IBM contract for computer systems design services awarded by HHS CMS for over $91.7M

Contract Overview

Contract Amount: $91,768,762 ($91.8M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2014-09-29

End Date: 2019-12-28

Contract Duration: 1,916 days

Daily Burn Rate: $47.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF NEW REQUIREMENT FOR FY 2014

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $91.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF NEW REQUIREMENT FOR FY 2014 Key points: 1. Contract awarded to a single large vendor, IBM, suggesting a focus on established capabilities. 2. The contract duration of nearly 5 years indicates a long-term need for these services. 3. Awarded under full and open competition, implying a broad search for qualified bidders. 4. The cost-plus-fixed-fee pricing structure allows for flexibility but requires careful oversight. 5. The contract's value places it in the mid-to-large range for IT services within the federal government. 6. Services are categorized under Computer Systems Design, a critical area for federal IT infrastructure.

Value Assessment

Rating: fair

Benchmarking this contract's value against similar IT services contracts awarded by CMS or HHS is challenging without more specific service details. However, a $91.7 million contract over nearly five years for computer systems design services is substantial. The cost-plus-fixed-fee (CPFF) structure can lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. Without detailed cost breakdowns and performance metrics, it's difficult to definitively assess value for money, but the duration and scope suggest a significant investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that the government sought proposals from all responsible sources. The presence of 9 bidders suggests a competitive environment for this type of service. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government. The specific details of the competition, such as the evaluation criteria and the number of proposals received, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it maximizes the pool of potential offerors, driving down prices through market forces and ensuring the government receives the best value.

Public Impact

The primary beneficiary is the Centers for Medicare and Medicaid Services (CMS), which relies on these services for its IT infrastructure and operations. The services delivered likely include the design, development, integration, and maintenance of complex computer systems supporting healthcare programs. The geographic impact is national, as CMS operates nationwide, and its IT systems support beneficiaries and providers across the United States. Workforce implications may include the employment of IT professionals, system architects, developers, and support staff, both within IBM and potentially through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost overruns if not rigorously monitored.
The long duration of the contract may reduce flexibility to adapt to rapidly changing technology.
Reliance on a single large vendor for critical IT systems can create vendor lock-in.
The specific performance metrics and their impact on the fixed fee are not detailed, making oversight assessment difficult.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The contract's significant value indicates a critical need and likely a well-defined scope of work.
The vendor, IBM, is a large, established company with extensive experience in government IT contracts.
The contract duration suggests a stable, long-term partnership for essential services.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically Computer Systems Design Services. This is a large and critical segment of federal spending, supporting everything from agency operations to national defense and healthcare. The market for these services is highly competitive, with numerous large and small businesses vying for government contracts. Comparable spending benchmarks would typically involve analyzing other large IT services contracts awarded by agencies like HHS, DOD, or GSA, looking at contract values, durations, and service types.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to IBM, it is unlikely that significant subcontracting opportunities for small businesses were mandated as part of a set-aside. However, large prime contractors often utilize small businesses for specialized services or components. Further analysis would be needed to determine if IBM has a subcontracting plan that benefits the small business ecosystem in this specific instance.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers within the Centers for Medicare and Medicaid Services (CMS). The cost-plus-fixed-fee structure necessitates close monitoring of allowable costs and progress towards the fixed fee. Transparency is typically managed through contract reporting requirements and performance reviews. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

HHS IT Modernization Initiatives
CMS Health IT Services
Federal Cloud Computing Strategy
Government-wide IT Acquisition Vehicles
Centers for Medicare & Medicaid Services Operations Support

Risk Flags

Cost-plus-fixed-fee pricing requires diligent oversight to prevent cost overruns.
Long contract duration may limit adaptability to evolving technological landscapes.
Potential for vendor lock-in with a single large provider for critical systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $91.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF NEW REQUIREMENT FOR FY 2014

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 $91.8 million.

What is the period of performance?

Start: 2014-09-29. End: 2019-12-28.

What specific computer systems design services were provided under this contract?

The contract description 'Computer Systems Design Services' (NAICS 541512) is broad. It typically encompasses designing, developing, integrating, and maintaining computer systems. For CMS, this could involve systems related to Medicare and Medicaid claims processing, beneficiary enrollment, provider management, data analytics, health information exchange, or IT infrastructure modernization. Without more granular data on the contract's statement of work, the precise services remain general. However, given the scale and duration, it likely involved significant system architecture, software development, and integration efforts critical to CMS's mission.

How does the $91.7 million value compare to other similar IT contracts awarded by CMS?

The $91.7 million value for a nearly five-year contract is substantial, placing it among significant IT investments by CMS. To provide a precise comparison, one would need to analyze the average contract value for 'Computer Systems Design Services' or similar IT categories awarded by CMS over comparable periods. Federal procurement data often shows numerous IT contracts ranging from a few million to hundreds of millions of dollars. This contract appears to be a mid-to-large-sized award within the context of CMS's overall IT spending, reflecting a critical and complex need.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude?

The primary risk with CPFF contracts is the potential for cost overruns. While the contractor is reimbursed for allowable costs, the fixed fee provides a profit incentive. If costs escalate beyond initial projections due to scope creep, inefficiencies, or unforeseen technical challenges, the government bears the increased cost. Effective oversight is crucial to scrutinize allowable costs, ensure efficient performance, and manage scope. For a contract of this size and duration, robust project management, regular audits, and clear performance metrics are essential to mitigate these risks and ensure value for money.

What is IBM's track record with large federal IT contracts, particularly with HHS/CMS?

IBM has a long and extensive history of performing large-scale IT contracts for the federal government, including significant work with the Department of Health and Human Services (HHS) and its agencies like CMS. They are a major federal IT contractor known for handling complex systems integration, software development, and infrastructure management. While specific performance details for this particular contract are not provided, IBM's general track record involves delivering a wide range of IT services across various agencies. Their experience suggests a capacity to manage contracts of this complexity, though like any large contractor, performance can vary across individual engagements.

How has federal spending on computer systems design services evolved over the past decade?

Federal spending on computer systems design services has generally trended upwards over the past decade, driven by the increasing digitization of government operations, the need for IT modernization, cybersecurity enhancements, and the adoption of new technologies like cloud computing and data analytics. Agencies across the government, including HHS, consistently allocate significant portions of their budgets to IT services. While specific figures fluctuate year-to-year based on agency priorities and budget cycles, the overall demand for these services remains robust, reflecting their critical role in enabling government functions and delivering services to the public.

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: NIHJT2010001

Offers Received: 9

Pricing Type: COST PLUS FIXED FEE (U)

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: $103,290,476

Exercised Options: $91,768,762

Current Obligation: $91,768,762

Actual Outlays: $512,371

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $24,873,611

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200030W

IDV Type: GWAC

Timeline