DOJ's $16M IBM contract for accounting support shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $16,023,707 ($16.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Justice

Start Date: 2010-02-26

End Date: 2013-02-25

Contract Duration: 1,095 days

Daily Burn Rate: $14.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: LABOR HOURS

Sector: Other

Official Description: OCFO ACCOUNTING - IBM TO PROVIDE MANAGEMENT ACCOUNTING AND BUDGET SUPPORT SERVICE FOR FIVE YEARS.

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Justice obligated $16.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: OCFO ACCOUNTING - IBM TO PROVIDE MANAGEMENT ACCOUNTING AND BUDGET SUPPORT SERVICE FOR FIVE YEARS. Key points: 1. Contract awarded to IBM for accounting and budget support services. 2. Duration of the contract is three years. 3. The contract was awarded using full and open competition. 4. The contract type is labor hours, indicating flexibility in service delivery. 5. The contract value is approximately $16 million. 6. The North American Industry Classification System (NAICS) code is 541219, indicating 'Other Accounting Services'.

Value Assessment

Rating: fair

The contract value of $16 million over three years for accounting and budget support services appears reasonable given the scope. Benchmarking against similar contracts for management accounting and budget support is challenging without more specific service details. However, the pricing structure, based on labor hours, allows for flexibility but requires careful monitoring to ensure cost-effectiveness. The absence of a specific task order number or detailed breakdown 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, suggesting that multiple vendors had the opportunity to bid. However, the provided data does not specify the number of bidders or the evaluation process. A full and open competition is generally expected to yield competitive pricing and a wider range of solutions. The specific details of the bidding process would be crucial to fully assess the effectiveness of the competition.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and a wider selection of qualified vendors due to the full and open competition approach.

Public Impact

The Office of Justice Programs within the Department of Justice benefits from enhanced management accounting and budget support. Improved financial management and budget execution are expected outcomes. The services delivered are critical for the operational efficiency of the agency. The geographic impact is primarily within the Department of Justice's operational areas, likely concentrated in Virginia where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess contractor performance objectively.
The labor hour contract type can lead to cost overruns if not managed diligently.
Limited information on specific deliverables hinders a comprehensive risk assessment.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
IBM is a large, established contractor with significant experience in government services.
The contract duration of three years provides stability for essential accounting services.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically accounting services. The market for government accounting and financial management support is substantial, with numerous firms offering specialized services. This contract with IBM for $16 million represents a moderate investment in essential administrative functions for a significant federal agency. Comparable spending in this sub-sector can vary widely based on agency size and complexity of financial operations.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from this particular award. The primary contractor, IBM, is a large business.

Oversight & Accountability

Oversight for this contract would typically reside within the Department of Justice's Office of the Chief Financial Officer (OCFO) and the Office of Justice Programs. Accountability measures would be tied to the contract's performance work statement and deliverables. Transparency is generally facilitated through contract databases like FPDS, though detailed performance reports are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Justice Financial Management Services
Federal Budgeting and Planning Services
Government Accounting and Auditing Services
Management Consulting Services for Federal Agencies

Risk Flags

Contract awarded to a single large vendor.
Limited information on specific performance metrics.
Labor hour contract type requires diligent oversight to control costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $16.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. OCFO ACCOUNTING - IBM TO PROVIDE MANAGEMENT ACCOUNTING AND BUDGET SUPPORT SERVICE FOR FIVE YEARS.

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Justice (Office of Justice Programs).

What is the total obligated amount?

The obligated amount is $16.0 million.

What is the period of performance?

Start: 2010-02-26. End: 2013-02-25.

What is the specific nature of the 'management accounting and budget support services' provided by IBM?

The provided data is limited and does not detail the specific services rendered under this contract. 'Management accounting and budget support' typically encompasses a range of activities including financial planning, budgeting, cost accounting, performance measurement, financial reporting, and advisory services related to financial management. For the Department of Justice's Office of Justice Programs, these services likely support the agency's complex financial operations, grant management, and resource allocation. A more granular understanding of the Statement of Work (SOW) would be necessary to ascertain the precise nature and scope of IBM's responsibilities.

How does the $16 million contract value compare to similar accounting support contracts within the federal government?

Benchmarking the $16 million contract value requires comparison with contracts for similar accounting and budget support services across federal agencies. Without specific details on the scope of work, duration, and service levels, a direct comparison is difficult. However, for a three-year contract supporting a major component of the Department of Justice, this value appears within a reasonable range for specialized financial management support. Larger agencies or those with more complex financial systems might award contracts in the tens or hundreds of millions, while smaller agencies might have contracts in the low millions. The value suggests a significant, but not exceptionally large, engagement.

What are the key performance indicators (KPIs) used to evaluate IBM's performance under this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. Typically, contracts for accounting and budget support services would include KPIs related to accuracy of financial reporting, timeliness of budget submissions, adherence to financial regulations, responsiveness to inquiries, and overall client satisfaction. The performance work statement (PWS) or SOW would outline these metrics. Effective oversight would involve regular performance reviews against these established KPIs to ensure IBM is meeting its contractual obligations and delivering value.

What is the historical spending pattern for accounting and budget support services within the Department of Justice?

The provided data focuses on a single contract awarded in 2010. To understand historical spending patterns for accounting and budget support services within the Department of Justice (DOJ), a broader analysis of past contracts would be required. This would involve examining spending across different components of the DOJ, including the various bureaus and offices, over several fiscal years. Analyzing trends in contract values, types of services procured, and primary contractors would reveal patterns. Such an analysis could indicate whether spending has increased, decreased, or remained stable, and whether there's a trend towards specific types of service providers or contract vehicles.

What are the potential risks associated with relying on a single large contractor like IBM for critical accounting functions?

Relying on a single large contractor like IBM for critical accounting functions presents several potential risks. One primary risk is vendor lock-in, where transitioning to another provider becomes difficult and costly. There's also the risk of reduced innovation if the contractor becomes complacent due to a lack of direct competition. Furthermore, if IBM experiences internal issues (e.g., staffing shortages, financial difficulties, or security breaches), it could directly impact the DOJ's financial operations. Dependence on a single entity can also reduce the agency's internal capacity and knowledge retention in these critical areas, making them more vulnerable to disruptions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Other Accounting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 12902 FEDERAL SYSTEMS PAR, FAIRFAX, VA, 22033

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $43,245,620

Exercised Options: $21,622,810

Current Obligation: $16,023,707

Parent Contract

Parent Award PIID: DJO2010BF10001

IDV Type: BPA

Timeline