HHS awards $132.7M contract for accounting services to IBM, citing no competition

Contract Overview

Contract Amount: $132,754,166 ($132.8M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2008-06-21

End Date: 2012-09-30

Contract Duration: 1,562 days

Daily Burn Rate: $85.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: ACCOUNTING SERVICES

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $132.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: ACCOUNTING SERVICES Key points: 1. IBM secured a significant $132.7 million contract for accounting services. 2. The contract was awarded without competition, raising questions about price discovery. 3. The duration of the contract (over 4 years) suggests a substantial, long-term need. 4. The sector is professional services, specifically financial transactions processing.

Value Assessment

Rating: questionable

The contract type is Cost Plus Award Fee, which can lead to higher costs if not managed tightly. Without a competitive benchmark, it's difficult to assess if the $132.7 million price is reasonable for the services rendered over the contract's duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was 'NOT COMPETED', indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition for a contract of this magnitude means taxpayers may have paid a premium for these accounting services.

Public Impact

Taxpayers funded a large contract without competitive bidding. The Centers for Medicare and Medicaid Services received accounting services from IBM. The contract spanned over four years, impacting federal financial operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost Plus Award Fee contract type
Long contract duration

Positive Signals

Established vendor (IBM)
Specific agency need addressed

Sector Analysis

This contract falls within the professional services sector, specifically financial and accounting services. Benchmarks for similar large-scale accounting service contracts are difficult to establish without knowing the exact scope, but $132.7M over four years is a substantial investment.

Small Business Impact

This contract was awarded to a large corporation (IBM) and there is no indication that small businesses were involved as subcontractors or partners.

Oversight & Accountability

The 'NOT COMPETED' status suggests potential oversight gaps or a justification for sole-sourcing that needs further scrutiny to ensure accountability and value for taxpayer money.

Related Government Programs

Financial Transactions Processing, Reserve, and Clearinghouse Activities
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Sole-source award
Potential for overpayment due to CPAF structure
Lack of transparency on performance metrics
No indication of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $132.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. ACCOUNTING SERVICES

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $132.8 million.

What is the period of performance?

Start: 2008-06-21. End: 2012-09-30.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative solutions explored?

The provided data indicates the contract was 'NOT COMPETED'. A thorough review would require access to the contract file to understand the specific justification, such as urgency, unique capabilities, or a prior relationship. Without this information, it's impossible to definitively assess if alternative solutions were explored or if sole-sourcing was the most appropriate path.

How was the 'award fee' component of the Cost Plus Award Fee structure determined, and what metrics were used to assess performance?

The Cost Plus Award Fee (CPAF) structure implies that IBM's performance was evaluated against specific criteria, and an award fee was determined based on that performance. The exact metrics and evaluation process are not detailed in the provided data. Understanding these would be crucial to assessing whether the government received optimal value and if the award fee incentivized desired outcomes effectively.

What is the estimated cost savings or efficiency gain that the government expected to achieve through this specific accounting service contract compared to internal capabilities or other service provi

The data does not provide information on expected cost savings or efficiency gains. Given the sole-source nature and CPAF structure, it's challenging to quantify these benefits without a competitive baseline or specific performance targets tied to savings. Further analysis of the contract's statement of work and performance metrics would be needed.

Industry Classification

NAICS: Finance and Insurance › Activities Related to Credit Intermediation › Financial Transactions Processing, Reserve, and Clearinghouse Activities

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $166,541,400

Exercised Options: $134,046,957

Current Obligation: $132,754,166

Parent Contract

Parent Award PIID: 500030014

IDV Type: IDC

Timeline