Treasury renews IBM software contract with ESCGOV, INC. for $68.5M over 4 years

Contract Overview

Contract Amount: $68,464,961 ($68.5M)

Contractor: Escgov, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2020-06-30

End Date: 2024-06-30

Contract Duration: 1,461 days

Daily Burn Rate: $46.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM SOFTWARE RENEWAL

Place of Performance

Location: PARKERSBURG, WOOD County, WEST VIRGINIA, 26106

State: West Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $68.5 million to ESCGOV, INC. for work described as: IBM SOFTWARE RENEWAL Key points: 1. Contract value represents a significant investment in essential software licensing and support. 2. Competition dynamics for this renewal will be crucial to assess value for money. 3. Potential risks include vendor lock-in and the need for ongoing software updates. 4. Performance context is tied to the continued operation of critical fiscal service functions. 5. This contract falls within the broader IT services sector, supporting government operations. 6. The firm-fixed-price structure aims to provide cost certainty for the duration of the contract.

Value Assessment

Rating: fair

Benchmarking this IBM software renewal against similar contracts is challenging without specific service details. However, the total value of $68.5 million over four years suggests a substantial commitment. The Bureau of the Fiscal Service's reliance on IBM software implies a need for specialized support and licensing, which can command premium pricing. Further analysis would require comparing the per-unit costs of licenses and support services to market rates or previous contract periods to determine if the pricing reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. With two bidders identified, the level of competition appears moderate. This suggests that while the government sought competitive proposals, the market for this specific IBM software support and licensing may be concentrated among a limited number of specialized providers. The presence of two bidders provides some basis for price negotiation and discovery.

Taxpayer Impact: A full and open competition, even with a limited number of bidders, generally benefits taxpayers by encouraging competitive pricing and ensuring that the government secures the best possible value for its investment.

Public Impact

Federal employees within the Bureau of the Fiscal Service benefit from access to necessary IBM software for their daily operations. The contract ensures the continued availability of critical financial management and reporting software. The geographic impact is primarily national, supporting the Treasury's nationwide functions. Workforce implications include ensuring IT staff have the tools and support needed to maintain these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost increases in future renewals if competition diminishes.
Dependence on a single software vendor (IBM) can limit flexibility and introduce long-term cost escalation.
Ensuring adequate technical support and timely updates for the software is critical to avoid operational disruptions.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Firm-fixed-price contract type provides cost certainty for the government.
The contract duration of four years allows for stable planning and execution of fiscal service operations.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on software licensing and maintenance. The market for enterprise software, particularly from major vendors like IBM, is characterized by high initial investment, ongoing support costs, and often a degree of vendor lock-in. Government spending in this area is substantial, supporting a wide range of critical functions. Comparable spending benchmarks would involve analyzing other large-scale software renewals across federal agencies for similar enterprise solutions.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the direct impact on small businesses through set-asides is minimal. However, the prime contractor, ESCGOV, INC., may engage small businesses as subcontractors for specialized services or support, though this information is not detailed in the provided data. The overall impact on the small business ecosystem would depend on ESCGOV's subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily reside with the Bureau of the Fiscal Service's contracting officers and program managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and approving payments. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Federal Information Technology Acquisition Reform Act (FITARA)
IT Software Licensing and Maintenance Contracts
Department of the Treasury IT Spending
Bureau of the Fiscal Service Operations

Risk Flags

Potential for vendor lock-in
Reliance on a single software vendor
Need for ongoing, potentially costly, software updates and support

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $68.5 million to ESCGOV, INC.. IBM SOFTWARE RENEWAL

Who is the contractor on this award?

The obligated recipient is ESCGOV, INC..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Bureau of the Fiscal Service).

What is the total obligated amount?

The obligated amount is $68.5 million.

What is the period of performance?

Start: 2020-06-30. End: 2024-06-30.

What is the historical spending trend for IBM software renewals within the Bureau of the Fiscal Service?

Analyzing historical spending on IBM software renewals within the Bureau of the Fiscal Service is crucial for understanding cost trends and identifying potential escalations. Without access to prior contract data, it's difficult to provide a precise trend. However, renewals of enterprise software licenses and support typically see incremental price increases year-over-year due to factors like inflation, enhanced software features, and vendor pricing strategies. If this $68.5 million contract represents a significant jump from previous periods, it would warrant closer scrutiny to ensure the increase is justified by expanded scope or market conditions rather than simply vendor leverage. A detailed review of at least the last three to five years of spending on similar IBM software would be necessary to establish a reliable trend.

How does the per-unit cost of this IBM software compare to market rates for similar enterprise solutions?

Determining the per-unit cost comparison for this IBM software renewal requires breaking down the total contract value by the number of licenses, user types, and specific software modules being procured. The provided data does not offer this granular detail. However, the Bureau of the Fiscal Service, as a large government entity, likely negotiates volume discounts. To benchmark effectively, one would need to compare the effective per-user or per-instance cost against publicly available pricing for comparable IBM software or similar enterprise solutions from competitors like Oracle, SAP, or Microsoft, adjusted for the scale of the deployment and the level of support included. If the per-unit cost significantly exceeds market benchmarks, it could indicate an issue with pricing or a lack of competitive pressure.

What are the key performance indicators (KPIs) used to measure the success of this IBM software contract?

Key Performance Indicators (KPIs) for an IBM software renewal contract typically focus on service availability, response times for support, and successful implementation of updates or patches. For the Bureau of the Fiscal Service, critical KPIs might include software uptime percentages (e.g., 99.9% availability), adherence to agreed-upon service level agreements (SLAs) for technical support response and resolution times, and the successful deployment of security patches within defined windows to mitigate vulnerabilities. Performance would also be assessed based on the software's ability to support the agency's core financial operations without disruption. Regular performance reviews between the agency and ESCGOV, INC. would track these KPIs.

What is the track record of ESCGOV, INC. in managing large federal IT software contracts?

ESCGOV, INC.'s track record in managing large federal IT software contracts is a critical factor in assessing the risk associated with this $68.5 million renewal. Information on their past performance, particularly with IBM software or similar enterprise solutions for agencies of the Treasury's size and complexity, would be essential. A review of their contract history, including past performance evaluations (e.g., CPARS reports), on-time delivery rates, and any history of contract disputes or performance issues, would provide insight into their capabilities. Positive indicators would include a history of successful contract completions, strong client satisfaction, and demonstrated expertise in managing complex software environments.

What are the potential risks associated with vendor lock-in for this IBM software contract?

Vendor lock-in is a significant risk with enterprise software contracts, especially those involving proprietary technology like IBM's. This contract renewal could deepen the Bureau of the Fiscal Service's reliance on IBM's ecosystem, making it technically difficult and financially costly to switch to alternative software solutions in the future. This dependence can reduce the government's bargaining power during future negotiations, potentially leading to higher prices. Mitigating this risk involves actively exploring open-source alternatives, ensuring contract terms allow for data portability, and conducting periodic market research to stay informed about competing technologies and their potential integration.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Commercial and Industrial Machinery and Equipment Rental and Leasing › Office Machinery and Equipment Rental and Leasing

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 8300 GREENSBORO DR, MC LEAN, VA, 22102

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $73,823,577

Exercised Options: $68,464,961

Current Obligation: $68,464,961

Actual Outlays: $68,464,961

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS35F0363P

IDV Type: FSS

Timeline