IBM contract for Medicare Data Center services valued at $79M over 8 years

Contract Overview

Contract Amount: $79,056,189 ($79.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2000-04-06

End Date: 2008-03-31

Contract Duration: 2,916 days

Daily Burn Rate: $27.1K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: FIXED PRICE

Sector: IT

Official Description: MEDICARE DATA CENTER

Place of Performance

Location: SOUTHBURY, NEW HAVEN County, CONNECTICUT, 06488

State: Connecticut Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $79.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MEDICARE DATA CENTER Key points: 1. Contract awarded through a competitive delivery order, suggesting a degree of market vetting. 2. The fixed-price contract type may offer cost certainty for the government, but could limit flexibility. 3. Duration of nearly 8 years indicates a long-term need for these IT services. 4. The contract's value of $79M over its term suggests a significant investment in IT infrastructure. 5. Performance period spans from 2000 to 2008, reflecting IT needs of that era. 6. The specific Product Service Code (PSC) is not provided, limiting detailed analysis of IT services.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without more specific service details or comparable contracts from the same period. The total value of $79 million over approximately 8 years equates to roughly $9.875 million annually. This figure needs to be assessed against the scope of services provided for the Medicare Data Center, which likely involved significant IT infrastructure, software, and support. Without knowing the exact deliverables, it's difficult to definitively state if this represented excellent or questionable value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded as a 'COMPETITIVE DELIVERY ORDER' under a larger indefinite-delivery indefinite-quantity (IDIQ) contract, indicating that multiple vendors likely had the opportunity to bid. The presence of 3 bids suggests a reasonable level of competition for this specific delivery order. This competitive process is generally expected to drive prices towards market rates and encourage efficient service delivery.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by leveraging market forces to obtain services at a fair price.

Public Impact

Beneficiaries of this contract include Medicare beneficiaries who rely on the data center for accurate and accessible health insurance information. The services delivered are critical for the operation and maintenance of the Medicare Data Center, supporting vast amounts of sensitive health data. The geographic impact is national, as Medicare serves beneficiaries across the United States. Workforce implications include IT professionals employed by IBM and potentially subcontractors, contributing to the IT sector's employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to vendor lock-in and potential for cost increases if not managed effectively.
Fixed-price contracts can sometimes lead to scope creep issues if not clearly defined, potentially impacting value.
Reliance on a single large contractor for critical data center operations poses a risk if performance falters.

Positive Signals

Competitive award process suggests efforts to secure fair pricing and good performance.
Fixed-price structure provides budget predictability for the agency.
The contract's long duration implies a stable, ongoing need that the contractor is fulfilling.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on data center operations and management. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and upgrading federal IT infrastructure. Comparable spending benchmarks would typically involve other large-scale IT service contracts for data management, cloud services, or infrastructure support within federal agencies, often running into tens or hundreds of millions of dollars.

Small Business Impact

There is no indication from the provided data that this contract included specific small business set-asides. The prime contractor is IBM, a large corporation. While IBM may utilize small businesses for subcontracting, the data does not provide details on subcontracting plans or performance, making it difficult to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures would be defined in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract databases like FPDS-NG, which track federal spending. Inspector General oversight from HHS would also be applicable for potential fraud, waste, or abuse.

Related Government Programs

Medicare Modernization Act (MMA) IT Investments
Healthcare.gov IT Infrastructure
Federal Health IT Initiatives
CMS Data Management Systems
Large-Scale IT Service Contracts

Risk Flags

Missing Product Service Code (PSC) limits detailed service analysis.
Lack of specific performance metrics or SLAs makes value assessment difficult.
Contract duration could pose risks of vendor lock-in or technological obsolescence.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $79.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MEDICARE DATA CENTER

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $79.1 million.

What is the period of performance?

Start: 2000-04-06. End: 2008-03-31.

What specific IT services were included under this contract?

The provided data indicates the contract was for 'MEDICARE DATA CENTER' services awarded to 'INTERNATIONAL BUSINESS MACHINES CORPORATION'. While the specific Product Service Code (PSC) is missing, typical services for a data center contract of this magnitude and era would likely include hardware maintenance, software licensing and support, network infrastructure management, data storage and retrieval, system integration, security services, and potentially IT consulting. The contract type was 'FIXED PRICE', suggesting a defined scope of work with a set cost. The duration was 2916 days (approximately 8 years), and the award value was $79,056,189. The agency was the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services (CMS).

How does the $79 million contract value compare to similar IT data center contracts during the 2000-2008 period?

Comparing the $79 million value requires context on the specific services rendered. For the period 2000-2008, federal IT spending was substantial. Large-scale data center operations, maintenance, and modernization contracts could easily reach tens of millions of dollars annually. For instance, other agencies managing vast datasets (like the IRS or DoD) would have comparable contracts. Without a detailed breakdown of services (e.g., number of servers managed, data volume, specific software supported), a precise benchmark is difficult. However, $79 million over 8 years ($9.875M/year) for a critical function like the Medicare Data Center suggests a significant, but not necessarily outlier, investment for the time, reflecting the complexity and scale of managing national health insurance data.

What were the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for a data center services contract, SLAs would focus on uptime/availability (e.g., 99.99% for critical systems), response times for incident resolution, data backup and recovery success rates, system performance metrics (e.g., processing speed), and security compliance adherence. KPIs would measure the contractor's performance against these SLAs. The fixed-price nature of the contract implies that meeting these defined service levels was a condition of payment, though specific penalties or incentives related to performance are not detailed in the summary data.

What is IBM's track record with large federal IT contracts, particularly for health-related agencies?

IBM has a long and extensive history of securing and performing on large federal IT contracts across numerous agencies, including those in the health sector. For decades, IBM has been a major player in government IT services, providing solutions for infrastructure, software development, data analytics, and cybersecurity. Their work with agencies like the Department of Health and Human Services (HHS), Centers for Medicare and Medicaid Services (CMS), and others often involves managing critical systems and sensitive data. While specific performance details for every contract are not publicly available, IBM's continued success in winning significant federal contracts suggests a generally positive track record, though like any large contractor, they have likely faced challenges and scrutiny on specific projects over the years.

Were there any notable risks or challenges identified during the performance of this contract?

The provided summary data does not detail specific risks or challenges encountered during the performance of this contract. However, general risks associated with large, long-term IT data center contracts include technological obsolescence, cybersecurity threats, potential cost overruns if scope is not managed tightly (even in fixed-price contracts due to change orders), vendor performance issues, and difficulties in transitioning services upon contract completion. Given the sensitive nature of Medicare data, security breaches or data integrity issues would represent significant risks. The contract's duration (2000-2008) also predates many modern cybersecurity frameworks, potentially introducing unique vulnerabilities relevant to that era.

How did this contract contribute to the modernization or stability of the Medicare data infrastructure?

This contract was crucial for the ongoing operation and stability of the Medicare Data Center during a critical period of IT evolution. By outsourcing the management and maintenance of this vital infrastructure to IBM, CMS could ensure the continuous availability and integrity of the vast amounts of data required to administer the Medicare program. This likely supported essential functions such as beneficiary enrollment, claims processing, payment systems, and data reporting. While the contract itself may not represent a 'modernization' project in the sense of a complete overhaul, it provided the stable foundation upon which modernization efforts could be built or sustained, ensuring the reliability of services for millions of Americans.

Industry Classification

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

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIXED PRICE (J)

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: $93,965,575

Exercised Options: $79,056,189

Current Obligation: $79,056,189

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline