IBM contract for Customs and Border Protection modernization valued at $121.9M, awarded under full and open competition

Contract Overview

Contract Amount: $121,934,209 ($121.9M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2007-11-01

End Date: 2010-12-15

Contract Duration: 1,140 days

Daily Burn Rate: $107.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: IT

Official Description: MODERNIZATION TASK ORDER A2: ENTRY SUMMARY, ACCOUNTS, AND REVENUE

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 $121.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MODERNIZATION TASK ORDER A2: ENTRY SUMMARY, ACCOUNTS, AND REVENUE Key points: 1. Contract awarded to a single, large incumbent vendor, raising questions about potential lack of competitive pressure. 2. Fixed Price Incentive contract type suggests a focus on performance targets, but requires careful monitoring of cost overruns. 3. The contract duration of 1140 days (approx. 3 years) indicates a significant, long-term commitment to modernization efforts. 4. Awarded by the Department of Homeland Security, this contract supports critical border security and revenue collection functions. 5. The task order focuses on entry summary, accounts, and revenue, highlighting its importance to CBP's financial operations. 6. No specific small business set-aside was noted, suggesting limited direct opportunities for smaller firms in this prime contract.

Value Assessment

Rating: fair

Benchmarking the value of this specific task order against similar modernization efforts within DHS is challenging without more granular data on the scope of work. The fixed-price incentive structure aims to control costs, but the total award of $121.9 million over approximately three years suggests a substantial investment. Without comparative data on per-unit costs for specific modernization components or a clear understanding of the baseline against which incentives are measured, a definitive value-for-money assessment is difficult. However, the award to a major IT provider like IBM indicates access to significant technical capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit offers. While the specific number of bidders is not provided, the 'full and open' designation suggests a competitive process was initiated. The effectiveness of this competition in driving down price and ensuring optimal value depends on the number of actual proposals received and the evaluation criteria used. A robust competition typically leads to better price discovery and a wider range of technical solutions.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a market where vendors compete on price and performance, potentially leading to more cost-effective solutions for government services.

Public Impact

This contract directly benefits U.S. Customs and Border Protection (CBP) by supporting the modernization of its entry summary, accounts, and revenue systems. The services delivered are crucial for efficient trade processing, accurate revenue collection, and enhanced border security operations. The geographic impact is national, affecting all ports of entry and trade operations across the United States. The contract likely involves a significant workforce of IT professionals and subject matter experts, both within IBM and potentially CBP, contributing to the federal IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if incentive targets are not met or if scope creep occurs within the fixed-price incentive structure.
Reliance on a single large contractor for a critical modernization effort could lead to vendor lock-in and reduced future competition.
Lack of specific small business participation details raises concerns about equitable distribution of federal contracting dollars.

Positive Signals

Awarded through full and open competition, suggesting a structured procurement process.
Fixed Price Incentive contract type aims to align contractor performance with government objectives.
The contract supports a critical mission for the Department of Homeland Security, indicating strategic importance.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on enterprise resource planning and financial systems modernization for a federal agency. The market for large-scale government IT modernization projects is dominated by major system integrators and technology providers. Spending in this area is substantial, driven by the need to update legacy systems, improve efficiency, and enhance security. Comparable spending benchmarks would typically involve looking at other large IT modernization contracts within DHS or similar agencies undertaking significant system overhauls.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses (ss=false, sb=false). This suggests that the primary award went to a large business, International Business Machines Corporation. While large prime contracts can sometimes include subcontracting opportunities for small businesses, the absence of a specific set-aside or explicit subcontracting goals in the summary data means direct benefits to the small business ecosystem from this prime award are not guaranteed. Further review of the contract's subcontracting plan would be necessary to assess its impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Customs and Border Protection contracting officers and program managers within the Department of Homeland Security. As a task order under a larger contract vehicle, its execution is subject to the oversight mechanisms of that vehicle. Transparency is generally facilitated through contract award databases like FPDS. Accountability is driven by the fixed-price incentive contract terms, performance metrics, and reporting requirements. The Department of Homeland Security's Office of Inspector General (OIG) would have jurisdiction to investigate potential fraud, waste, or abuse related to this contract.

Related Government Programs

Department of Homeland Security IT Modernization Programs
Customs and Border Protection Financial Systems
Federal Revenue Collection Systems
Entry Summary Data Processing Contracts
Large-Scale IT Service Contracts

Risk Flags

Potential for cost escalation under FPI contract if not closely managed.
Limited visibility into specific small business participation.
Reliance on a single large incumbent vendor for critical modernization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $121.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MODERNIZATION TASK ORDER A2: ENTRY SUMMARY, ACCOUNTS, AND REVENUE

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 $121.9 million.

What is the period of performance?

Start: 2007-11-01. End: 2010-12-15.

What was the specific scope of work for 'MODERNIZATION TASK ORDER A2: ENTRY SUMMARY, ACCOUNTS, AND REVENUE'?

The task order, valued at approximately $121.9 million, was focused on modernizing key operational systems for U.S. Customs and Border Protection (CBP). Specifically, it targeted the 'Entry Summary, Accounts, and Revenue' functions. This implies improvements to the systems responsible for processing import declarations (entry summaries), managing financial accounts related to trade and customs duties, and ensuring the accurate collection of revenue owed to the government. Modernization efforts likely included software upgrades, system integration, process re-engineering, and potentially the implementation of new technologies to enhance efficiency, accuracy, and data integrity in these critical areas.

How does the Fixed Price Incentive (FPI) contract type typically function, and what are its implications for this contract?

A Fixed Price Incentive (FPI) contract establishes a target cost, target profit, and target price. The final price is adjusted based on the contractor's performance against the target cost. If the final cost is lower than the target cost, both the government and the contractor share in the savings (up to a ceiling price). Conversely, if the final cost exceeds the target cost, the contractor bears a portion of the overrun, but the government's liability is capped at the ceiling price. For this IBM contract, the FPI structure incentivizes IBM to control costs while meeting performance objectives related to the modernization of CBP's entry summary, accounts, and revenue systems. It aims to balance cost control with the need for quality and timely delivery, but requires careful monitoring to ensure the ceiling price is not breached and that performance targets are met.

What is the significance of IBM being the contractor for this modernization effort?

International Business Machines Corporation (IBM) is a major global technology and consulting firm with extensive experience in large-scale IT projects, including those for government agencies. Awarding this $121.9 million modernization task order to IBM suggests that CBP sought a contractor with deep technical expertise, a proven track record in system integration, and the capacity to manage complex, multi-year projects. IBM's involvement indicates a reliance on established industry capabilities for critical infrastructure upgrades. While large contractors bring significant resources, it also highlights the trend of major federal IT modernization efforts being concentrated among a few large prime vendors.

What does the contract duration of 1140 days imply for CBP's modernization timeline?

The contract duration of 1140 days, approximately three years and one month, indicates a substantial and long-term commitment to the modernization of CBP's entry summary, accounts, and revenue systems. This timeframe suggests that the scope of work is complex, involving significant system development, integration, testing, and deployment phases. Such durations are typical for large-scale IT modernization projects where legacy systems need to be replaced or significantly overhauled. It implies that the benefits of the modernization may not be fully realized until the end of this period, requiring sustained project management and oversight from CBP throughout the contract's life.

How does this contract fit into the broader context of Department of Homeland Security (DHS) IT spending?

This $121.9 million task order represents a significant investment within the Department of Homeland Security's overall IT budget, specifically allocated to U.S. Customs and Border Protection (CBP). DHS is one of the largest federal agencies with a substantial and complex IT infrastructure supporting diverse missions, including border security, immigration, and emergency management. Modernizing core systems like those handling entry summaries and revenue collection is crucial for operational efficiency and national security. This contract aligns with broader government initiatives to update aging federal IT systems, improve data management, and enhance cybersecurity posture across agencies.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $133,977,493

Exercised Options: $121,934,209

Current Obligation: $121,934,209

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline