DoD's $19.5M IBM Consulting Contract: A Deep Dive into Administrative Management Services

Contract Overview

Contract Amount: $19,547,849 ($19.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2007-08-22

End Date: 2013-07-31

Contract Duration: 2,170 days

Daily Burn Rate: $9.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LABOR

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20310

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $19.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: LABOR Key points: 1. Analysis of IBM's administrative management consulting services for the Department of the Army. 2. Contract awarded under full and open competition, suggesting a broad market search. 3. The firm fixed-price contract type aims to control costs and provide predictable spending. 4. A duration of 2170 days (nearly 6 years) indicates a long-term strategic engagement. 5. The contract's value of $19.5M over its lifespan warrants scrutiny for efficiency. 6. Focus on administrative management suggests support for internal operations rather than direct program delivery.

Value Assessment

Rating: fair

The contract value of $19.5 million over nearly six years averages to approximately $3.25 million annually. Without specific deliverables or performance metrics, it's challenging to benchmark this against similar administrative management consulting contracts. However, the firm fixed-price structure suggests the government sought to cap costs. Further analysis would require understanding the scope of services provided and comparing IBM's rates to industry standards for comparable expertise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that the Department of the Army solicited bids from all responsible sources. This approach typically fosters a competitive environment, potentially leading to better pricing and service offerings. The fact that it was competed broadly suggests that multiple firms were likely considered, though the number of actual bidders is not specified.

Taxpayer Impact: A full and open competition generally benefits taxpayers by encouraging a wider range of potential providers to offer their services, which can drive down costs and improve the quality of services received.

Public Impact

The primary beneficiaries are likely internal administrative functions within the Department of the Army, leading to improved operational efficiency. Services delivered focus on administrative management, potentially encompassing areas like process improvement, organizational design, and strategic planning support. The geographic impact is concentrated within the District of Columbia, where the contract is registered. Workforce implications may involve the integration of IBM's consulting expertise with existing Army personnel to enhance capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the true value and impact of the consulting services.
The long duration of the contract could lead to vendor lock-in or a decrease in responsiveness over time if not managed proactively.
Potential for scope creep if the administrative management needs evolve significantly beyond the initial contract's intent.

Positive Signals

Awarded through full and open competition, suggesting a robust vetting process for potential contractors.
Firm fixed-price contract type provides cost certainty for the government.
IBM is a large, established contractor with a significant track record in government services, implying a degree of reliability.

Sector Analysis

Administrative Management and General Management Consulting Services (NAICS 541611) represent a significant segment of the professional services market. This contract falls within the broader professional, scientific, and technical services sector. Spending in this area often supports government agencies in optimizing their operations, implementing new strategies, and managing complex organizational structures. Benchmarking this contract's value would require comparing it to similar engagements for large federal agencies, considering the specific scope of consulting provided.

Small Business Impact

The contract was not set aside for small businesses, and IBM is a large corporation. There is no explicit indication of subcontracting plans for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific contract appears minimal, though IBM's overall subcontracting practices could involve small businesses on other projects.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of the Army. The firm fixed-price nature provides some cost control. Transparency is generally facilitated through contract databases like FPDS. Accountability would be tied to the successful delivery of agreed-upon consulting services as defined in the contract's statement of work. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Administrative Support Contracts
Federal Management Consulting Services
Army IT and Management Support Contracts
Professional Services Acquisition

Risk Flags

Long contract duration may lead to evolving needs not fully captured.
Lack of specific performance metrics hinders objective value assessment.
Potential for vendor lock-in over the contract's extended term.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. LABOR

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 $19.5 million.

What is the period of performance?

Start: 2007-08-22. End: 2013-07-31.

What specific administrative management and general management consulting services did IBM provide under this contract?

The provided data indicates the contract falls under NAICS code 541611 (Administrative Management and General Management Consulting Services). While the specific services are not detailed, this category typically includes activities such as strategic planning, organizational design, business process re-engineering, performance management, and executive-level advisory services. For the Department of the Army, these services could have been aimed at improving the efficiency of administrative functions, optimizing resource allocation, enhancing decision-making processes, or supporting major organizational transformations. Without access to the contract's statement of work (SOW), the precise nature of IBM's contributions remains general.

How does the $19.5 million contract value compare to typical spending on administrative consulting by the Department of the Army?

Benchmarking the $19.5 million value requires context regarding the duration and scope. Spread over nearly six years (2170 days), the average annual spend is approximately $3.25 million. The Department of the Army, as a massive organization, engages in numerous consulting contracts across various domains. To assess if this is typical, one would need to compare it against other administrative management consulting contracts of similar duration and complexity awarded to large prime contractors by the Army or other large federal agencies. Given IBM's status as a major federal contractor, this value is plausible for a long-term, broad-scope engagement, but a definitive comparison would necessitate access to a wider dataset of comparable contracts.

What are the potential risks associated with a nearly six-year firm fixed-price contract for consulting services?

A significant risk with long-term contracts is the potential for the contractor's understanding of the agency's needs to become outdated, or for the agency's requirements to evolve beyond the original scope, leading to inefficiencies or the need for costly modifications. For a firm fixed-price contract, if the scope is not meticulously defined and managed, the contractor might deliver only the minimum required, or conversely, the government might pay for services that are no longer critical. Another risk is vendor lock-in, where the agency becomes overly reliant on the incumbent contractor, making it difficult to switch providers or bring services in-house later. Proactive contract management, regular performance reviews, and clear communication channels are crucial to mitigate these risks.

What is IBM's track record with the Department of Defense and other federal agencies for similar services?

IBM has a long and extensive history of contracting with the Department of Defense (DoD) and other federal agencies, providing a wide array of services including IT, cloud computing, cybersecurity, and management consulting. Their track record generally indicates experience in handling large, complex government contracts. Specific to administrative management consulting, IBM has supported various agencies in optimizing operations and implementing strategic initiatives. However, like any large contractor, their performance can vary across different contracts and agencies. A thorough assessment would involve reviewing past performance evaluations and any documented issues or successes related to similar engagements within the DoD.

How does the 'full and open competition' award method impact the value proposition for taxpayers?

Awarding a contract through 'full and open competition' is generally considered beneficial for taxpayers. This method ensures that the government solicits proposals from all responsible sources, maximizing the pool of potential bidders. Increased competition typically drives down prices as contractors vie for the award. It also allows the government to select the offer that provides the best overall value, considering factors beyond just price, such as technical approach, past performance, and management capability. This process helps ensure that taxpayer funds are used efficiently and effectively by securing competitive rates and high-quality services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91WAW07R0055

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12902 FEDERAL SYSTEMS PAR, FAIRFAX, VA, 22033

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,747,849

Exercised Options: $19,747,849

Current Obligation: $19,547,849

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline