HHS Awards $252M IBM Contract for Computer Systems Design Services Over 5 Years
Contract Overview
Contract Amount: $252,171,750 ($252.2M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2012-09-24
End Date: 2017-08-31
Contract Duration: 1,802 days
Daily Burn Rate: $139.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: IGF::OT::IGF
Place of Performance
Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $252.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF Key points: 1. Significant contract value of $252.17 million awarded to a major IT vendor. 2. IBM, a large established corporation, is the sole awardee, raising questions about broad competition. 3. The contract spans five years, indicating a long-term need for these services. 4. The 'Computer Systems Design Services' category is a common area for federal IT spending.
Value Assessment
Rating: fair
The contract type is Cost Plus Award Fee, which can lead to higher costs if not managed carefully. Benchmarking against similar contracts for Computer Systems Design Services is difficult without more specific task order details, but the overall value suggests a substantial engagement.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple vendors had the opportunity to bid. However, the award went to a single entity, IBM, which may indicate specific capabilities or a strategic partnership.
Taxpayer Impact: Taxpayer funds are being utilized for essential IT services. The cost-plus award fee structure necessitates robust oversight to ensure value for money and prevent excessive spending.
Public Impact
Impacts Medicare and Medicaid services by ensuring the underlying IT systems are maintained and improved. Potential for improved efficiency and effectiveness of healthcare administration through advanced IT solutions. Long-term reliance on a single vendor could create lock-in and limit future flexibility.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure
- Long contract duration
- Sole awardee despite full and open competition
Positive Signals
- Awarded under full and open competition
- Services critical to healthcare administration
Sector Analysis
This contract falls within the IT sector, specifically computer systems design services. Federal IT spending is a significant portion of the overall budget, with agencies constantly seeking to modernize systems. Benchmarks for similar large-scale IT service contracts vary widely based on scope and complexity.
Small Business Impact
The contract was awarded to a large business (IBM) and there is no indication of specific set-asides or subcontracting goals for small businesses within the provided data. This suggests limited direct participation opportunities for small businesses on this specific award.
Oversight & Accountability
The Cost Plus Award Fee (CPAF) contract type requires diligent oversight from the Centers for Medicare and Medicaid Services (CMS) to ensure IBM meets performance objectives and delivers value. Regular performance reviews and audits are crucial for accountability.
Related Government Programs
- Computer Systems Design Services
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Potential for cost overruns due to Cost Plus Award Fee structure.
- Risk of vendor lock-in with a single large provider over a long contract term.
- Limited visibility into specific performance metrics and award criteria.
- Lack of apparent small business participation opportunities.
Tags
computer-systems-design-services, department-of-health-and-human-services, md, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $252.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF
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 $252.2 million.
What is the period of performance?
Start: 2012-09-24. End: 2017-08-31.
What specific performance metrics and award fee criteria were established to ensure IBM's services align with CMS objectives and deliver optimal value?
The effectiveness of the Cost Plus Award Fee structure hinges on clearly defined, measurable performance metrics and objective award fee criteria. These should directly relate to the successful design, implementation, and maintenance of computer systems critical to CMS operations. Without insight into these specific criteria, it's challenging to definitively assess if the award fee mechanism is driving the desired outcomes and ensuring taxpayer value.
How did the 'full and open competition' process result in a single awardee, and were there any risks associated with limiting the vendor pool for these critical systems?
While the contract was advertised under full and open competition, the award to a single entity like IBM suggests they were the only bidder meeting all stringent requirements or offering the most advantageous proposal. This could pose risks related to vendor lock-in, reduced leverage in future negotiations, and potential lack of innovation if alternative solutions were not explored. A thorough justification for the single award is essential.
What is the projected return on investment or measurable improvement in healthcare administration efficiency expected from this $252 million contract over its five-year duration?
Quantifying the ROI for complex IT service contracts is challenging without specific baseline data and defined success metrics. However, the expectation is that these services will lead to more robust, secure, and efficient IT infrastructure supporting critical healthcare programs. Measurable improvements could include reduced system downtime, enhanced data processing capabilities, and better support for healthcare providers and beneficiaries.
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
Solicitation ID: HHSM5002012R3127003
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
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: $347,969,504
Exercised Options: $252,171,750
Current Obligation: $252,171,750
Subaward Activity
Number of Subawards: 97
Total Subaward Amount: $29,328,964
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS00Q09BGD0034
IDV Type: GWAC
Timeline
Start Date: 2012-09-24
Current End Date: 2017-08-31
Potential End Date: 2017-08-31 00:00:00
Last Modified: 2023-02-24
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