IBM's $148M IT services contract for Army logistics faces scrutiny over value and competition

Contract Overview

Contract Amount: $148,168,063 ($148.2M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2017-06-22

End Date: 2020-10-30

Contract Duration: 1,226 days

Daily Burn Rate: $120.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: IGF::OT::IGF LOGISTICS INFORMATION TECHNOLOGY ENTERPRISE SERVICES. IT SERVICES INCLUDE APPLICATION/SYSTEM DEVELOPMENT, ADMINISTRATION, OPERATIONS, MAINTENANCE AND SUSTAINMENT; SYSTEMS ANALYSIS, DESIGN AND DEVELOPMENT; PROGRAMMING AND CONFIGURATION MANAGEMENT; NETWORK SUPPORT; INFORMATION ASSURANCE ACTIVITIES AND PROGRAMS.

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $148.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF LOGISTICS INFORMATION TECHNOLOGY ENTERPRISE SERVICES. IT SERVICES INCLUDE APPLICATION/SYSTEM DEVELOPMENT, ADMINISTRATION, OPERATIONS, MAINTENANCE AND SUSTAINMENT; SYSTEMS ANALYSIS, DESIGN AND DEVELOPMENT; PROGRAMMING AND CONFIGURATION MANAGEMENT; NETWORK SUPPORT; IN… Key points: 1. The contract's value of $148 million over its period of performance raises questions about cost-effectiveness. 2. Full and open competition was utilized, but the number of bidders is not specified, impacting price discovery assessment. 3. The contract type (Time and Materials) can present cost control risks if not managed diligently. 4. Performance context is limited without specific metrics on the IT services delivered for Army logistics. 5. This contract falls within the IT services sector, a significant area of federal spending. 6. The contract was awarded to a large, established vendor, IBM, suggesting a focus on established capabilities.

Value Assessment

Rating: fair

Benchmarking the value of this $148 million contract is challenging without specific performance metrics or detailed service breakdowns. The Time and Materials (T&M) contract type, while flexible, can lead to higher costs if not closely monitored for scope creep and efficient labor utilization. Comparing it to similar large-scale IT services contracts for defense logistics would provide a clearer picture of whether the pricing reflects market rates for the services rendered. The lack of detailed cost breakdowns makes a precise value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for ensuring a broad range of potential offerors can participate. However, the specific number of bids received is crucial for understanding the true level of competition. A high number of bids typically drives down prices and encourages innovation, while a low number might indicate barriers to entry or a lack of market interest, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Full and open competition theoretically benefits taxpayers by fostering a competitive environment that should lead to better pricing and service quality. However, the ultimate benefit depends on the actual number of bids received and the effectiveness of the evaluation process.

Public Impact

The primary beneficiaries are the Department of the Army, receiving IT services to support its logistics operations. Services include application development, administration, operations, maintenance, systems analysis, network support, and information assurance. The geographic impact is likely concentrated within Army logistics command centers and operational areas. Workforce implications may include support for existing Army IT personnel and potential reliance on contractor staff for specialized skills.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Risk of cost overruns due to Time and Materials contract type if not managed stringently.
Potential for vendor lock-in if specialized knowledge becomes concentrated with IBM.
Dependence on a single large contractor for critical logistics IT infrastructure.
Challenges in measuring true value-for-money without detailed performance metrics.
Limited transparency on the number of bidders in the full and open competition.

Positive Signals

Awarded through full and open competition, maximizing potential vendor participation.
Contract awarded to a reputable and experienced IT services provider (IBM).
Scope of services covers a broad range of critical IT functions for logistics.
Contract duration provides a period of stable IT support for Army operations.

Sector Analysis

The IT services sector is a vast and critical component of federal spending, encompassing a wide array of support functions for government operations. This contract for logistics IT services fits within the broader category of IT support and modernization efforts. Comparable spending benchmarks in this area are often in the hundreds of millions or billions of dollars for large enterprise-wide systems. The market is characterized by a mix of large prime contractors like IBM and numerous smaller specialized firms.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to IBM, it is unlikely that small businesses would be primary subcontractors unless specifically required by the contract terms or through IBM's own subcontracting initiatives. The absence of small business set-aside provisions means that opportunities for small businesses to directly compete for this work were limited.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is enhanced by the contract being publicly awarded, but detailed oversight reports or performance reviews are not provided in the data. Accountability would be managed through contract performance reviews and adherence to the terms and conditions.

Related Government Programs

Army Logistics Modernization Programs
Department of Defense IT Enterprise Services
Federal Civilian IT Services Contracts
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Potential for cost overruns due to T&M contract type.
Lack of specific performance metrics makes value assessment difficult.
Unclear number of bidders limits assessment of competition effectiveness.
No indication of small business subcontracting goals or achievements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $148.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF LOGISTICS INFORMATION TECHNOLOGY ENTERPRISE SERVICES. IT SERVICES INCLUDE APPLICATION/SYSTEM DEVELOPMENT, ADMINISTRATION, OPERATIONS, MAINTENANCE AND SUSTAINMENT; SYSTEMS ANALYSIS, DESIGN AND DEVELOPMENT; PROGRAMMING AND CONFIGURATION MANAGEMENT; NETWORK SUPPORT; INFORMATION ASSURANCE ACTIVITIES AND PROGRAMS.

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 $148.2 million.

What is the period of performance?

Start: 2017-06-22. End: 2020-10-30.

What was the specific number of bids received for this full and open competition, and how did this impact pricing?

The provided data does not specify the exact number of bids received for the IGF::OT::IGF LOGISTICS INFORMATION TECHNOLOGY ENTERPRISE SERVICES contract. While it was awarded under 'FULL AND OPEN COMPETITION,' knowing the number of bidders is crucial for assessing the effectiveness of the competition. If only a few bids were received, it could suggest limited market interest or high barriers to entry, potentially leading to less competitive pricing. Conversely, a robust number of bids would typically indicate strong price discovery and a better outcome for taxpayers. Without this information, it's difficult to definitively state how the competition level influenced the final negotiated price.

How does the Time and Materials (T&M) contract structure for this $148M IT services contract compare to industry best practices for managing costs?

Time and Materials (T&M) contracts, like the one used for the IGF::OT::IGF LOGISTICS INFORMATION TECHNOLOGY ENTERPRISE SERVICES, offer flexibility but carry inherent risks for cost control. Best practices for managing T&M contracts involve stringent oversight, detailed tracking of labor hours and rates, and clear definitions of materials. For a contract of this magnitude ($148 million), agencies often implement specific clauses to cap costs, require detailed justifications for hours worked, and conduct regular audits. Comparing this contract's specific T&M clauses and oversight mechanisms to established government and industry best practices would reveal its potential for cost efficiency versus the risk of cost overruns.

What specific performance metrics were used to evaluate IBM's delivery of IT services under this contract?

The provided data for the IGF::OT::IGF LOGISTICS INFORMATION TECHNOLOGY ENTERPRISE SERVICES contract does not include specific performance metrics or Key Performance Indicators (KPIs) used to evaluate IBM's delivery. For IT services contracts of this scale, effective evaluation typically involves metrics related to system uptime, response times for support requests, application development cycle times, security compliance, and user satisfaction. Without these metrics, it is challenging to objectively assess the contractor's performance and determine if the government received adequate value for the $148 million expenditure.

What is the historical spending trend for similar IT logistics services within the Department of the Army?

The provided data focuses on a single contract and does not offer historical spending trends for IT logistics services within the Department of the Army. To establish such a trend, one would need to analyze spending data over multiple fiscal years for similar contract vehicles, including their scope, duration, and total value. Understanding historical spending patterns is crucial for benchmarking current contract values, identifying potential increases or decreases in demand, and assessing the overall efficiency of IT investments in Army logistics over time.

What is the potential impact of this contract on the broader IT services market, particularly for small and medium-sized businesses?

This contract, awarded to a large incumbent like IBM for $148 million, likely has a limited direct impact on small and medium-sized businesses (SMBs) in terms of prime contract opportunities, as it was not a small business set-aside. However, it could create indirect opportunities if IBM utilizes SMBs as subcontractors for specialized services. The concentration of such a large contract with a major vendor might also influence market dynamics by reinforcing the dominance of large players in the federal IT services space, potentially making it harder for smaller firms to compete for similar large-scale enterprise contracts.

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

Solicitation ID: W31P4Q17R0082

Offers Received: 1

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: $148,220,302

Exercised Options: $148,168,063

Current Obligation: $148,168,063

Subaward Activity

Number of Subawards: 104

Total Subaward Amount: $49,952,175

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