IBM awarded $54.4M for Army IT sustainment, a sole-source contract with a 3-year duration

Contract Overview

Contract Amount: $54,461,050 ($54.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2018-02-27

End Date: 2021-04-30

Contract Duration: 1,158 days

Daily Burn Rate: $47.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: GOARMYED SUSTAINMENT SUPPORT

Place of Performance

Location: FORT KNOX, HARDIN County, KENTUCKY, 40122

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $54.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: GOARMYED SUSTAINMENT SUPPORT Key points: 1. Contract awarded to a single vendor, raising questions about potential price efficiencies. 2. The fixed-price contract type suggests cost certainty for the government. 3. The duration of the contract (1158 days) indicates a long-term need for these services. 4. The services provided fall under Computer Systems Design, a critical IT support area. 5. The contract was not competed, suggesting potential limitations in market exploration. 6. The awardee, IBM, is a large, established technology provider with significant government experience.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive data. The fixed-price nature provides some cost control, but the absence of competition means potential savings from market forces were likely forgone. The total award value of $54.4 million over approximately three years averages to about $18.1 million annually. Without comparable sole-source contracts for similar IT sustainment services from other large providers, it's difficult to definitively assess if this represents excellent or questionable value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition. This typically occurs when a specific vendor possesses unique capabilities or when circumstances preclude a competitive process. The lack of bidders means there was no direct price negotiation driven by market demand, potentially leading to higher costs than a competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without exploring the market, it's impossible to know if alternative, potentially more cost-effective solutions were available.

Public Impact

The U.S. Army benefits from sustained IT systems crucial for its operations. Services include computer systems design and related support, ensuring IT infrastructure reliability. The contract's geographic impact is primarily within Kentucky, where the contract was administered. The workforce implications are likely centered around IBM's IT professionals supporting the Army.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Lack of competition may reduce incentives for innovation and efficiency from the contractor.
Contract duration could lock the government into a specific vendor relationship.

Positive Signals

Award to a large, experienced contractor like IBM suggests a focus on reliability and established expertise.
Fixed-price contract type provides budget certainty.
Sustainment support is critical for maintaining ongoing Army IT operations.

Sector Analysis

This contract falls within the IT services sector, specifically Computer Systems Design Services. The federal government is a major consumer of these services, with significant annual spending. This contract represents a portion of the Department of Defense's broader IT modernization and sustainment efforts. Comparable spending benchmarks would involve analyzing other large, sole-source IT support contracts awarded to major technology firms by various government agencies.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The award to a large prime contractor like IBM suggests that the primary focus was on leveraging established capabilities rather than fostering small business participation through this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract terms, requiring IBM to deliver specified services. Transparency is limited due to the sole-source nature, but contract award details are publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Army IT Modernization Programs
Department of Defense IT Services
Computer Systems Design Services
IT Sustainment Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. GOARMYED SUSTAINMENT 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 Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $54.5 million.

What is the period of performance?

Start: 2018-02-27. End: 2021-04-30.

What is the track record of International Business Machines Corporation (IBM) in performing similar IT sustainment contracts for the Department of Defense?

IBM has a long and extensive history of contracting with the U.S. federal government, including the Department of Defense, across a wide range of IT services. This includes large-scale system integration, cloud computing, cybersecurity, and IT sustainment. Their track record generally indicates a capacity to handle complex, large-value contracts. However, specific performance metrics for individual contracts, especially older ones, are not always readily available in public databases. For this particular GOARMYED SUSTAINMENT SUPPORT contract, the duration and value suggest a significant undertaking. While IBM's overall experience is substantial, the success of this specific contract would depend on detailed performance reviews and delivery outcomes, which are not fully captured in the basic award data.

How does the $54.4 million award value compare to similar IT sustainment contracts awarded by the Army or DoD in recent years?

Comparing this $54.4 million award requires context regarding the scope and duration. As a sole-source contract for Computer Systems Design Services over approximately three years, it represents a substantial investment. However, without detailed service descriptions and performance periods, direct comparisons are difficult. The Department of Defense awards numerous IT contracts, many exceeding this value, particularly for major system development or enterprise-wide solutions. For sustainment-focused contracts, especially those involving large, established vendors like IBM, values in the tens of millions annually are not uncommon. The key differentiator here is the sole-source nature, which limits direct value benchmarking against competitively bid efforts.

What are the primary risks associated with a sole-source award for critical IT sustainment services?

The primary risks associated with a sole-source award for critical IT sustainment services include a lack of price competition, potentially leading to inflated costs for the government. There's also a reduced incentive for the contractor to innovate or improve efficiency beyond contractual minimums, as there's no competitive pressure. Furthermore, the government becomes dependent on a single vendor, creating potential risks if that vendor experiences financial difficulties, undergoes significant restructuring, or fails to meet performance expectations. Lock-in effects can make it difficult and costly to transition to a new provider if needed. Finally, the absence of market exploration means the government might miss out on potentially better or more cost-effective solutions offered by other vendors.

What is the expected effectiveness of IBM's services in sustaining Army IT systems under this contract?

The expected effectiveness of IBM's services hinges on several factors. Given IBM's extensive experience in IT services and its status as a major technology provider, there's a reasonable expectation of technical competence. The contract's fixed-price nature aims to ensure that the Army receives defined services for a set cost, promoting budget predictability. However, effectiveness is ultimately measured by the reliability, security, and performance of the IT systems being sustained. Without specific performance metrics (like uptime guarantees, response times, or system availability targets) detailed in the public award data, a definitive assessment of expected effectiveness is limited. The Army's internal program management and quality assurance processes would be crucial in monitoring and ensuring IBM meets its obligations.

How has federal spending on Computer Systems Design Services (NAICS 541512) evolved, and where does this contract fit within that trend?

Federal spending on Computer Systems Design Services (NAICS 541512) has generally trended upwards over the past decade, reflecting the increasing reliance of government agencies on sophisticated IT infrastructure and digital services. This category encompasses a broad range of activities, from system design and integration to IT consulting and support. This $54.4 million contract with IBM for Army IT sustainment fits within this trend as a component of the broader government investment in maintaining and operating its complex IT environment. While specific year-over-year spending figures for this NAICS code fluctuate based on agency priorities and major procurements, the overall demand for such services remains robust, driven by modernization efforts and the need for ongoing operational support across all branches of the government.

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

Solicitation ID: W52P1J17RGAES

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $54,461,050

Exercised Options: $54,461,050

Current Obligation: $54,461,050

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $12,168,866

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline