IBM contract for Education Department's automated processing system valued at $58M over five years

Contract Overview

Contract Amount: $58,066,020 ($58.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Education

Start Date: 2008-09-30

End Date: 2013-05-31

Contract Duration: 1,704 days

Daily Burn Rate: $34.1K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CONTRACTOR SUPPORT FOR THE DAILY OPERATION OF THE EDUCATION DEPARTMENT'S CENTRAL AUTOMATED PROCESSING SYSTEM (EDCAPS)

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20202

State: District of Columbia Government Spending

Plain-Language Summary

Department of Education obligated $58.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: CONTRACTOR SUPPORT FOR THE DAILY OPERATION OF THE EDUCATION DEPARTMENT'S CENTRAL AUTOMATED PROCESSING SYSTEM (EDCAPS) Key points: 1. The contract's value of $58 million over approximately five years suggests a significant investment in maintaining critical IT infrastructure. 2. IBM, a large established contractor, was awarded this contract, indicating a reliance on experienced providers for essential government systems. 3. The fixed-price contract type aims to control costs, but the duration and scope may present risks if requirements evolve. 4. Performance context is tied to the daily operation of the Education Department's Central Automated Processing System (EDCAPS), a vital function. 5. This contract falls within the IT sector, specifically supporting software and computer system operations for a federal agency.

Value Assessment

Rating: good

The contract value of $58 million over roughly 1704 days (approximately 4.6 years) averages to about $12.6 million annually. Benchmarking this against similar IT support contracts for large federal systems is challenging without more specific service details. However, the firm-fixed-price structure suggests an attempt to manage costs predictably. The total value appears reasonable for maintaining a critical, large-scale automated processing system, assuming the scope of work is comprehensive and effectively executed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded as a competitive delivery order, indicating that it was subject to full and open competition. This suggests that multiple vendors had the opportunity to bid on the requirement. The presence of competition generally leads to better price discovery and potentially more innovative solutions, as contractors vie for the award. The fact that it was competed implies the agency sought the best value through a market-driven process.

Taxpayer Impact: For taxpayers, a competitively awarded contract increases the likelihood that the government is receiving services at a fair market price, maximizing the value of federal dollars spent on essential IT operations.

Public Impact

Students and educational institutions benefit indirectly through the efficient processing of educational data and financial aid applications. The contract ensures the continuous operation of the EDCAPS, which is crucial for managing federal student financial aid programs. The geographic impact is national, as the system supports nationwide educational programs administered by the Department of Education. Workforce implications include the potential for IT professionals at IBM to be engaged in supporting this federal system, and indirectly, the federal employees who rely on EDCAPS for their daily tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the long duration and critical nature of the system.
Reliance on a single large contractor (IBM) could limit future flexibility or innovation if not managed proactively.
Ensuring continued alignment with evolving federal IT modernization goals and cybersecurity standards.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Competitive award process suggests a focus on achieving value for money.
Long-term contract allows for stable support of a critical government system.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on the operation and maintenance of a large-scale automated processing system. The market for government IT support services is substantial, with agencies increasingly relying on contractors for specialized expertise in software development, system integration, and ongoing operational support. Comparable spending benchmarks would typically involve analyzing IT support contracts for other large federal systems, considering factors like system complexity, user base, and criticality.

Small Business Impact

There is no indication that this contract involved a small business set-aside. As a large contract awarded to a major corporation, the primary focus is likely on the prime contractor's capabilities. However, IBM, as a large prime contractor, may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the broader small business ecosystem. Further analysis would be needed to determine the extent of small business subcontracting.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Education's contracting officers and program managers. They are responsible for monitoring contractor performance, ensuring compliance with contract terms, and approving payments. The contract's fixed-price nature provides some cost control, but ongoing performance reviews are essential. Transparency is generally maintained through contract databases, though specific performance metrics and detailed operational data may not be publicly disclosed.

Related Government Programs

Federal Student Aid IT Modernization
Department of Education IT Infrastructure Support
Government-wide IT Services Contracts
Centralized IT Processing Systems

Risk Flags

Contract Duration
System Criticality
Reliance on Single Large Vendor

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $58.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. CONTRACTOR SUPPORT FOR THE DAILY OPERATION OF THE EDUCATION DEPARTMENT'S CENTRAL AUTOMATED PROCESSING SYSTEM (EDCAPS)

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Education (Department of Education).

What is the total obligated amount?

The obligated amount is $58.1 million.

What is the period of performance?

Start: 2008-09-30. End: 2013-05-31.

What is the track record of International Business Machines Corporation (IBM) in supporting similar large-scale federal IT systems?

IBM has a long and extensive history of supporting federal IT systems across numerous agencies. They are a major contractor for the U.S. government, providing a wide range of services including cloud computing, cybersecurity, data analytics, and legacy system modernization. Their experience spans critical infrastructure like financial processing, logistics, and citizen-facing services. For the Department of Education specifically, IBM has likely been involved in various IT projects over the years, given the scale and complexity of the department's operations. Their track record generally indicates a capacity to handle large, complex contracts, though specific performance on individual contracts can vary and is subject to agency oversight and evaluation.

How does the $58 million contract value compare to other IT support contracts for federal automated processing systems?

The $58 million value over approximately five years, averaging around $12.6 million annually, places this contract in the mid-to-large range for IT support services for a critical federal system. Many large federal IT systems, especially those handling sensitive data or high transaction volumes like student financial aid, require substantial ongoing investment. Contracts for similar systems can range from tens of millions to hundreds of millions of dollars annually, depending on the system's complexity, user base, and the scope of services (e.g., maintenance, upgrades, cybersecurity, cloud migration). Without specific details on the EDCAPS system's scale and the exact services procured, a precise comparison is difficult, but the value appears consistent with the operational needs of a significant federal IT platform.

What are the primary risks associated with a five-year firm-fixed-price contract for operating a critical government IT system?

A primary risk with a long-term, firm-fixed-price contract for a critical IT system is the potential for the contractor to become complacent or for the government to be locked into outdated technology or processes if requirements evolve significantly. If the system's needs change due to new regulations, technological advancements, or shifts in user demand, modifying the scope under a fixed-price contract can be complex and costly, potentially leading to disputes or change orders. Conversely, if the contractor underestimates the effort required, they risk financial losses, which could impact service quality or lead to contractor instability. Ensuring robust performance metrics and clear communication channels is crucial to mitigate these risks.

How effective is the firm-fixed-price (FFP) contract type in ensuring value for money for IT support services?

The firm-fixed-price (FFP) contract type is generally favored for IT support services when the scope of work is well-defined and unlikely to change significantly. It offers the government maximum price certainty, as the contractor assumes most of the risk for cost overruns. This can drive efficiency, as the contractor is incentivized to perform the work within the agreed-upon price. However, for complex IT systems where requirements may evolve, FFP can sometimes stifle innovation or lead to change order costs if the government needs to adjust the scope. In such cases, other contract types like FFP with economic price adjustment or cost-plus-incentive-fee might offer better value by balancing cost control with flexibility and performance incentives.

What are the historical spending patterns for IT support at the Department of Education?

Historical spending patterns for IT support at the Department of Education reflect a consistent need for maintaining and upgrading its complex technological infrastructure to manage student financial aid, data processing, and administrative functions. Over the years, the department has allocated significant resources to IT services, often through large contracts with major IT vendors. Spending has likely trended towards modernization efforts, cloud adoption, and enhanced cybersecurity measures, mirroring broader government-wide IT initiatives. Analyzing specific historical data would reveal trends in contract values, types of services procured (e.g., software development, infrastructure management, cybersecurity), and the primary contractors utilized, indicating a sustained investment in IT capabilities.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $58,269,761

Exercised Options: $58,125,086

Current Obligation: $58,066,020

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4984H

IDV Type: FSS

Timeline