DHS Spends $111.5M on IBM Software Maintenance, Awarded to Merlin International Under Full and Open Competition

Contract Overview

Contract Amount: $111,550,000 ($111.5M)

Contractor: Merlin International, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2018-03-31

End Date: 2020-07-07

Contract Duration: 829 days

Daily Burn Rate: $134.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM SOFTWARE MAINTENANCE AND SUPPORT

Place of Performance

Location: VIENNA, FAIRFAX County, VIRGINIA, 22182

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $111.5 million to MERLIN INTERNATIONAL, INC. for work described as: IBM SOFTWARE MAINTENANCE AND SUPPORT Key points: 1. Significant spending on software maintenance highlights ongoing reliance on established vendors. 2. Merlin International secured the contract, indicating competitive dynamics within the IT services sector. 3. The contract's duration and value present a moderate financial risk if not managed effectively. 4. Spending falls within the 'Other Computer Related Services' category, requiring sector-specific benchmarks.

Value Assessment

Rating: good

The $111.5M contract value for IBM software maintenance and support appears reasonable given the duration and the nature of enterprise-level software agreements. Benchmarking against similar long-term support contracts for major software vendors would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' suggesting a competitive process was initiated, but specific sources may have been excluded. This method aims for price discovery but the exclusion criteria warrant scrutiny.

Taxpayer Impact: The competitive award process is intended to secure fair pricing, potentially saving taxpayer dollars compared to non-competitive awards. However, the specific nature of the exclusion could impact the ultimate cost-effectiveness.

Public Impact

Ensures continued operation and support for critical IBM software used by U.S. Customs and Border Protection. Supports national security and border control functions by maintaining essential IT infrastructure. Potential for cost savings through competitive bidding, benefiting taxpayers. Highlights the significant investment in maintaining legacy and enterprise software systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with IBM software.
Complexity of managing long-term software maintenance contracts.
Reliance on a single contractor (Merlin International) for this specific service.

Positive Signals

Awarded through full and open competition.
Firm Fixed Price contract type provides cost certainty.
Contract supports critical agency functions.

Sector Analysis

This contract falls under 'Other Computer Related Services,' a broad category. Spending on IT maintenance and support for large government agencies can range widely, but $111.5M over two years for enterprise software is substantial, reflecting the cost of maintaining complex systems.

Small Business Impact

The data indicates that neither the prime contractor (Merlin International) nor the award itself explicitly involved small business participation. Further investigation would be needed to determine if any subcontracting opportunities were extended to small businesses.

Oversight & Accountability

The contract was awarded by the Department of Homeland Security to U.S. Customs and Border Protection. Oversight would involve monitoring contract performance, adherence to terms, and ensuring continued operational effectiveness of the supported IBM software.

Related Government Programs

Other Computer Related Services
Department of Homeland Security Contracting
U.S. Customs and Border Protection Programs

Risk Flags

High contract value.
Duration of the contract.
Potential for vendor lock-in.
Exclusion of sources in competition.
Reliance on third-party maintenance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $111.5 million to MERLIN INTERNATIONAL, INC.. IBM SOFTWARE MAINTENANCE AND SUPPORT

Who is the contractor on this award?

The obligated recipient is MERLIN INTERNATIONAL, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $111.5 million.

What is the period of performance?

Start: 2018-03-31. End: 2020-07-07.

What specific IBM software is covered by this maintenance and support contract, and what is its criticality to CBP operations?

The specific IBM software is not detailed in the provided data. However, given the substantial value and duration, it likely pertains to core enterprise systems such as databases, middleware, or operating systems critical for U.S. Customs and Border Protection's mission. Understanding the software's role is key to assessing the value of the maintenance.

How did the 'Exclusion of Sources' in the full and open competition impact the final price and vendor selection?

The 'Exclusion of Sources' implies that while the competition was open, certain potential bidders were not considered. This could limit the competitive pool and potentially influence the final price. Analyzing the justification for exclusion and the number of actual bidders would reveal the extent of its impact on price discovery and overall value.

What is the long-term strategy for managing IBM software licenses and maintenance costs beyond this contract's expiration?

This contract represents a significant, but finite, expenditure. A long-term strategy should address whether CBP plans to continue with IBM software, explore alternative solutions, or potentially bring maintenance in-house. Proactive planning is essential to avoid future cost escalations or operational disruptions.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4 B INVERNESS CT E STE 100, ENGLEWOOD, CO, 80112

Business Categories: Category Business, Hispanic American Owned Business, Minority Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $111,550,000

Exercised Options: $111,550,000

Current Obligation: $111,550,000

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HSHQDC13D00021

IDV Type: IDC

Timeline