DHS awards $75.5M contract to IBM for ESAR services, raising value concerns

Contract Overview

Contract Amount: $75,467,731 ($75.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2005-12-02

End Date: 2007-10-31

Contract Duration: 698 days

Daily Burn Rate: $108.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: IT

Official Description: TO 23 RELEASE 5 ESAR

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20229

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $75.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: TO 23 RELEASE 5 ESAR Key points: 1. The contract value of $75.5M for 698 days is substantial, warranting scrutiny. 2. IBM is a major player, but the lack of specific competition details is notable. 3. The 'COST PLUS INCENTIVE' contract type can lead to cost overruns. 4. The sector is IT, specifically related to data processing and management.

Value Assessment

Rating: questionable

The contract value of $75.5M over 698 days averages to approximately $108,120 per day. Without specific details on the services rendered, it's difficult to benchmark against similar IT contracts, but the daily rate appears high.

Cost Per Unit: $108,120 per day

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing. However, the specific details of the bidding process and the number of bidders are not provided, making it hard to assess the effectiveness of price discovery.

Taxpayer Impact: The use of a cost-plus incentive fee contract type, while potentially encouraging performance, carries a risk of increased costs for taxpayers if not managed tightly.

Public Impact

Taxpayers may be paying a premium for IT services due to the contract structure. The long duration of the contract could limit opportunities for future cost savings through competitive re-bidding. Lack of transparency on specific deliverables makes it hard for the public to gauge value for money.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee structure
High daily rate
Lack of detailed performance metrics

Positive Signals

Awarded under full and open competition
Established contractor (IBM)

Sector Analysis

This contract falls within the Information Technology sector, specifically for the development and support of the Electronic Security and Access Records (ESAR) system. Spending in this area is critical for agency operations but requires careful management to ensure cost-effectiveness.

Small Business Impact

The data indicates this contract was not awarded to a small business. There is no information provided on subcontracting opportunities for small businesses within this award.

Oversight & Accountability

Oversight of this contract would involve monitoring IBM's performance against the incentive fee structure and ensuring that costs remain within reasonable bounds. The Department of Homeland Security's contracting officers are responsible for this oversight.

Related Government Programs

Department of Homeland Security Contracting
U.S. Customs and Border Protection Programs

Risk Flags

Cost-plus incentive fee contract type can lead to cost overruns.
High daily rate suggests potential for overpayment.
Lack of detailed service description makes value assessment difficult.
No indication of small business participation.
Contract duration is significant, potentially limiting future competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $75.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. TO 23 RELEASE 5 ESAR

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 $75.5 million.

What is the period of performance?

Start: 2005-12-02. End: 2007-10-31.

What specific services were provided under the ESAR contract, and how do they justify the daily cost?

The provided data does not detail the specific services rendered under the ESAR contract. To justify the daily cost of approximately $108,120, a comprehensive breakdown of IT support, software development, system maintenance, and any specialized data processing would be required. Without this, it is difficult to ascertain the value for money provided to U.S. Customs and Border Protection.

What were the key performance indicators and incentive targets for IBM under this cost-plus incentive fee contract?

The data does not specify the key performance indicators (KPIs) or incentive targets set for IBM under the 'COST PLUS INCENTIVE' contract. Understanding these metrics is crucial for assessing whether the contract structure effectively drove desired outcomes and managed risks. The absence of this information hinders a thorough evaluation of the contract's effectiveness in achieving its objectives.

How did the full and open competition process ensure the best possible price and value for the government?

While the contract was awarded under 'FULL AND OPEN COMPETITION,' the provided data lacks details on the number of bids received, the evaluation criteria used, and the final negotiated price relative to initial proposals. Effective competition typically involves multiple qualified bidders submitting competitive offers, leading to a price that reflects market value. Without these specifics, the extent to which competition truly optimized value is unclear.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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: $75,467,731

Exercised Options: $75,467,731

Current Obligation: $75,467,731

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline