IBM Mainframe Software Maintenance contract awarded to IBM for over $24.6M, spanning 5 years

Contract Overview

Contract Amount: $24,693,323 ($24.7M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Agriculture

Start Date: 2020-03-31

End Date: 2025-03-30

Contract Duration: 1,825 days

Daily Burn Rate: $13.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM MAINFRAME SOFTWARE MAINTENANCE

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64114

State: Missouri Government Spending

Plain-Language Summary

Department of Agriculture obligated $24.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IBM MAINFRAME SOFTWARE MAINTENANCE Key points: 1. Value for money assessed through firm-fixed-price structure, aiming for cost certainty. 2. Competition dynamics indicate a full and open competition, suggesting potential for competitive pricing. 3. Risk indicators include contract duration and reliance on a single vendor for critical software. 4. Performance context is tied to essential mainframe software maintenance for USDA operations. 5. Sector positioning places this within IT services, specifically custom computer programming.

Value Assessment

Rating: good

The contract's firm-fixed-price nature provides cost predictability for the Department of Agriculture. While specific benchmarking data for this exact IBM mainframe software maintenance is not publicly detailed, the total award of over $24.6 million over five years suggests a significant investment. Comparing this to similar long-term, mission-critical software maintenance contracts, the pricing appears within a reasonable range, assuming the scope of services is comprehensive and addresses the full spectrum of IBM mainframe software needs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The data indicates one award, but the competition type suggests that multiple bids were likely considered. A full and open competition generally fosters a more competitive environment, which can lead to better pricing and terms for the government compared to sole-source or limited competitions.

Taxpayer Impact: A full and open competition provides taxpayers with assurance that the government sought the best possible value by allowing a wide range of vendors to bid, potentially driving down costs through market forces.

Public Impact

The Department of Agriculture benefits from continued operational support of its critical mainframe systems. Essential IT services are maintained, ensuring the stability of core government functions. The contract's impact is primarily national, supporting federal IT infrastructure. Workforce implications may include the need for specialized IT personnel to manage and maintain these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential vendor lock-in due to specialized mainframe software.
Long-term reliance on a single provider for critical maintenance.
Risk of price increases upon contract renewal if competition is not re-established.

Positive Signals

Firm-fixed-price contract provides budget certainty.
Full and open competition suggests a competitive bidding process.
Long-term award allows for stable planning and resource allocation.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on software maintenance for mainframe systems. Mainframe software maintenance is a critical, albeit niche, segment of the IT services market, essential for many large organizations, including government agencies, that rely on these robust systems for core operations. The market for such services is often dominated by the original software vendors due to the specialized nature of the technology. Comparable spending benchmarks for mainframe software maintenance can vary widely based on the specific software, vendor, and support level required.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary contractor is IBM, a large corporation, suggesting that any subcontracting opportunities would likely be managed through IBM's broader procurement processes.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Agriculture's contracting officers and program managers. Accountability measures are embedded within the firm-fixed-price contract terms, requiring IBM to deliver specified maintenance services. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

IBM Software Maintenance Contracts
Federal IT Infrastructure Support
Mainframe Modernization Programs
Custom Computer Programming Services

Risk Flags

Long-term reliance on a single vendor.
Potential for cost escalation upon renewal.
Dependency on legacy technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $24.7 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IBM MAINFRAME SOFTWARE MAINTENANCE

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Office of the Chief Financial Officer).

What is the total obligated amount?

The obligated amount is $24.7 million.

What is the period of performance?

Start: 2020-03-31. End: 2025-03-30.

What is the historical spending pattern for IBM mainframe software maintenance at the Department of Agriculture?

Analyzing historical spending for IBM mainframe software maintenance at the Department of Agriculture (USDA) requires examining past contract awards and modifications. While this specific contract (ID: [Contract ID if available]) represents a significant award of over $24.6 million from March 2020 to March 2025, it is one piece of a larger spending picture. Previous contracts for similar services would indicate the USDA's ongoing reliance on IBM mainframe technology and the associated maintenance costs. Trends might show increasing or decreasing expenditures based on system consolidation, modernization efforts, or changes in software licensing. Without access to a comprehensive database of all prior USDA contracts for this specific service, a precise historical trend analysis is challenging. However, the duration and value of this current award suggest a consistent need and investment in maintaining these critical systems over an extended period.

How does the pricing of this contract compare to other federal agencies using similar IBM mainframe software?

Benchmarking the pricing of this IBM mainframe software maintenance contract against other federal agencies requires access to comparable contract data. The total award of over $24.6 million over five years, at an average of approximately $4.9 million per year, provides a baseline. However, direct comparisons are complex due to variations in software versions, the scope of maintenance services (e.g., 24/7 support vs. standard business hours), the number of systems covered, and negotiated discount levels. Agencies with large mainframe footprints, such as the Social Security Administration or the Department of Defense, might have similar contracts. If those contracts were also awarded under full and open competition and have similar terms, they could serve as benchmarks. The firm-fixed-price nature of this contract aims for cost certainty, but without detailed service level agreements and specific software entitlements, a precise per-unit cost comparison is difficult. Generally, large, long-term maintenance agreements with established vendors like IBM are significant investments.

What are the key risks associated with relying on a single vendor for critical mainframe software maintenance?

Relying on a single vendor, such as IBM, for critical mainframe software maintenance presents several key risks. Firstly, there's the risk of vendor lock-in, where the agency becomes highly dependent on the vendor's proprietary technology and pricing structure, making it difficult and costly to switch to alternative solutions or competitors. Secondly, pricing power can shift towards the vendor, especially upon contract renewal, potentially leading to significant cost increases if competitive pressures are not maintained. Thirdly, the vendor's business strategy or financial health could impact service delivery; if IBM were to deprioritize or discontinue certain mainframe software lines, the USDA could face operational disruptions. Lastly, innovation might be constrained, as the agency's ability to adopt new technologies or features would be largely dictated by the vendor's roadmap. Mitigating these risks often involves robust contract management, exploring open-source alternatives where feasible, and maintaining strong negotiation leverage.

What is the potential impact of this contract on the modernization of the USDA's IT infrastructure?

This contract for IBM mainframe software maintenance has a dual potential impact on the modernization of the USDA's IT infrastructure. On one hand, it ensures the continued stability and operational integrity of existing critical systems, which is foundational. Without reliable maintenance, modernization efforts could be jeopardized by system failures. On the other hand, long-term, substantial investments in maintaining legacy mainframe systems can sometimes divert resources (both financial and human capital) away from investing in newer, cloud-based, or more agile technologies that are central to modernization. The USDA must balance the necessity of maintaining current operations with the strategic imperative to modernize. This contract's duration (five years) suggests a continued reliance on mainframes during this period, implying that modernization efforts might focus on integrating with or gradually migrating away from these systems rather than an immediate replacement.

How does the 'Custom Computer Programming Services' NAICS code apply to mainframe software maintenance?

The North American Industry Classification System (NAICS) code 541511, 'Custom Computer Programming Services,' is applied to this contract because mainframe software maintenance, particularly when provided by the original vendor or a specialized third party, often involves more than just passive support. It can encompass activities like applying patches, developing workarounds for known issues, providing technical expertise to integrate the software with other systems, and potentially offering customized configurations or minor enhancements to ensure the software functions optimally within the agency's specific environment. While the core software may be off-the-shelf, the ongoing maintenance, troubleshooting, and ensuring its compatibility and performance within a unique operational context often require a level of custom service and specialized knowledge that aligns with the 'custom programming' definition, especially when it involves deep technical intervention and problem-solving.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 NEW ORCHARD RD, ARMONK, NY, 10504

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

Financial Breakdown

Contract Ceiling: $32,422,443

Exercised Options: $24,693,323

Current Obligation: $24,693,323

Actual Outlays: $24,693,323

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS35F110DA

IDV Type: FSS

Timeline