DoD awards $250M+ for wired telecommunications, with IBM as prime, over 5 years

Contract Overview

Contract Amount: $250,778,312 ($250.8M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-24

End Date: 2017-06-30

Contract Duration: 1,740 days

Daily Burn Rate: $144.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: CONTRACT AWARD FOR SOLICITATION W31P4Q-LITES IGF::OT::IGF

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $250.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: CONTRACT AWARD FOR SOLICITATION W31P4Q-LITES IGF::OT::IGF Key points: 1. Contract value exceeds $250 million, indicating a significant investment in telecommunications infrastructure. 2. IBM secured this award, highlighting its continued role in large-scale government IT services. 3. The contract spans nearly five years, suggesting a long-term need for these services. 4. Awarded as a delivery order, it implies a pre-existing contract vehicle was utilized. 5. The North American Industry Classification System (NAICS) code 517110 points to services related to wired telecommunications carriers. 6. The contract type is Time and Materials, which can pose cost control challenges if not managed diligently.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific service details or comparable contracts. However, a $250M+ award over five years for telecommunications services from a major provider like IBM suggests a substantial investment. The Time and Materials pricing model warrants careful monitoring to ensure value for money, as it can lead to cost overruns if not managed effectively. The relatively high number of bidders (8) in a full and open competition could indicate competitive pricing, but the final price is dependent on the specific services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. Eight bids were received, suggesting a healthy level of competition for this telecommunications services requirement. The presence of multiple bidders generally supports price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: The full and open competition and eight bids received are positive indicators for taxpayers, suggesting that the government likely received competitive pricing for these essential telecommunications services.

Public Impact

The Department of the Army benefits from enhanced wired telecommunications infrastructure and services. This contract supports critical communication networks essential for military operations and administrative functions. The geographic impact is likely widespread, supporting Army installations across various locations. The contract may have implications for the telecommunications workforce, both within the government and through subcontracting opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type can lead to cost overruns if not closely monitored.
Lack of specific service details makes it difficult to assess true value for money.
Reliance on a single prime contractor (IBM) for a large award could present vendor lock-in risks.

Positive Signals

Full and open competition with 8 bidders suggests a competitive award process.
Awarded by the Department of the Army, indicating a critical need for these services.
Long contract duration (nearly 5 years) provides stability for essential telecommunications services.

Sector Analysis

The wired telecommunications carriers sector is a mature industry focused on providing voice and data services over fixed lines. This contract falls within the broader IT and telecommunications services market, which is a significant area of federal spending. Government spending in this sector often focuses on maintaining and upgrading critical infrastructure to support operations, cybersecurity, and data transmission needs. Comparable spending benchmarks are difficult to ascertain without specific service details, but large-scale telecommunications awards are common across federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While IBM is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on IBM's specific subcontracting plan and the nature of the services required.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting officers and program managers. The Time and Materials nature of the award necessitates robust oversight to track labor hours, material costs, and ensure compliance with contract terms. Transparency is generally facilitated through contract award databases, but detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

General Services Administration (GSA) IT Schedule contracts
Defense Information Systems Agency (DISA) telecommunications contracts
Other agency-specific telecommunications service agreements

Risk Flags

Potential for cost overruns due to Time and Materials pricing
Risk of technology obsolescence over the contract's five-year duration
Need for robust oversight to ensure value for money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $250.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. CONTRACT AWARD FOR SOLICITATION W31P4Q-LITES IGF::OT::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 $250.8 million.

What is the period of performance?

Start: 2012-09-24. End: 2017-06-30.

What specific telecommunications services are covered under this contract?

The provided data indicates the contract falls under NAICS code 517110 (Wired Telecommunications Carriers) and was awarded as a Delivery Order. However, the specific services are not detailed. Typically, this could include installation, maintenance, and operation of wired communication networks, such as voice and data lines, fiber optics, and related infrastructure. Without further details, it's difficult to ascertain the exact scope, which could range from basic circuit provisioning to complex network integration and managed services.

How does the Time and Materials (T&M) pricing structure compare to other telecommunications contracts?

Time and Materials contracts, like this one, pay the contractor for direct labor hours at specified fixed hourly rates and for the actual cost of materials plus a percentage markup. This contrasts with fixed-price contracts, where the price is set regardless of the contractor's actual costs. T&M contracts can be advantageous when the scope of work is uncertain or likely to change. However, they carry a higher risk of cost overruns for the government if not managed with stringent oversight, as the contractor is incentivized to bill for more hours or materials. For telecommunications services, fixed-price or labor-hour contracts are often preferred for well-defined tasks to ensure better cost predictability.

What is IBM's track record with similar large-scale government telecommunications contracts?

International Business Machines Corporation (IBM) has a long and extensive history of securing and performing large-scale contracts with various U.S. federal agencies, including the Department of Defense. They are a major player in IT services, cloud computing, and telecommunications infrastructure. While specific details of past performance on contracts identical to this one are not provided, IBM's general track record suggests they possess the capability to manage complex, high-value projects. However, like any large contractor, past performance reviews and specific contract outcomes would need to be examined for a comprehensive assessment.

What are the potential risks associated with a nearly five-year contract duration for telecommunications services?

A contract duration of nearly five years for telecommunications services presents several potential risks. Technology in the telecommunications sector evolves rapidly; a five-year commitment could lead to the government being locked into outdated technology or infrastructure. Furthermore, market prices for telecommunications services can fluctuate, potentially making the contracted rates uncompetitive over time. There's also the risk of vendor lock-in, where switching providers becomes difficult or costly. Effective contract management, including regular reviews and potential for modifications or renegotiations, is crucial to mitigate these risks and ensure the government continues to receive optimal value and performance throughout the contract's life.

How does the $250M+ award size compare to typical federal spending on wired telecommunications?

An award of over $250 million for wired telecommunications services is substantial and indicates a significant, long-term requirement. Federal spending on telecommunications infrastructure and services is consistently high, driven by the need for secure, reliable, and high-capacity networks across all branches of government. While specific benchmarks vary widely based on agency needs, geographic scope, and the type of services procured (e.g., basic connectivity vs. managed network solutions), awards in the tens or hundreds of millions of dollars are not uncommon for large-scale, multi-year telecommunications requirements, especially within the Department of Defense.

Industry Classification

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

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: 8

Pricing Type: TIME AND MATERIALS (Y)

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: $385,012,470

Exercised Options: $250,778,312

Current Obligation: $250,778,312

Subaward Activity

Number of Subawards: 219

Total Subaward Amount: $147,265,985

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