IBM awarded $10.8M Navy ERP support contract by GSA, highlighting IT services for defense

Contract Overview

Contract Amount: $10,843,906 ($10.8M)

Contractor: International Business Machines Corporation

Awarding Agency: General Services Administration

Start Date: 2023-05-10

End Date: 2026-05-09

Contract Duration: 1,095 days

Daily Burn Rate: $9.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OFFICE OF NAVAL RESEARCH ONR NAVY ENTERPRISE RESOURCE PLANNING SUPPORT

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

General Services Administration obligated $10.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: OFFICE OF NAVAL RESEARCH ONR NAVY ENTERPRISE RESOURCE PLANNING SUPPORT Key points: 1. Contract focuses on essential IT infrastructure support for the Navy's enterprise resource planning. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The fixed-price contract type shifts performance risk to the contractor, IBM. 4. Delivery order structure allows for phased implementation and flexibility. 5. This award falls within the broader category of IT services supporting federal agencies. 6. The duration of 1095 days indicates a medium-term commitment to the service provider.

Value Assessment

Rating: good

The contract value of $10.8 million over three years for enterprise resource planning support is within a reasonable range for large-scale IT services. Benchmarking against similar contracts for ERP system maintenance and support for major federal agencies suggests this pricing is competitive. The firm fixed-price structure further indicates that the government has negotiated a defined cost, with IBM bearing the risk of cost overruns. Without specific details on the scope of services, a precise per-unit cost comparison is difficult, but the overall value appears aligned with market expectations for such critical IT functions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The specific number of bidders is not provided, but the 'full and open' designation suggests a healthy level of interest and competition for this significant IT support contract. This process is designed to ensure the government receives optimal value by leveraging the widest possible pool of qualified contractors.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs through market forces and encourages innovation from a broader range of providers, ensuring the government secures services at competitive rates.

Public Impact

Naval personnel and operations will benefit from improved efficiency and data management through robust ERP support. The contract ensures the continued functionality and maintenance of critical enterprise resource planning systems for the Navy. Services are likely to be delivered primarily within the United States, supporting naval operations globally. The contract supports IT professionals within IBM, potentially including roles in system administration, development, and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the system becomes highly customized to IBM's proprietary solutions.
Reliance on a single contractor for critical ERP support could pose risks if performance issues arise.
Scope creep could lead to cost increases if not managed tightly, despite the fixed-price nature.

Positive Signals

IBM's established track record in large-scale IT projects provides a degree of confidence in execution.
The firm fixed-price contract structure incentivizes contractor efficiency and cost control.
Full and open competition suggests a competitive landscape that should drive quality and value.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on Computer Systems Design Services. The federal IT services market is substantial, with agencies continually investing in modernizing and maintaining their enterprise resource planning systems. These systems are crucial for managing financial, logistical, and personnel data. The $10.8 million award is moderate within the context of large federal IT contracts, but significant for the specific support function it addresses. Comparable spending often involves multi-year contracts for system integration, maintenance, and operational support.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like IBM suggests that the primary focus was on leveraging established capabilities for a complex IT service. This means that direct opportunities for small businesses may be limited unless IBM voluntarily includes them in its subcontracting plan. Further analysis would be needed to determine if any small business subcontracting goals were established post-award.

Oversight & Accountability

The contract is managed by the General Services Administration (GSA), which has established procurement and oversight processes. The firm fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Performance will be monitored against contract requirements, and delivery orders will be tracked. Transparency is generally maintained through federal procurement databases like FPDS. The specific Inspector General jurisdiction would typically be that of the Department of the Navy, overseeing the ultimate end-user agency.

Related Government Programs

Navy Enterprise Resource Planning (ERP) Program
Department of Defense IT Modernization Initiatives
GSA IT Schedule 70 Contracts
Federal Civilian ERP Systems

Risk Flags

Potential for performance issues impacting critical Navy operations.
Risk of vendor lock-in due to specialized IT support.
Data security and breach potential with sensitive defense information.
Dependency on a single contractor for essential ERP functions.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $10.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. OFFICE OF NAVAL RESEARCH ONR NAVY ENTERPRISE RESOURCE PLANNING SUPPORT

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $10.8 million.

What is the period of performance?

Start: 2023-05-10. End: 2026-05-09.

What is IBM's track record with similar large-scale federal ERP support contracts?

IBM has a long history of supporting large federal agencies with complex IT systems, including ERP solutions. They have been involved in major modernization efforts for various branches of the government, such as the Department of Defense and civilian agencies. Their experience often includes system implementation, maintenance, upgrades, and ongoing operational support. While specific details of past performance on contracts of identical scope and value are not provided here, IBM's general profile suggests a capacity to handle significant federal IT service requirements. Past performance evaluations, often available through government contract databases or agency reports, would offer more granular insights into their success rates, adherence to schedules, and client satisfaction on comparable projects.

How does the $10.8 million value compare to other federal ERP support contracts?

The $10.8 million value for a three-year delivery order for Navy ERP support is considered a moderate-sized contract within the federal IT services landscape. Larger federal ERP implementations and sustainment contracts can range from tens of millions to hundreds of millions of dollars over their lifecycles. For instance, major ERP system upgrades or full lifecycle support for agencies like the Army or IRS often involve significantly larger budgets. However, this contract's value is substantial enough to indicate a critical support function. When compared to similar delivery orders or task orders for specific ERP modules or support functions, this award appears competitive, especially given the full and open competition.

What are the primary risks associated with this contract for the Navy?

The primary risks associated with this contract involve potential performance issues, vendor lock-in, and the security of sensitive data. If IBM fails to deliver the required support effectively, it could disrupt critical Navy operations reliant on the ERP system. Vendor lock-in is a risk because the Navy might become overly dependent on IBM's specific expertise and proprietary tools, making future transitions to different vendors or systems difficult and costly. Furthermore, as this contract involves access to sensitive defense data, any security breaches or mismanagement of data by the contractor could have severe national security implications. The firm fixed-price nature mitigates some financial risk but does not eliminate performance or security risks.

How effective is the 'full and open competition' strategy for IT services like this?

The 'full and open competition' strategy is generally considered highly effective for procuring IT services, including ERP support. It maximizes the pool of potential bidders, thereby increasing the likelihood of receiving competitive pricing and innovative technical solutions. This approach allows the government to leverage market dynamics to its advantage, driving down costs and ensuring it selects the best value offering. For complex services like ERP support, where multiple vendors possess relevant capabilities, this method ensures that the government isn't limited to a pre-selected few. The main challenge lies in the potential for a more complex and lengthy solicitation and evaluation process compared to other contracting methods.

What is the historical spending trend for similar Navy ERP support services?

Historical spending on Navy ERP support services has been substantial and generally increasing as the Navy continues to modernize its IT infrastructure and enterprise systems. Agencies like the Navy often award multi-year contracts for ERP sustainment, maintenance, and upgrades, reflecting the long-term nature of these critical systems. Spending patterns typically show a consistent need for IT support services, with fluctuations based on major system overhauls, new technology integration, or shifts in strategic priorities. Awards in the multi-million dollar range for such services are common, reflecting the complexity and criticality of ERP systems to naval operations. Analyzing past contract awards from GSA and the Department of the Navy would reveal specific trends in vendor selection and contract values over time.

What are the implications of the 'delivery order' award type for this contract?

The 'delivery order' award type signifies that this contract is likely an indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar multiple-award contract vehicle, under which specific tasks or quantities of services are ordered as needed. For this $10.8 million contract, it means the total value represents the sum of anticipated orders over the contract's duration. This structure provides flexibility for the Navy to order services incrementally based on evolving requirements and budget availability, rather than committing to the full scope upfront. It allows for phased implementation and adaptation to changing needs. However, it also means the total spending might fluctuate, and the government is not obligated to purchase the full stated amount.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 47QFDA23Q0034

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $19,774,264

Exercised Options: $11,178,878

Current Obligation: $10,843,906

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $1,781,527

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 47QTCK18D0014

IDV Type: GWAC

Timeline