HHS awards $211.5M IBM Enterprise License Agreement for software, with a 5-year term

Contract Overview

Contract Amount: $211,548,701 ($211.5M)

Contractor: Four LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2018-12-31

End Date: 2023-12-30

Contract Duration: 1,825 days

Daily Burn Rate: $115.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM) ENTERPRISE LICENSE AGREEMENT (ELA)

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $211.5 million to FOUR LLC for work described as: IGF::OT::IGF INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM) ENTERPRISE LICENSE AGREEMENT (ELA) Key points: 1. The contract value represents a significant investment in enterprise software licensing. 2. Competition was full and open, suggesting a robust market for these services. 3. The fixed-price contract type helps mitigate cost overrun risks. 4. Performance is measured over a substantial five-year period. 5. This award falls within the software publishers industry sector. 6. The contract is managed by the Centers for Medicare and Medicaid Services.

Value Assessment

Rating: good

The contract value of $211.5 million over five years for an IBM Enterprise License Agreement (ELA) appears reasonable given the scope of enterprise software licensing. Benchmarking against similar large-scale software agreements is challenging without specific details on the software suite and user base. However, IBM ELAs typically cover a broad range of software products and services, making direct per-unit cost comparisons difficult. The fixed-price nature of the contract provides cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely invited to bid. The presence of a competitive process suggests that the government sought the best value and pricing available in the market. The specific number of bidders is not provided, but the designation implies a healthy level of market interest and engagement.

Taxpayer Impact: Full and open competition generally leads to more favorable pricing for taxpayers by fostering a competitive environment where vendors strive to offer their best terms.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) benefits from access to essential IBM software. This agreement supports critical IT infrastructure and operations within CMS. The contract's duration ensures continuity of software services and support. The impact is primarily on federal IT operations and the workforce managing these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with enterprise software agreements.
Ensuring continued relevance and support for the licensed software over the contract term.
Managing the complexity of a large enterprise license across various departments.

Positive Signals

Full and open competition suggests a competitive market and potentially good value.
Fixed-price contract provides cost predictability.
Long-term agreement allows for strategic IT planning and stability.

Sector Analysis

This contract falls within the Information Technology sector, specifically software licensing and publishers. The market for enterprise software, particularly from major vendors like IBM, is substantial, with numerous large-scale agreements awarded annually by federal agencies. This contract represents a significant portion of spending within this niche, enabling CMS to leverage a comprehensive suite of software solutions for its operations.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large enterprise license agreement with IBM, it is likely that the primary awardee is a large business. Further analysis would be needed to determine if any subcontracting opportunities exist for small businesses within the scope of this agreement.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and program managers within the Centers for Medicare and Medicaid Services. The fixed-price nature of the contract and the defined delivery order structure provide a framework for accountability. Transparency is generally maintained through contract databases and reporting, though specific performance metrics and oversight activities are not detailed here.

Related Government Programs

IBM Enterprise License Agreements
Federal Software Licensing
CMS IT Infrastructure
Department of Health and Human Services IT Spending

Risk Flags

Long-term dependency on a single vendor.
Potential for software obsolescence.
Complexity in managing enterprise-wide licenses.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $211.5 million to FOUR LLC. IGF::OT::IGF INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM) ENTERPRISE LICENSE AGREEMENT (ELA)

Who is the contractor on this award?

The obligated recipient is FOUR LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $211.5 million.

What is the period of performance?

Start: 2018-12-31. End: 2023-12-30.

What is the historical spending pattern for IBM software at CMS or HHS?

Analyzing historical spending patterns for IBM software at CMS or HHS is crucial for contextualizing the $211.5 million award. Without specific historical data, it's difficult to determine if this represents an increase, decrease, or stable level of investment. Agencies often consolidate software licenses through Enterprise License Agreements (ELAs) to achieve better pricing and streamline management compared to purchasing individual licenses. If previous spending was fragmented or higher, this ELA could represent cost savings. Conversely, if prior spending was significantly lower, this award might indicate an expansion of IBM software usage or a price increase. A detailed review of past contracts, including the scope of software and services procured, would be necessary to establish a clear trend and assess the value proposition of this current ELA.

How does the per-unit cost of this IBM ELA compare to other federal agencies or commercial entities?

Benchmarking the per-unit cost of this IBM Enterprise License Agreement (ELA) against other federal agencies or commercial entities is complex due to the nature of ELAs. These agreements often bundle a wide array of software products, support services, and user licenses, making direct per-unit comparisons difficult. Factors such as the specific IBM software products included (e.g., operating systems, databases, middleware, analytics tools), the number and type of licenses (e.g., perpetual, subscription, user-based, processor-based), and the negotiated discount levels significantly influence the overall cost. While the total award of $211.5 million over five years provides a headline figure, a true per-unit cost analysis would require a detailed breakdown of the software components and licensing metrics within the ELA, which is typically not publicly available. However, the fact that it was awarded under full and open competition suggests that the pricing was vetted against market alternatives.

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

The success of this IBM Enterprise License Agreement (ELA) is likely measured through a combination of performance indicators focused on software availability, support responsiveness, and adherence to licensing terms. Key Performance Indicators (KPIs) would typically include metrics such as software uptime and availability, response times for technical support incidents, resolution times for reported issues, and compliance with the terms of the license agreement, such as usage limits or permitted software deployment. The Centers for Medicare and Medicaid Services (CMS) would establish these KPIs in the contract's performance work statement. Regular performance reviews between CMS and IBM would assess performance against these KPIs, with potential remedies or incentives tied to meeting or failing to meet agreed-upon standards. Ensuring continuous access to critical software and timely support is paramount for CMS operations.

What is IBM's track record with the Centers for Medicare and Medicaid Services (CMS) or HHS?

IBM has a long-standing history of providing technology solutions and services to government agencies, including the Department of Health and Human Services (HHS) and its various operating divisions like the Centers for Medicare and Medicaid Services (CMS). Their track record typically involves supplying a wide range of hardware, software, and IT consulting services. For CMS, IBM has likely been involved in supporting critical systems related to healthcare data management, claims processing, and program administration. While specific contract details and performance reviews are often proprietary, IBM's continued presence as a major technology vendor suggests a generally satisfactory relationship, characterized by the provision of enterprise-level solutions. However, like any large vendor, there may have been past challenges or areas for improvement that would be reflected in contract performance data and agency feedback.

What are the potential risks associated with a long-term, high-value enterprise software license agreement?

Long-term, high-value enterprise software license agreements like this IBM ELA carry several potential risks. One primary risk is technological obsolescence; the software landscape evolves rapidly, and the licensed software might become outdated or superseded by newer technologies before the contract term ends, potentially leading to underutilization or the need for costly upgrades outside the ELA. Another risk is vendor lock-in, where the agency becomes heavily reliant on a single vendor's ecosystem, making it difficult and expensive to switch to alternative solutions in the future. Cost management is also a concern; while fixed-price contracts offer predictability, the initial pricing might not reflect future market shifts, or the agency might pay for software capacity it doesn't fully utilize. Furthermore, ensuring effective contract management and oversight to guarantee that the vendor meets performance obligations and provides adequate support throughout the contract's duration is critical.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

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: 2303 DULLES STATION BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $211,548,701

Exercised Options: $211,548,701

Current Obligation: $211,548,701

Actual Outlays: $55,095,531

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS35F0312U

IDV Type: FSS

Timeline