DoD awards $34M for IT services to IBM, raising questions on value and competition

Contract Overview

Contract Amount: $33,974,356 ($34.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2005-10-01

End Date: 2008-06-06

Contract Duration: 979 days

Daily Burn Rate: $34.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY)

Sector: IT

Official Description: DUMMY CLIN TAS::21 2020::TAS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $34.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: DUMMY CLIN TAS::21 2020::TAS Key points: 1. Significant contract value ($34M) awarded to a major IT vendor. 2. Full and open competition was utilized, but specific pricing details are limited. 3. Potential risk associated with vendor lock-in and long-term cost implications. 4. IT sector spending is substantial, requiring careful oversight for efficiency.

Value Assessment

Rating: fair

The award amount of $34.4M for IT services appears substantial. Without detailed breakdowns of services rendered and comparison to market rates for similar contracts, assessing the value for money is challenging. The benchmark of $34.7M suggests the award was within a reasonable range, but further analysis is needed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a broad solicitation process. However, the limited information on the specific pricing structure and the number of bids received makes it difficult to ascertain the extent of price discovery and whether the most cost-effective solution was secured.

Taxpayer Impact: While competition was utilized, the total taxpayer impact is difficult to quantify without more granular cost data and performance metrics.

Public Impact

Taxpayers may be paying premium prices for IT services if competition was not fully leveraged for price reduction. The long-term implications of this contract on government IT infrastructure and potential vendor dependency need consideration. Ensuring transparency in contract performance and cost reporting is crucial for public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed cost breakdown
Potential for vendor lock-in
Limited insight into competitive pricing effectiveness

Positive Signals

Awarded under full and open competition
Contract duration aligns with project needs

Sector Analysis

This contract falls within the IT sector, which represents a significant portion of federal spending. Benchmarks for IT services vary widely based on complexity and scope, but large-scale contracts like this require rigorous justification and oversight to ensure efficiency and avoid cost overruns.

Small Business Impact

The data indicates this contract was awarded to a large corporation, International Business Machines Corporation. There is no explicit information suggesting opportunities for small businesses were included or utilized in this specific award, which could be a missed opportunity for economic diversification.

Oversight & Accountability

Oversight of this contract would involve monitoring IBM's performance against the contract's terms, ensuring timely delivery of services, and scrutinizing invoices for accuracy. Regular audits and performance reviews are essential to maintain accountability and ensure taxpayer funds are used effectively.

Related Government Programs

Computer and Software Stores
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of detailed service description
Limited transparency on bid specifics
Potential for long-term cost escalation
No clear indication of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. DUMMY CLIN TAS::21 2020::TAS

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 $34.0 million.

What is the period of performance?

Start: 2005-10-01. End: 2008-06-06.

What specific IT services were procured under this contract, and how do their costs compare to industry standards for similar services?

The provided data does not specify the exact IT services procured, only that they fall under NAICS code 443120 (Computer and Software Stores). Without this detail, a direct cost comparison to industry standards is impossible. Further investigation into the contract's statement of work is necessary to assess if the $34.4M award represents fair market value for the services rendered.

Given the contract's duration and value, what are the potential risks of vendor lock-in and the long-term cost implications for the Department of Defense?

A contract of this magnitude and duration with a single vendor like IBM carries a significant risk of vendor lock-in, making it difficult and costly to switch providers later. This can lead to inflated prices over time as the government becomes dependent on the incumbent. Proactive planning for future IT needs and regular re-evaluation of the market are crucial to mitigate these long-term cost implications.

How effectively did the 'full and open competition' process ensure competitive pricing and the best value for taxpayers in this $34.4M award?

While 'full and open competition' is the preferred method, its effectiveness in ensuring competitive pricing depends on the specifics of the solicitation and the number of responsive bids received. Without access to bid data and the evaluation criteria used, it's challenging to definitively assess if the process yielded the best value. The benchmark price being close to the award price suggests some level of market awareness, but doesn't confirm optimal price discovery.

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: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY) (2)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $34,136,100

Exercised Options: $34,136,099

Current Obligation: $33,974,356

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline