IBM awarded $136M task order for modernization by DHS Customs and Border Protection

Contract Overview

Contract Amount: $136,161,677 ($136.2M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2004-03-01

End Date: 2012-12-06

Contract Duration: 3,202 days

Daily Burn Rate: $42.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: MODERNIZATION TASK ORDER 16

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA (CITY) County, VIRGINIA, 22311

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $136.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MODERNIZATION TASK ORDER 16 Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Award Fee, which incentivizes performance but can lead to higher costs. 3. The duration of the contract is substantial at 3202 days, indicating a long-term need. 4. The task order was awarded to a large, established contractor, IBM. 5. The contract falls under the IT sector, specifically for modernization efforts. 6. The geographic location of performance is Virginia.

Value Assessment

Rating: fair

The total award amount of $136,161,677.22 for a task order of this duration (3202 days) suggests a significant investment in modernization. Without specific performance metrics or a detailed breakdown of costs, it is difficult to definitively benchmark value for money. However, the Cost Plus Award Fee (CPAF) structure implies that IBM's fee is tied to performance, which could lead to better outcomes but also potentially higher overall costs if award fees are consistently met. Comparing this to similar large-scale IT modernization contracts within DHS or other agencies would provide a clearer picture of its cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit a bid. The presence of two bids suggests a moderate level of competition for this specific task order. While two bidders is better than one, a higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government. The specific details of the bidding process and the evaluation criteria would further illuminate the effectiveness of the competition.

Taxpayer Impact: A full and open competition, even with two bidders, generally provides a better opportunity for taxpayers to receive competitive pricing compared to sole-source or limited competition scenarios. This approach helps ensure that the government is not overpaying for services.

Public Impact

This contract directly benefits U.S. Customs and Border Protection by supporting critical modernization efforts. The services delivered are expected to enhance the operational capabilities and efficiency of border security. The primary geographic impact is within Virginia, where the performance is scheduled. The contract likely involves a significant workforce, including IT professionals and support staff, contributing to employment in the IT sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can sometimes lead to cost overruns if not managed tightly.
The long duration of the contract may present challenges in adapting to rapidly evolving technological landscapes.
The limited number of bidders (two) might indicate potential barriers to entry for smaller or specialized firms.

Positive Signals

Awarded through full and open competition, promoting a fair marketplace.
The Cost Plus Award Fee structure incentivizes contractor performance and successful project outcomes.
The contract addresses a critical need for modernization within a key federal agency.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on system modernization. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and upgrading legacy systems as well as implementing new technologies. Large system integrators like IBM often compete for these substantial modernization efforts. Benchmarking this contract's value would involve comparing its cost per day or per function against other large-scale federal IT modernization projects, considering the complexity and scope.

Small Business Impact

The data indicates that small business participation (sb) was not a specific set-aside for this contract (sb: false). There is no explicit information on subcontracting plans for small businesses. Without this data, it's difficult to assess the direct impact on the small business ecosystem. However, large prime contractors are often encouraged or required to subcontract portions of their work to small businesses, which could still provide opportunities.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Customs and Border Protection contracting officers and program managers within the Department of Homeland Security. The Cost Plus Award Fee structure necessitates robust performance monitoring to ensure award fees are justified. Transparency would be enhanced through regular reporting requirements and potential audits. The Inspector General for DHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

DHS IT Modernization Programs
Customs and Border Protection Technology Modernization
Federal Civilian IT Services Contracts
Large-Scale System Integration Contracts

Risk Flags

Potential for cost overruns due to CPAF structure.
Risk of technological obsolescence given the long contract duration.
Moderate competition level may limit price discovery.
Lack of explicit small business subcontracting data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $136.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MODERNIZATION TASK ORDER 16

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $136.2 million.

What is the period of performance?

Start: 2004-03-01. End: 2012-12-06.

What was the specific nature of the modernization effort this task order funded?

The provided data does not specify the exact nature of the modernization effort. However, given it was awarded to U.S. Customs and Border Protection (CBP) under the Department of Homeland Security (DHS) and falls under the IT sector, it likely involved upgrading or replacing legacy IT systems critical to border security operations. This could encompass areas such as data processing, surveillance systems, border management software, or communication networks. The substantial award amount and long duration suggest a complex, multi-faceted project aimed at enhancing the agency's technological infrastructure and operational capabilities.

How does the Cost Plus Award Fee (CPAF) structure typically impact project costs and performance for large IT modernization contracts?

The Cost Plus Award Fee (CPAF) structure allows the contractor to recover allowable costs plus a fixed fee, with a portion of that fee being an award amount contingent upon meeting or exceeding specific performance objectives. For large IT modernization contracts, CPAF aims to incentivize high performance and quality by linking a significant portion of the contractor's profit to achieving defined goals. This can lead to better project outcomes and innovation. However, it also carries the risk of higher overall costs compared to fixed-price contracts if the award criteria are broadly met or if the base fee is substantial. Effective oversight and clearly defined performance metrics are crucial to ensure value for money under a CPAF arrangement.

What are the potential risks associated with a 3202-day contract duration for an IT modernization project?

A contract duration of 3202 days (approximately 8.8 years) for an IT modernization project presents several risks. Technology evolves rapidly, and systems implemented at the beginning of such a long contract could become outdated or obsolete before its completion. There's a risk of scope creep, where the project's objectives may change significantly over time, leading to cost increases and delays. Furthermore, maintaining contractor focus and institutional knowledge over such an extended period can be challenging. Agencies must implement robust change management processes and ensure flexibility within the contract to adapt to evolving requirements and technological advancements.

Given the contractor is IBM, what does this suggest about the complexity and scale of the modernization task?

Awarding a $136 million task order for modernization to a large, established contractor like IBM suggests a project of significant complexity and scale. IBM has extensive experience and resources for managing large-scale IT projects, including system integration, software development, and infrastructure management. This choice often indicates that the government requires a contractor with proven capabilities to handle intricate technical challenges, manage large teams, and deliver comprehensive solutions. It implies the modernization effort likely involves integrating multiple systems, migrating substantial amounts of data, or overhauling critical infrastructure, requiring the deep technical expertise and project management capacity that major IT firms possess.

How does the 'full and open competition' with only two bidders compare to typical competition levels for similar federal IT modernization contracts?

While 'full and open competition' is the preferred method, having only two bidders for a contract of this magnitude ($136 million) suggests a moderately competitive environment. For large, complex IT modernization efforts, the market can sometimes be limited to a few large system integrators with the necessary expertise and capacity. However, ideal full and open competition often sees a larger number of bids, which generally drives down prices and increases innovation. The specific nature of the required technology or security clearances might also limit the pool of eligible bidders. Further analysis would require comparing this to the number of bids received on comparable DHS or other agency modernization contracts of similar value and technical scope.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

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: $138,998,005

Exercised Options: $136,161,677

Current Obligation: $136,161,677

Actual Outlays: $-990

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline