DHS awards IBM $91.8M for Enterprise Software and Services Offering (ESSO) modernization

Contract Overview

Contract Amount: $91,823,315 ($91.8M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2010-03-31

End Date: 2012-03-31

Contract Duration: 731 days

Daily Burn Rate: $125.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MODERNIZATION TASK ORDER ESSO (ENTERPRISE SOFTWARE AND SERVICES OFFERING)

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20202

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $91.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MODERNIZATION TASK ORDER ESSO (ENTERPRISE SOFTWARE AND SERVICES OFFERING) Key points: 1. Contract value represents a significant investment in IT modernization for U.S. Customs and Border Protection. 2. The firm-fixed-price structure aims to control costs, but requires careful scope management. 3. A full and open competition suggests a potentially competitive bidding process. 4. The contract duration of two years indicates a focused effort on specific modernization goals. 5. IBM's extensive experience in government IT contracts positions them as a capable provider. 6. The ESSO program likely supports critical border security and trade facilitation functions.

Value Assessment

Rating: good

The contract value of $91.8 million over two years for an Enterprise Software and Services Offering (ESSO) modernization task order appears reasonable given the scope of IT modernization for a large agency like U.S. Customs and Border Protection. Benchmarking against similar large-scale IT modernization contracts within federal agencies suggests that costs can range significantly, but this figure falls within expected parameters for comprehensive software and service delivery. The firm-fixed-price contract type provides cost certainty, assuming the scope is well-defined and managed.

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 bids. While the number of bidders is not specified, this method generally fosters a competitive environment, which can lead to better pricing and innovative solutions. The agency's decision to use full and open competition suggests confidence in the market's ability to provide suitable options for their complex IT needs.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it maximizes the potential for cost savings through competitive bidding and encourages a wider range of solutions, potentially leading to more efficient service delivery.

Public Impact

Benefits U.S. Customs and Border Protection by modernizing critical IT systems. Enhances capabilities for border security and trade facilitation operations. Supports the agency's mission to secure U.S. borders and facilitate lawful international trade. Impacts the IT workforce within CBP and potentially IBM through project execution. Geographic impact is national, supporting operations across all ports of entry and border sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in large IT modernization projects, which could increase costs beyond initial estimates.
Dependence on a single contractor (IBM) for critical IT services could pose risks if performance issues arise.
Ensuring effective knowledge transfer and integration with existing CBP systems requires diligent oversight.

Positive Signals

IBM's extensive experience in large-scale federal IT projects suggests a strong capability to deliver complex solutions.
The firm-fixed-price contract type provides a degree of cost predictability for the agency.
Full and open competition indicates a robust market engagement process, potentially leading to better value.

Sector Analysis

The federal IT services market is vast and highly competitive, with agencies continually investing in modernization to improve operational efficiency and security. This contract falls within the Enterprise Software and Services Offering (ESSO) category, which encompasses a broad range of solutions including software development, implementation, maintenance, and support. Comparable spending benchmarks for large-scale IT modernization efforts within federal agencies can vary widely, but significant investments are common for agencies with critical national security and operational mandates like DHS.

Small Business Impact

As this contract was awarded under full and open competition and does not indicate a small business set-aside, the direct impact on small businesses is likely limited unless IBM engages them as subcontractors. The success of this contract could indirectly benefit the small business ecosystem if IBM actively seeks out and integrates small business capabilities for specialized tasks or components of the ESSO modernization. However, without specific subcontracting plans or set-aside provisions, the primary focus is on the prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract would typically be managed by U.S. Customs and Border Protection contracting officers and program managers. Accountability measures are embedded within the firm-fixed-price contract terms, requiring IBM to deliver specified services and software within the agreed budget and timeline. Transparency is facilitated through contract reporting requirements and potential reviews by agency oversight bodies or the Government Accountability Office (GAO), though specific Inspector General jurisdiction would depend on the nature of any issues that arise.

Related Government Programs

Department of Homeland Security IT Modernization Programs
U.S. Customs and Border Protection Systems Modernization
Federal Enterprise Software and Services Contracts
Large-Scale IT Services Delivery Contracts

Risk Flags

Potential for cost overruns if scope is not tightly managed.
Risk of vendor lock-in with a single provider for critical IT services.
Dependence on contractor performance for mission-critical system upgrades.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $91.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MODERNIZATION TASK ORDER ESSO (ENTERPRISE SOFTWARE AND SERVICES OFFERING)

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 $91.8 million.

What is the period of performance?

Start: 2010-03-31. End: 2012-03-31.

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

IBM has a long and extensive history of performing large-scale IT modernization and services contracts for numerous federal agencies, including the Department of Homeland Security (DHS). Their portfolio includes work on enterprise resource planning (ERP) systems, cloud migrations, cybersecurity solutions, and custom software development. For DHS specifically, IBM has been involved in various projects supporting different components, leveraging their broad technological expertise. While specific performance metrics for past contracts are not detailed here, IBM's continued success in winning and executing such significant contracts suggests a generally positive track record in meeting complex government requirements. However, as with any large contractor, past performance reviews and contract-specific data would be necessary for a comprehensive assessment.

How does the $91.8 million contract value compare to other federal ESSO modernization efforts?

The $91.8 million contract value for this two-year ESSO modernization task order is substantial, reflecting the complexity and scope typically associated with upgrading enterprise-level software and services for a major federal agency like U.S. Customs and Border Protection (CBP). Federal IT modernization projects can range from tens of millions to billions of dollars, depending on the agency's size, the criticality of the systems, and the extent of the modernization required. For a program like ESSO, which likely underpins critical border security and trade functions, this investment appears aligned with industry benchmarks for similar large-scale initiatives. Agencies often face significant costs in replacing legacy systems, integrating new technologies, and ensuring seamless data flow and operational continuity.

What are the primary risks associated with this firm-fixed-price contract for IT modernization?

The primary risks associated with this firm-fixed-price (FFP) contract for IT modernization revolve around scope definition and management. While FFP contracts offer cost certainty to the government, they place the risk of cost overruns on the contractor (IBM). If the scope of the ESSO modernization is not precisely defined or if unforeseen technical challenges arise, IBM may incur higher costs than anticipated. This could potentially lead to pressure on quality or a reluctance to accommodate necessary changes if they are perceived as outside the original scope. For CBP, the risk lies in ensuring that the modernization fully meets evolving operational needs without costly change orders or compromises in functionality. Effective project management and clear communication channels are crucial to mitigate these risks.

What is the expected impact of this contract on CBP's operational effectiveness?

This contract is expected to significantly enhance CBP's operational effectiveness by modernizing its Enterprise Software and Services Offering (ESSO). Modernized IT systems can lead to improved data accuracy, faster processing times for customs declarations and border crossings, and better integration between different CBP divisions and systems. This can result in more efficient trade facilitation, enhanced border security through better intelligence and surveillance capabilities, and improved resource allocation. Ultimately, a successful ESSO modernization should streamline operations, reduce manual workarounds, and provide CBP personnel with more robust and reliable tools to perform their critical missions.

How has federal spending on IT modernization, specifically for agencies like DHS, trended in recent years?

Federal spending on IT modernization, particularly within agencies like the Department of Homeland Security (DHS), has been on a significant upward trend in recent years. Driven by the need to replace aging legacy systems, enhance cybersecurity, adopt cloud technologies, and improve data analytics capabilities, agencies are increasingly prioritizing IT modernization. DHS, with its broad mandate encompassing national security, border control, and emergency management, consistently represents a large portion of federal IT spending. Budgets allocated to modernization efforts aim to improve operational efficiency, bolster defenses against cyber threats, and enable more agile responses to evolving challenges. This trend is supported by government-wide initiatives and mandates focused on digital transformation and improving the efficiency of federal IT investments.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $92,146,540

Exercised Options: $92,146,540

Current Obligation: $91,823,315

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TC2001025

IDV Type: IDC

Timeline