HHS Awards $28M for Enterprise Systems Development to IBM, Highlighting IT Services Competition

Contract Overview

Contract Amount: $27,963,903 ($28.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2009-05-01

End Date: 2014-06-30

Contract Duration: 1,886 days

Daily Burn Rate: $14.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: ENTERPRISE SYSTEMS DEVELOPMENT

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $28.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: ENTERPRISE SYSTEMS DEVELOPMENT Key points: 1. Significant investment in enterprise systems development underscores the importance of robust IT infrastructure for government agencies. 2. IBM's contract award indicates strong competition within the Computer Systems Design Services sector. 3. The Cost Plus Award Fee contract type suggests a focus on performance-based incentives and managing project costs effectively. 4. This spending falls within the broader IT sector, which consistently sees substantial government investment.

Value Assessment

Rating: good

The award amount of $27.96 million for enterprise systems development appears reasonable given the contract duration of approximately 5 years. Benchmarking against similar large-scale IT development contracts would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust process for soliciting bids and ensuring fair market pricing. This method typically leads to better price discovery and value for the government.

Taxpayer Impact: Taxpayer funds are being utilized for essential government IT infrastructure, aiming for efficient service delivery through competitive procurement.

Public Impact

Enhances critical healthcare IT systems, potentially improving services for Medicare and Medicaid beneficiaries. Supports the modernization of government technology, which can lead to more efficient operations. IBM's role in this project signifies a major technology provider's involvement in public sector IT.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can sometimes lead to cost overruns if not managed carefully.
Long contract durations require ongoing oversight to ensure objectives are met.
Reliance on a single large vendor could pose future integration or lock-in risks.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Focus on enterprise systems development suggests investment in critical government functions.
Contract includes award fees, incentivizing contractor performance.

Sector Analysis

This contract falls within the Information Technology sector, specifically Computer Systems Design Services. Government spending in IT is substantial, driven by the need for modernization, cybersecurity, and efficient data management across agencies.

Small Business Impact

While the primary awardee is IBM, a large corporation, the contract details do not specify any subcontracting requirements for small businesses. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The Centers for Medicare and Medicaid Services (CMS) is responsible for overseeing this contract. The use of an award fee structure implies performance monitoring and accountability mechanisms are in place.

Related Government Programs

Computer Systems Design Services
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Cost Plus Award Fee contract type can lead to higher costs if not managed diligently.
Long contract duration (approx. 5 years) requires sustained oversight.
Potential for vendor lock-in with a large IT provider.
Lack of explicit small business subcontracting information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $28.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. ENTERPRISE SYSTEMS DEVELOPMENT

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 $28.0 million.

What is the period of performance?

Start: 2009-05-01. End: 2014-06-30.

What specific enterprise systems are being developed or enhanced under this contract, and how do they align with CMS's strategic goals?

The contract focuses on 'ENTERPRISE SYSTEMS DEVELOPMENT' for CMS. While specific system details are not provided, such development typically involves enhancing or creating integrated IT platforms to manage healthcare programs, process claims, manage beneficiary data, and support regulatory functions. Alignment with strategic goals would likely involve improving data analytics, operational efficiency, and user experience for both beneficiaries and administrators.

What are the key performance metrics and award criteria used to determine the 'award fee' for IBM, and how are these measured?

The contract type is 'COST PLUS AWARD FEE', indicating that IBM's fee is composed of a base cost plus an award amount determined by performance. Key performance metrics would likely relate to project milestones, system functionality, reliability, user satisfaction, adherence to budget, and timely delivery. CMS would establish specific, measurable criteria and a process for evaluating IBM's performance against these metrics to justify the award fee.

How does the $27.96 million expenditure compare to similar enterprise systems development projects within HHS or other federal agencies of comparable size and scope?

Without specific details on the scope and complexity of the systems being developed, a direct comparison is challenging. However, $27.96 million over approximately five years for enterprise-level IT development is within the expected range for large federal agencies like CMS. Factors influencing cost include the number of users, integration requirements with existing systems, data migration complexity, and the level of customization needed.

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: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $33,403,042

Exercised Options: $27,963,903

Current Obligation: $27,963,903

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700018I

IDV Type: IDC

Timeline