DHS awards $127M IBM contract for TO 17 FAE services, raising value and competition questions
Contract Overview
Contract Amount: $127,160,113 ($127.2M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Homeland Security
Start Date: 2004-02-10
End Date: 2008-04-30
Contract Duration: 1,541 days
Daily Burn Rate: $82.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: IT
Official Description: TO 17 FAE
Place of Performance
Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22311
State: Virginia Government Spending
Plain-Language Summary
Department of Homeland Security obligated $127.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: TO 17 FAE Key points: 1. The contract value of $127.16 million for TO 17 FAE services is substantial. 2. IBM is a major player, but the specific nature of 'TO 17 FAE' needs clarification regarding competition. 3. Potential risks include vendor lock-in and the effectiveness of the Cost Plus Incentive Fee structure. 4. The IT sector is broad; specific sub-sector context is needed for accurate benchmarking.
Value Assessment
Rating: questionable
The Cost Plus Incentive Fee (CPIF) structure can lead to cost overruns if not managed tightly. Benchmarking against similar IT service contracts is difficult without more specific details on the 'TO 17 FAE' services provided.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the duration and potential for follow-on work could still limit future competition.
Taxpayer Impact: The use of CPIF necessitates robust oversight to ensure taxpayer funds are used efficiently and effectively, preventing unnecessary cost escalation.
Public Impact
Citizens expect transparency in how large government contracts are awarded and managed. The effectiveness of IT services impacts border security operations, a critical government function. Ensuring fair competition protects taxpayer dollars and promotes innovation in the IT sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of specific service details for 'TO 17 FAE'.
- Potential for cost overruns with CPIF contract type.
- Long contract duration may limit future competitive opportunities.
Positive Signals
- Awarded under full and open competition.
- IBM is a well-established IT provider.
Sector Analysis
This contract falls within the broad IT services sector. Benchmarking is challenging without knowing the specific nature of 'TO 17 FAE' services, but IT services represent a significant portion of federal spending.
Small Business Impact
The data indicates the award went to a large corporation (IBM), with no specific mention of small business participation. Further analysis would be needed to determine if small businesses were involved as subcontractors.
Oversight & Accountability
The Cost Plus Incentive Fee structure requires diligent oversight from the Department of Homeland Security to ensure performance targets are met and costs are controlled. Regular audits and performance reviews are crucial.
Related Government Programs
- Department of Homeland Security Contracting
- U.S. Customs and Border Protection Programs
Risk Flags
- Lack of clarity on specific services ('TO 17 FAE').
- Potential for cost overruns inherent in CPIF contracts.
- Long contract duration (over 4 years) may limit future competition.
- No explicit mention of small business subcontracting opportunities.
- Effectiveness of incentive fee structure needs detailed scrutiny.
Tags
department-of-homeland-security, va, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Homeland Security awarded $127.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. TO 17 FAE
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 $127.2 million.
What is the period of performance?
Start: 2004-02-10. End: 2008-04-30.
What specific services does 'TO 17 FAE' encompass, and how do these align with the agency's mission?
The acronym 'TO 17 FAE' is not immediately clear and requires further definition. Understanding the specific services is crucial for assessing their necessity, effectiveness, and alignment with the Department of Homeland Security's mission, particularly U.S. Customs and Border Protection's operational needs.
What are the key performance indicators (KPIs) and incentive structures within the Cost Plus Incentive Fee (CPIF) arrangement?
The CPIF structure implies that both the contractor and the government share in cost savings or overruns based on pre-defined targets. Understanding the specific KPIs and the formula for cost sharing is essential to evaluate if the incentives effectively drive desired performance and cost control.
How was the 'fair and reasonable price' determination made for this extensive contract, given its duration and CPIF nature?
Determining a fair and reasonable price for a contract of this magnitude and type, especially with a CPIF structure, requires thorough cost analysis and market research. The government must demonstrate that the negotiated price reflects the expected costs, profit, and the potential for cost efficiencies.
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SIMPLIFIED ACQUISITION
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
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: $128,157,704
Exercised Options: $127,160,113
Current Obligation: $127,160,113
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: TC2001025
IDV Type: IDC
Timeline
Start Date: 2004-02-10
Current End Date: 2008-04-30
Potential End Date: 2008-04-30 00:00:00
Last Modified: 2017-07-30
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