DoD awards $155M contract to IBM for Wired Telecommunications Carriers, raising value and competition questions

Contract Overview

Contract Amount: $155,254,031 ($155.3M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-02

End Date: 2021-04-13

Contract Duration: 1,684 days

Daily Burn Rate: $92.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::CL,CT::IGF

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $155.3 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::CL,CT::IGF Key points: 1. Significant contract value of $155M awarded to a single vendor. 2. Full and open competition was utilized, but vendor concentration is noted. 3. Potential risks include vendor lock-in and price escalation over the contract duration. 4. The sector is IT/Telecommunications, a critical area for government operations.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure can lead to cost overruns if not managed tightly. Benchmarking against similar wired telecommunications contracts is difficult without more granular data on services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a broad solicitation. However, the award to a single large vendor like IBM may limit the diversity of solutions and potentially impact price discovery if follow-on work is concentrated.

Taxpayer Impact: Taxpayer funds are being utilized for essential telecommunications services. The effectiveness of competition in driving value for money will be key to minimizing taxpayer impact.

Public Impact

Ensures continued connectivity for Department of Defense operations. Supports critical infrastructure for national security. Potential for innovation in telecommunications services through vendor partnership.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure
Long contract duration
Single vendor award

Positive Signals

Full and open competition utilized
Essential service provision

Sector Analysis

This contract falls within the IT and Telecommunications sector, specifically Wired Telecommunications Carriers. Spending in this sector is substantial across government agencies, supporting essential communication networks. Benchmarks vary widely based on service scope and duration.

Small Business Impact

The data does not indicate any specific provisions or awards to small businesses under this contract. Large, established vendors like IBM typically dominate such large-scale telecommunications procurements.

Oversight & Accountability

Oversight will be crucial to ensure the Cost Plus Fixed Fee structure does not lead to excessive costs. Regular performance reviews and audits are necessary to maintain accountability and ensure value for taxpayer money.

Related Government Programs

Wired Telecommunications Carriers
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Potential for cost overruns due to CPFF structure
Risk of vendor lock-in
Long contract duration may not keep pace with technological advancements
Limited visibility into specific service details and pricing components

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $155.3 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::CL,CT::IGF

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 $155.3 million.

What is the period of performance?

Start: 2016-09-02. End: 2021-04-13.

What specific telecommunications services are covered under this contract, and how do they align with current technological needs?

The contract number 517110 indicates Wired Telecommunications Carriers. This typically includes services like voice, data, and internet connectivity via wired infrastructure. Understanding the specific service level agreements and technological capabilities is crucial to assess if the contracted services remain relevant and efficient given the rapid evolution of telecommunications technology.

How effectively did the 'full and open competition' process ensure competitive pricing for a Cost Plus Fixed Fee contract?

While 'full and open competition' theoretically maximizes the pool of potential bidders, the Cost Plus Fixed Fee (CPFF) structure inherently introduces cost uncertainty. The effectiveness of competition in this scenario hinges on the clarity of the statement of work, the rigor of the evaluation criteria, and the government's ability to negotiate a fair fixed fee. Without detailed evaluation data, it's difficult to ascertain the true price discovery achieved.

What are the long-term implications of a single vendor holding this significant contract for future telecommunications needs?

A single vendor holding a large, long-term contract can lead to vendor lock-in, potentially limiting future flexibility and innovation. It may also reduce the incentive for the vendor to aggressively reduce costs over time. Agencies should consider strategies for managing this relationship, including regular performance assessments and planning for potential future transitions to ensure continued access to competitive and advanced telecommunications solutions.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $155,254,031

Exercised Options: $155,254,031

Current Obligation: $155,254,031

Subaward Activity

Number of Subawards: 100

Total Subaward Amount: $83,210,202

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06D0010

IDV Type: IDC

Timeline