IBM's $200M DHS contract for IT Operations & Maintenance shows long-term engagement and full competition

Contract Overview

Contract Amount: $201,990,785 ($202.0M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2005-09-29

End Date: 2012-03-06

Contract Duration: 2,350 days

Daily Burn Rate: $86.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: IT

Official Description: TO 19 O&M

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $202.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: TO 19 O&M Key points: 1. Contract duration of nearly 7 years suggests a critical, ongoing need for IT services. 2. Full and open competition indicates a robust bidding process, potentially leading to better pricing. 3. The contract type (Cost Plus Incentive) aims to balance contractor incentives with cost control. 4. IBM's significant role highlights its established presence in providing IT solutions to federal agencies. 5. The substantial award value points to the complexity and scale of the IT services required. 6. The contract's completion date in 2012 suggests it is no longer active, requiring analysis of its historical impact.

Value Assessment

Rating: good

Benchmarking the value of this contract is challenging without specific performance metrics or comparable IT O&M contracts from the same period. However, the Cost Plus Incentive Fee (CPIF) contract type suggests an effort to align contractor performance with cost objectives, which can be a good value driver if managed effectively. The duration and scale indicate a significant investment, implying a perceived value by the agency at the time of award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The presence of multiple bidders, though not explicitly detailed here, is implied by the competition type and is crucial for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging innovation from a wider pool of contractors, leading to more efficient use of public funds.

Public Impact

The Department of Homeland Security (DHS) and specifically U.S. Customs and Border Protection (CBP) benefited from sustained IT operations and maintenance. This contract supported critical IT infrastructure necessary for border security and immigration enforcement operations. The services delivered ensured the continuity and reliability of essential IT systems for national security. The contract likely supported IT jobs within IBM and potentially its subcontractors, contributing to the tech workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to potential cost overruns if not closely managed.
Cost Plus Incentive Fee contracts require diligent oversight to ensure cost efficiency.
Reliance on a single large contractor for critical IT functions may pose risks if not diversified.

Positive Signals

Full and open competition suggests a competitive award process, likely securing favorable terms.
The contract's scale and duration indicate a stable, long-term need being met effectively.
IBM's established track record in government IT likely ensured reliable service delivery.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on Operations and Maintenance (O&M) for complex government systems. The IT O&M market is substantial, with agencies heavily reliant on contractors for maintaining aging infrastructure and supporting evolving digital services. Comparable spending benchmarks would involve looking at other large-scale IT O&M contracts awarded by federal agencies during the 2005-2012 period.

Small Business Impact

The provided data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale IT O&M contract awarded to a major corporation like IBM, it is unlikely to have significant direct subcontracting opportunities for small businesses unless specifically mandated or pursued by the prime contractor. The focus was likely on large-scale IT service delivery rather than small business ecosystem development.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of Homeland Security, likely through contracting officers and program managers. The Cost Plus Incentive Fee structure necessitates close monitoring of costs and performance against established targets. Transparency would be facilitated through contract reporting requirements, and potential issues could be addressed by the agency's Inspector General if performance or cost concerns arose.

Related Government Programs

DHS IT Modernization Programs
Customs and Border Protection IT Infrastructure
Federal Civilian IT Operations and Maintenance
Large-Scale IT Service Contracts
Cost Plus Incentive Fee Contracts

Risk Flags

Long-term contract duration
Cost Plus Incentive Fee structure
Large dollar value
Critical infrastructure support

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $202.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. TO 19 O&M

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 $202.0 million.

What is the period of performance?

Start: 2005-09-29. End: 2012-03-06.

What was IBM's track record with the federal government prior to and during this contract?

International Business Machines Corporation (IBM) has a long and extensive history of contracting with the U.S. federal government across various agencies and sectors, including IT services, hardware, and software solutions. Prior to this specific DHS contract awarded in 2005, IBM was already a major government contractor. During the contract period (2005-2012), IBM continued to secure significant federal awards. Its track record generally reflects a capacity to handle large, complex IT projects. However, like any large contractor, specific contract performance can vary, and detailed reviews of past performance on similar contracts would be necessary for a comprehensive assessment. Federal procurement databases often contain past performance information, which would provide more granular insights into IBM's execution on this and comparable contracts.

How does the $200 million award value compare to similar IT O&M contracts for border security agencies during that era?

The $200 million award value for IT Operations & Maintenance (O&M) to U.S. Customs and Border Protection (CBP) from 2005 to 2012 is substantial, reflecting the critical and extensive IT needs of a large federal agency responsible for national security. During that period, federal agencies were increasingly reliant on robust IT infrastructure for data management, surveillance, and operational efficiency. Comparable contracts for large-scale IT O&M services, particularly for agencies with significant operational footprints like CBP, often ran into hundreds of millions of dollars over multi-year periods. Factors influencing this value include the scope of systems managed (e.g., legacy systems, new implementations), the number of users supported, security requirements, and the complexity of the IT environment. Without specific comparative data points for similar CBP or DHS IT O&M contracts from the same timeframe, it's difficult to definitively benchmark, but the figure aligns with the scale of IT investments typical for major federal law enforcement and security organizations.

What were the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract of this magnitude?

Cost Plus Incentive Fee (CPIF) contracts, while designed to incentivize efficiency, carry inherent risks, especially for large-scale, long-term agreements like this $200 million DHS contract. A primary risk is that the 'cost-plus' nature, even with incentives, can lead to cost growth if the government's oversight and baseline targets are not rigorously defined and monitored. Contractors might incur costs that, while technically allowable, are higher than necessary if the incentive structure isn't perfectly aligned with true value. Another risk involves the complexity of defining and measuring performance metrics for the incentive component; if these are poorly defined or subjective, it can lead to disputes or failure to achieve the intended cost savings. For taxpayers, the risk is paying more than necessary if the contractor's profit is maximized through cost increases rather than efficiency gains. Effective management and clear performance metrics are crucial to mitigate these risks.

How effective was the 'full and open competition' in ensuring value for money for this specific contract?

The 'full and open competition' designation for this $200 million DHS contract is a positive indicator for value for money, as it theoretically allows the widest possible pool of qualified contractors to bid. This competitive pressure typically drives down prices and encourages innovation. However, the ultimate effectiveness depends on the specifics of the solicitation, the evaluation criteria, and the number of actual bids received. If the solicitation was well-defined and attracted multiple strong proposals, it's likely that the government secured competitive pricing and terms. Conversely, if the technical requirements were overly restrictive or the bidding process was complex, it might have deterred some potential bidders, reducing the competitive intensity. Without access to the number of bidders or the evaluation details, we infer value from the process itself, assuming it functioned as intended to yield the best possible offer at the time.

What does the contract's duration (nearly 7 years) suggest about the nature of the IT services provided?

A contract duration of nearly seven years (September 2005 to March 2012) for IT Operations & Maintenance (O&M) strongly suggests that the services provided were fundamental, mission-critical, and required long-term stability. Such extended periods are typical for maintaining complex, integrated IT systems that form the backbone of an agency's operations, like those at U.S. Customs and Border Protection. This duration implies that the IT infrastructure supported was not easily replaceable or subject to frequent, radical changes, but rather required ongoing support, updates, and system integrity management. It also indicates a level of trust and established working relationship between DHS and IBM, as agencies are generally hesitant to commit to such long-term engagements without confidence in the contractor's ability to deliver reliably over an extended period.

What were the potential implications of this contract ending in 2012 for ongoing IT services at DHS?

The conclusion of this $200 million IT O&M contract in March 2012 would have necessitated a transition plan for the services previously provided by IBM. Depending on the agency's strategy, this could have involved several outcomes: the services might have been re-competed under a new contract, potentially with a different contractor or IBM again if they won the re-bid; the scope of services might have been absorbed into other existing contracts; or the agency might have brought some functions in-house. For DHS, particularly U.S. Customs and Border Protection, ensuring continuity of IT operations was paramount. A poorly managed transition could have led to disruptions in critical systems, impacting border security operations. Conversely, a well-executed transition, possibly involving knowledge transfer and phased handovers, would ensure minimal impact and potentially lead to improved services or cost efficiencies under a new arrangement.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

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: $202,606,589

Exercised Options: $201,990,785

Current Obligation: $201,990,785

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline