IBM contract for IT services awarded by Department of the Interior for over $30.8 million

Contract Overview

Contract Amount: $30,896,400 ($30.9M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Interior

Start Date: 2007-08-27

End Date: 2009-12-16

Contract Duration: 842 days

Daily Burn Rate: $36.7K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: BUSINESS BLUPRINT

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of the Interior obligated $30.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: BUSINESS BLUPRINT Key points: 1. Contract awarded on a non-competitive basis, raising questions about potential cost efficiencies. 2. The contract duration of 842 days suggests a significant, ongoing need for services. 3. Fixed-price contract type may offer some cost certainty, but initial pricing needs scrutiny. 4. The specific NAICS code (541519) indicates a broad range of 'Other Computer Related Services'. 5. Awarded to a large, established contractor (IBM), potentially limiting opportunities for smaller firms. 6. The contract was awarded in 2007, indicating a historical need for these services.

Value Assessment

Rating: questionable

The total award amount of over $30.8 million for 'Other Computer Related Services' requires further benchmarking against similar IT support contracts. Given the non-competitive nature of the award, it is difficult to assess if the pricing reflects fair market value or if efficiencies were achieved through competitive bidding. The fixed-price nature provides some predictability, but the absence of competition means there's less external pressure to optimize costs. A detailed breakdown of services rendered against the total cost would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order, indicating that a full and open competition was not conducted. This suggests that either only one source was capable of providing the required services, or there were specific circumstances justifying a sole-source award. The lack of multiple bidders means that price discovery through market forces was limited, potentially leading to higher costs for the government compared to a competitive scenario.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. The government did not benefit from the potential cost savings that typically arise from multiple vendors vying for a contract.

Public Impact

The Department of the Interior benefits from the provision of 'Other Computer Related Services'. These services likely support the agency's internal IT infrastructure and operations. The contract's impact is primarily internal to the Department of the Interior's functioning. The workforce implications are likely related to IT support personnel, potentially both government and contractor staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price transparency and potential savings.
Broad service category ('Other Computer Related Services') may obscure specific cost drivers.
Award to a large incumbent contractor could indicate a lack of focus on small business participation.

Positive Signals

Fixed-price contract offers some cost control for the government.
Award to a reputable contractor like IBM suggests a level of expected performance reliability.
Long contract duration indicates a sustained need, potentially leading to stable IT support.

Sector Analysis

The IT services sector is vast and highly competitive, encompassing a wide range of services from software development to network management. Contracts for 'Other Computer Related Services' (NAICS 541519) are common across federal agencies, supporting critical IT functions. Benchmarking this contract's value would involve comparing its total cost and duration against similar IT support agreements within the federal government, considering the specific services provided and the contractor's expertise. The market for these services is characterized by both large, established players like IBM and numerous smaller, specialized firms.

Small Business Impact

The contract was not set aside for small businesses, and the award to IBM, a large corporation, suggests limited direct benefit to the small business ecosystem through this specific award. There is no explicit information on subcontracting plans, but large prime contractors often utilize small businesses. However, the lack of competition might have reduced opportunities for small businesses to compete for the prime contract itself.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Interior's contracting officers and program managers. Transparency is limited by the non-competitive nature of the award. Accountability would be measured by the contractor's adherence to the terms of the fixed-price contract and the delivery of agreed-upon services. Inspector General jurisdiction would apply if any potential fraud, waste, or abuse were suspected.

Related Government Programs

IT Support Services
Computer Systems Design Services
Information Technology Professional Services
Department of the Interior IT Contracts

Risk Flags

Non-competitive award
Lack of detailed service description
Potential for overpayment due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $30.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. BUSINESS BLUPRINT

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Departmental Offices).

What is the total obligated amount?

The obligated amount is $30.9 million.

What is the period of performance?

Start: 2007-08-27. End: 2009-12-16.

What specific 'Other Computer Related Services' were provided under this contract?

The provided data indicates the NAICS code 541519, which covers 'Other Computer Related Services'. This broad category can encompass a wide array of IT support functions, including but not limited to IT management consulting, IT support services, network administration, data processing services, and IT security consulting. Without a more detailed statement of work or contract line item details, it is difficult to ascertain the precise services rendered. However, given the duration and value, it likely involved significant ongoing support for the Department of the Interior's IT infrastructure, potentially including system maintenance, help desk support, or specialized IT project assistance.

How does the $30.8 million award compare to similar IT service contracts awarded by the Department of the Interior?

Comparing the $30.8 million award to similar IT service contracts within the Department of the Interior requires access to a broader dataset of historical contracts. However, as a general benchmark, IT service contracts of this magnitude are substantial and typically cover multi-year periods, supporting significant agency operations. The non-competitive nature of this award makes direct value comparison challenging, as competitive bids often result in lower prices. To provide a precise comparison, one would need to identify contracts with similar service scopes (e.g., IT support, systems integration) awarded around the same period (2007-2009) and analyze their total value, duration, and pricing structures, ideally focusing on competitively awarded contracts for a more accurate market assessment.

What are the potential risks associated with a sole-source award for IT services?

Sole-source awards for IT services carry several potential risks. Firstly, the absence of competition can lead to inflated prices, as the contractor faces less pressure to offer the most cost-effective solution. Secondly, it may limit innovation, as the government is tied to one provider's offerings without exploring alternatives from other vendors. Thirdly, there's a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Lastly, a sole-source award can reduce transparency and accountability, as there are fewer external benchmarks to assess performance and value. This can also raise concerns about whether the government truly obtained the best possible value for taxpayer dollars.

What is the significance of the contract being awarded on a 'NON-COMPETITIVE DELIVERY ORDER' basis?

A 'NON-COMPETITIVE DELIVERY ORDER' signifies that the contract was not awarded through a full and open competitive process. This typically occurs when only one source is deemed capable of fulfilling the requirement, or under specific circumstances like urgent needs or follow-on work to an existing contract where competition is impractical or not cost-effective. For taxpayers, this means the government may not have secured the lowest possible price, as the usual market forces of competition were absent. It also raises questions about the justification for not competing the requirement and whether alternative solutions were adequately explored.

What does the fixed-price contract type imply for cost management and risk?

A 'FIRM FIXED PRICE' (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. This is generally advantageous for the government as it provides cost certainty and shifts the risk of cost overruns to the contractor. If IBM incurs higher costs than anticipated, their profit margin decreases, but the government's payment remains fixed. Conversely, if IBM completes the work under budget, their profit increases. This structure incentivizes the contractor to manage costs efficiently and perform the work within the agreed-upon price, making it a preferred contract type for minimizing cost uncertainty for the buyer.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $30,896,400

Exercised Options: $30,896,400

Current Obligation: $30,896,400

Parent Contract

Parent Award PIID: INN06PC10435

IDV Type: IDC

Timeline