IBM awarded over $327M for IT modernization by DHS Customs and Border Protection

Contract Overview

Contract Amount: $327,433,239 ($327.4M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2007-11-01

End Date: 2012-02-21

Contract Duration: 1,573 days

Daily Burn Rate: $208.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: IT

Official Description: MODERNIZATION TASK ORDER PROD

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 $327.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MODERNIZATION TASK ORDER PROD Key points: 1. Contract awarded for IT modernization services, indicating a significant investment in upgrading federal technology infrastructure. 2. The contract's duration of over 1500 days suggests a long-term commitment to the modernization effort. 3. Awarded under full and open competition, implying a broad market solicitation and potential for competitive pricing. 4. The Cost Plus Incentive fee structure suggests a focus on performance-based outcomes and cost control. 5. The contract's value places it among substantial IT service procurements within the federal government. 6. The geographic location of performance in Washington D.C. may indicate a focus on headquarters or critical operational systems.

Value Assessment

Rating: good

The contract value of over $327 million for IT modernization is substantial. Benchmarking against similar large-scale IT modernization contracts within federal agencies is crucial for a precise value-for-money assessment. However, the Cost Plus Incentive fee type suggests an attempt to align contractor incentives with cost efficiency and performance, which can be a positive indicator if managed effectively. Without specific performance metrics and final costs, a definitive value assessment is challenging, but the competitive award process provides a baseline for fair pricing.

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. This approach generally fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The number of bidders is not specified, but the open competition suggests a robust process aimed at achieving market-driven pricing and selecting the most capable contractor.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining services at competitive prices and encourages innovation from a wider range of potential providers.

Public Impact

The primary beneficiary is U.S. Customs and Border Protection (CBP), which receives upgraded IT systems to support its mission. Services delivered include the modernization of critical IT infrastructure, likely enhancing operational efficiency and data processing capabilities. The geographic impact is centered in Washington D.C., suggesting a focus on national-level systems or headquarters operations. Workforce implications may include the need for specialized IT skills to implement and manage the modernized systems, potentially creating or shifting jobs within the IT sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive fee structures can lead to cost overruns if not rigorously monitored and managed.
The long contract duration (over 4 years) increases the risk of scope creep or technological obsolescence if not actively managed.
Dependence on a single large contractor for a critical modernization effort can pose risks if performance falters.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield fair pricing.
The Cost Plus Incentive fee structure aligns contractor incentives with performance and cost control.
The contract addresses a critical need for IT modernization, which is essential for agency operational effectiveness.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT modernization services for a federal agency. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and upgrading legacy systems and implementing new technologies. Comparable spending benchmarks for large-scale federal IT modernization projects often run into hundreds of millions of dollars, reflecting the complexity and scale of such undertakings.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). As a large prime contract, it is possible that International Business Machines Corporation may engage small businesses as subcontractors to fulfill specific requirements. However, without explicit subcontracting plans or goals detailed in the award, the direct impact on the small business ecosystem is not immediately clear, though large prime contracts often represent opportunities for specialized small business support.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Customs and Border Protection contracting officers and program managers. Accountability measures are embedded within the Cost Plus Incentive fee structure, which links contractor payment to performance and cost targets. Transparency is generally facilitated through federal procurement databases like FPDS, where contract awards are reported. The Inspector General for the Department of Homeland Security would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Federal IT Modernization Programs
Department of Homeland Security IT Services
Customs and Border Protection Technology Procurement
Large-Scale IT Service Contracts
Cost-Plus Contract Vehicles

Risk Flags

Potential for cost overruns with Cost Plus Incentive fee structure.
Risk of schedule delays in long-term IT modernization projects.
Technological obsolescence if modernization pace does not keep up with industry advancements.
Contractor performance dependency for critical mission systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $327.4 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MODERNIZATION TASK ORDER PROD

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 $327.4 million.

What is the period of performance?

Start: 2007-11-01. End: 2012-02-21.

What specific IT systems or infrastructure components were targeted for modernization under this contract?

The provided data does not specify the exact IT systems or infrastructure components targeted for modernization. However, given the agency (U.S. Customs and Border Protection) and the nature of IT modernization, it likely encompassed areas such as legacy system upgrades, data center consolidation or migration, network infrastructure enhancements, cybersecurity improvements, and the implementation of new software or platforms to improve border security operations, trade processing, and data analytics. A detailed review of the contract's statement of work would be necessary to identify the specific systems.

How did IBM's proposed solution compare to other bidders in terms of technical approach and innovation?

The available data indicates the contract was awarded under 'FULL AND OPEN COMPETITION,' suggesting multiple proposals were likely received and evaluated. However, the specific details of the technical proposals, including IBM's approach and how it was assessed against competitors, are not provided. Typically, agencies evaluate proposals based on criteria such as technical merit, past performance, management approach, and price. Without access to the source selection decision document or evaluation summaries, a comparison of technical solutions and innovation levels between IBM and other bidders cannot be made.

What were the key performance indicators (KPIs) and incentive targets associated with the Cost Plus Incentive fee structure?

The data provided does not detail the specific Key Performance Indicators (KPIs) or incentive targets for this Cost Plus Incentive (CPIF) contract. In a CPIF contract, the final profit is adjusted based on whether the final cost is below or above the target cost, and performance incentives are often tied to achieving specific, measurable outcomes related to schedule, quality, or technical performance. For an IT modernization contract, KPIs could include system uptime, data processing speed improvements, reduction in security vulnerabilities, successful migration of data, or user satisfaction rates. The exact metrics and their associated incentive adjustments would be defined in the contract's Statement of Work and terms.

What is the historical spending trend for IT modernization at U.S. Customs and Border Protection?

The provided data focuses on a single contract award of over $327 million to IBM. To understand the historical spending trend for IT modernization at U.S. Customs and Border Protection (CBP), one would need to analyze CBP's IT procurement data over several fiscal years. This would involve identifying all contracts related to IT modernization, including task orders under larger IDIQs, and summing their values. Trends could reveal whether spending has increased, decreased, or remained stable, and whether CBP is consolidating its IT modernization efforts or diversifying its approach. This single contract represents a significant investment but does not provide a comprehensive trend analysis on its own.

What risks were identified during the procurement process, and how were they mitigated?

The provided data does not explicitly list risks identified during the procurement process or their mitigation strategies. However, for a contract of this magnitude and type (Cost Plus Incentive), common risks include potential cost overruns, schedule delays, scope creep, contractor performance issues, and technological obsolescence. Agencies typically mitigate these risks through robust requirements definition, thorough market research, a competitive solicitation process, clear contract terms and conditions, strong contract administration, performance monitoring, and defined dispute resolution mechanisms. The selection of a CPIF fee structure itself is a risk management tool, aiming to incentivize cost control and performance.

How does the $327 million award compare to other major federal IT modernization contracts awarded around the same period (2007-2012)?

The $327 million award to IBM by DHS Customs and Border Protection, occurring between 2007 and 2012, was a substantial sum for an IT modernization contract during that era. Federal IT spending was significant during this period, with agencies investing heavily in upgrading aging infrastructure and systems. While this contract is large, it is comparable to other major federal IT modernization efforts undertaken by agencies like the Department of Defense, IRS, or Social Security Administration, which often involved multi-year, multi-hundred-million-dollar procurements. Benchmarking against specific, contemporaneous contracts for similar services (e.g., enterprise resource planning implementations, large-scale network upgrades) would provide a more precise comparison of its relative size and significance.

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: $327,433,239

Exercised Options: $327,433,239

Current Obligation: $327,433,239

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline