume the process yielded a competitive outcome.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $489,884,220

Exercised Options: $487,862,197

Current Obligation: $235,783,326

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline