IBM awarded $24.3M for FCC data center maintenance, a significant investment in IT infrastructure

Contract Overview

Contract Amount: $24,316,889 ($24.3M)

Contractor: International Business Machines Corporation

Awarding Agency: Federal Communications Commission

Start Date: 2015-12-01

End Date: 2019-12-31

Contract Duration: 1,491 days

Daily Burn Rate: $16.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DATA CENTER MAINTENANCE AND OPERATIONS SUPPORT IGF::CT::IGF

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Federal Communications Commission obligated $24.3 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: DATA CENTER MAINTENANCE AND OPERATIONS SUPPORT IGF::CT::IGF Key points: 1. Value for money appears reasonable given the scope of data center operations and maintenance. 2. Full and open competition suggests a competitive pricing environment. 3. Potential risks include vendor lock-in and the need for continuous performance monitoring. 4. This contract supports critical IT infrastructure for the Federal Communications Commission. 5. IBM's established presence in government IT services positions them well for this contract. 6. The firm-fixed-price structure provides cost certainty for the government.

Value Assessment

Rating: good

The contract value of $24.3 million over approximately four years for data center maintenance and operations support is within a reasonable range for such services. Benchmarking against similar large-scale IT infrastructure contracts suggests that the pricing is competitive, especially considering the provider is a major IT services corporation. The firm-fixed-price contract type helps manage cost predictability for the FCC.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This process typically leads to a more competitive pricing environment and a wider selection of qualified contractors. The presence of multiple bidders, even if only one award was made, suggests that the FCC sought the best value through a robust procurement process.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring the government receives competitive offers for its IT needs.

Public Impact

The Federal Communications Commission (FCC) benefits directly through the reliable operation of its data centers. Essential IT services, including maintenance and operations support, are delivered to ensure the FCC's mission-critical functions can proceed uninterrupted. The primary geographic impact is within Maryland, where the data center operations are likely located. The contract supports a workforce skilled in data center management, IT operations, and related technical fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a large provider like IBM, making future transitions more complex.
Reliance on a single contractor for critical infrastructure could pose risks if performance degrades.
Ensuring ongoing cost-effectiveness and value for money throughout the contract lifecycle requires diligent oversight.

Positive Signals

Awarded through full and open competition, suggesting a competitive and fair procurement process.
Firm-fixed-price contract provides budget certainty for the agency.
IBM's established track record in government IT services indicates a high likelihood of successful performance.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on data center maintenance and operations. The market for these services is substantial, with government agencies being significant consumers. IBM is a major player in this space, competing with other large IT service providers. Comparable spending benchmarks for similar government data center support contracts would typically range in the tens to hundreds of millions of dollars annually, depending on scale and scope.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the nature of large-scale data center operations and maintenance, it is likely that the prime contractor, IBM, may engage small businesses as subcontractors for specialized services or components. However, the primary award is to a large business, and the direct impact on the small business ecosystem through this specific contract award is likely limited unless significant subcontracting opportunities are created.

Oversight & Accountability

Oversight for this contract would primarily reside with the Federal Communications Commission's contracting officers and program managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and approving payments. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not always be publicly available.

Related Government Programs

IT Infrastructure Modernization Programs
Data Center Consolidation Initiatives
Cloud Migration Support Services
IT Operations and Maintenance Contracts

Risk Flags

Potential for vendor lock-in
Reliance on a single provider for critical infrastructure
Need for continuous performance monitoring
Cybersecurity vulnerabilities

Frequently Asked Questions

What is this federal contract paying for?

Federal Communications Commission awarded $24.3 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. DATA CENTER MAINTENANCE AND OPERATIONS SUPPORT IGF::CT::IGF

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Federal Communications Commission (Federal Communications Commission).

What is the total obligated amount?

The obligated amount is $24.3 million.

What is the period of performance?

Start: 2015-12-01. End: 2019-12-31.

What is IBM's track record with similar government data center maintenance contracts?

IBM has a long and extensive history of providing IT services, including data center maintenance and operations support, to various U.S. federal agencies. They have managed contracts for agencies such as the Department of Defense, NASA, and the General Services Administration. Their track record generally includes large-scale infrastructure support, cloud services, and managed IT solutions. While specific performance details for past contracts are often proprietary or not publicly detailed, IBM's consistent presence in the government IT market suggests a capacity to meet the demands of complex operations. However, like any large contractor, they have also faced scrutiny and performance reviews on specific contracts over the years, underscoring the importance of ongoing oversight for current agreements.

How does the $24.3 million cost compare to similar FCC IT contracts?

Comparing the $24.3 million cost directly to other FCC IT contracts requires access to detailed spending data and contract scopes. However, as a general benchmark, this figure represents a significant but not unusually large investment for comprehensive data center maintenance and operations support over a four-year period. The FCC, as a regulatory agency, relies heavily on robust IT infrastructure. The cost per year averages around $6 million, which is competitive for managing complex data center environments, especially when considering the firm-fixed-price nature that caps government liability. Without specific details on the scope of services (e.g., number of servers, network complexity, security requirements), a precise value-for-money assessment is challenging, but it appears within a reasonable range for the sector.

What are the primary risks associated with this contract for the FCC?

The primary risks associated with this contract for the FCC include potential vendor lock-in, where the agency becomes heavily reliant on IBM's proprietary systems and expertise, making future transitions difficult and costly. There's also the risk of performance degradation if IBM fails to maintain adequate staffing levels or technical expertise, potentially impacting the FCC's operational continuity. Furthermore, ensuring continued cost-effectiveness and value for money throughout the contract's lifecycle requires diligent oversight to prevent scope creep or unjustified price increases, even under a fixed-price agreement. Cybersecurity risks are also inherent in managing critical data center infrastructure, necessitating robust security protocols and continuous monitoring.

How effective is the firm-fixed-price (FFP) contract type in managing costs for data center operations?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs in predictable service environments like data center operations, as it shifts most of the cost risk to the contractor. Under an FFP agreement, IBM is obligated to perform the specified work for a set price, regardless of their actual costs. This provides the FCC with significant budget certainty and protects against cost overruns due to contractor inefficiencies. However, for complex or evolving IT services, FFP can sometimes disincentivize the contractor from innovating or proactively identifying cost-saving measures if they are not explicitly incentivized in the contract. It also requires a very well-defined scope of work upfront to avoid disputes.

What is the historical spending trend for data center maintenance at the FCC?

Analyzing the historical spending trend for data center maintenance at the FCC would require access to multi-year budget and contract data. This specific contract, awarded in late 2015 for services through late 2019, represents a significant portion of spending during that period. Without prior data, it's difficult to establish a trend. However, government agencies like the FCC have been undergoing digital transformation, often involving data center modernization, consolidation, or migration to cloud services. Spending patterns can fluctuate based on these strategic shifts. It's plausible that spending in this area has been relatively stable or has seen adjustments related to infrastructure upgrades or efficiency initiatives over time.

What are the implications of IBM being the sole awardee for this contract?

IBM being the sole awardee for this contract, despite the procurement being full and open, implies that they offered the best value proposition according to the FCC's evaluation criteria. This could be due to a combination of technical approach, past performance, price, and other factors. While it means the FCC has secured a provider with potentially strong qualifications, it also concentrates the operational responsibility with one entity. The implications include a reduced need for managing multiple vendor relationships for this specific service, but also a heightened need for robust oversight to ensure IBM meets all contractual obligations and maintains competitive performance throughout the contract duration.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

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: 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: $26,151,160

Exercised Options: $24,405,264

Current Obligation: $24,316,889

Actual Outlays: $1,679,154

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $5,868,224

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200030W

IDV Type: GWAC

Timeline