IBM awarded $142.8M DHS contract for modernization task order, highlighting IT infrastructure needs

Contract Overview

Contract Amount: $142,808,158 ($142.8M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2006-08-17

End Date: 2010-08-31

Contract Duration: 1,475 days

Daily Burn Rate: $96.8K/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 22

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 $142.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MODERNIZATION TASK ORDER 22 Key points: 1. Contract value of $142.8 million indicates significant investment in IT modernization. 2. Full and open competition suggests a robust market for these services. 3. Cost Plus Award Fee (CPA) structure can incentivize performance but requires careful oversight. 4. The contract duration of 1475 days points to a long-term project. 5. Awarded by U.S. Customs and Border Protection, suggesting a focus on border security technology. 6. IBM's selection implies a strong track record in large-scale government IT projects.

Value Assessment

Rating: good

The contract value of $142.8 million for a modernization task order appears reasonable given the scope and duration. Benchmarking against similar large-scale IT modernization contracts within DHS or other agencies would provide further context. The Cost Plus Award Fee (CPA) structure, while common for complex projects, necessitates diligent monitoring to ensure costs remain aligned with performance objectives and market rates. Without specific per-unit cost data, a precise value-for-money assessment is challenging, but the competitive nature of the award suggests a degree of price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a competitive environment, though more bidders would typically indicate stronger price discovery. The open competition is a positive sign for achieving fair market pricing and ensuring the government selects the best value solution.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and the assurance that the contract was awarded based on merit rather than restricted access.

Public Impact

The primary beneficiaries are U.S. Customs and Border Protection (CBP) and its operational efficiency through modernized systems. Services delivered likely include software development, system integration, and IT infrastructure upgrades. The geographic impact is centered in Washington D.C., the contract's place of performance. Workforce implications may involve IT specialists, project managers, and technical support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can lead to cost overruns if not managed tightly.
The long duration of the contract increases the risk of scope creep or technological obsolescence.
Reliance on a single large contractor for critical modernization could pose a risk if performance falters.

Positive Signals

Full and open competition suggests a healthy market and potential for competitive pricing.
IBM is a well-established contractor with extensive experience in government IT.
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 IT services and modernization for a federal agency. The IT services market for the federal government is substantial, with agencies consistently investing in upgrading legacy systems and enhancing cybersecurity. Comparable spending benchmarks would involve looking at other large-scale IT modernization efforts within agencies like DHS, DoD, or GSA, which often run into hundreds of millions of dollars.

Small Business Impact

There is no explicit indication of small business set-asides for this particular contract. Given the large dollar value and the nature of IT modernization, it is likely that IBM, as the prime contractor, may engage small businesses as subcontractors. However, without specific subcontracting plans or goals, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security and U.S. Customs and Border Protection. The Cost Plus Award Fee structure necessitates robust performance monitoring and financial oversight to ensure that award fees are justified. Transparency would be facilitated through contract reporting mechanisms, and potential issues could be addressed by the agency's contracting officer and potentially the DHS Inspector General.

Related Government Programs

DHS IT Modernization Programs
CBP Technology Modernization
Federal IT Services Contracts
Large-Scale System Integration Projects

Risk Flags

Potential for cost overruns due to CPA structure
Risk of technological obsolescence given contract duration
Limited number of bidders may reduce competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $142.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MODERNIZATION TASK ORDER 22

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 $142.8 million.

What is the period of performance?

Start: 2006-08-17. End: 2010-08-31.

What is IBM's track record with similar large-scale IT modernization contracts for federal agencies?

IBM has a long and extensive history of performing large-scale IT modernization and system integration projects for various federal agencies, including the Department of Defense, NASA, and other components of the Department of Homeland Security. Their experience often spans complex software development, infrastructure upgrades, and data center consolidation. While specific performance metrics for past contracts are not detailed here, IBM's continued success in winning significant federal IT contracts suggests a generally positive track record. However, like any large contractor, past performance reviews and contract close-outs would provide a more granular understanding of their successes and challenges on specific projects.

How does the $142.8 million contract value compare to typical IT modernization efforts at CBP?

The $142.8 million contract value for this modernization task order is substantial and aligns with the significant investments federal agencies, particularly those with critical missions like CBP, make in upgrading their IT infrastructure. CBP, responsible for border security and trade facilitation, relies heavily on complex IT systems. Modernization efforts for such systems often involve multi-year projects with budgets in the tens or hundreds of millions of dollars. This award appears to be a significant, but not necessarily outlier, investment for a critical modernization initiative within CBP, reflecting the scale and complexity of their technological needs.

What are the primary risks associated with a Cost Plus Award Fee (CPA) contract structure for this type of project?

The primary risks associated with a Cost Plus Award Fee (CPA) contract for IT modernization include potential cost overruns and a less direct incentive for cost control compared to fixed-price contracts. While the 'award fee' component is designed to incentivize performance, the 'cost plus' element means the government pays the contractor's allowable costs plus a fee that can be adjusted based on performance. This structure requires robust government oversight to ensure costs are reasonable and allocable, and that performance metrics are clearly defined and objectively measured. Without stringent management, there's a risk that costs could escalate beyond initial expectations, even if performance targets are met.

How might the 1475-day duration (approx. 4 years) impact the effectiveness of this modernization effort?

A duration of approximately four years for an IT modernization contract presents both opportunities and risks. On the positive side, it allows for thorough planning, phased implementation, and comprehensive testing, which are crucial for complex system overhauls. It also provides stability for the project team and contractor. However, the extended timeline increases the risk of technological obsolescence, as IT landscapes evolve rapidly. Furthermore, requirements may change over four years, potentially leading to scope creep or the need for significant contract modifications. Effective project management, agile methodologies, and regular reviews are essential to mitigate these risks and ensure the modernized systems remain relevant and effective upon completion.

What does the 'full and open competition' with two bidders imply for price discovery and value for taxpayers?

Full and open competition is generally the preferred method for federal procurements as it maximizes the pool of potential offerors, fostering a competitive environment. However, receiving only two bids for a contract of this magnitude suggests that the market for such specialized IT modernization services might be concentrated among a few large providers, or that the solicitation's requirements were highly specific. While competition is present, only two bidders might limit the extent of price discovery compared to a scenario with numerous offers. For taxpayers, this means that while competition likely drove the price down from a non-competitive scenario, there may be less assurance of achieving the absolute lowest possible price compared to a more robustly contested bid.

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, 20817

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $453,073,019

Exercised Options: $142,808,158

Current Obligation: $142,808,158

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline