Navy ERP Project Support Contract Awarded to IBM for $176.9M
Contract Overview
Contract Amount: $176,903,692 ($176.9M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Defense
Start Date: 2018-09-24
End Date: 2020-09-23
Contract Duration: 730 days
Daily Burn Rate: $242.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: NAVY ERP PROJECTS SUPPORT
Place of Performance
Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17050
Plain-Language Summary
Department of Defense obligated $176.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: NAVY ERP PROJECTS SUPPORT Key points: 1. Significant investment in enterprise resource planning (ERP) for the Navy. 2. IBM is a major player in government IT services, indicating strong incumbent advantage. 3. Potential risks include cost overruns and schedule delays common in large IT projects. 4. The 'Other Computer Related Services' NAICS code suggests a broad scope of support.
Value Assessment
Rating: fair
The contract's Cost Plus Fixed Fee (CPFF) structure can lead to higher costs if not managed tightly. Benchmarking against similar large-scale ERP implementations is difficult due to unique Navy requirements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific nature of ERP support may favor established vendors with relevant experience.
Taxpayer Impact: Taxpayer funds are being used for a critical IT infrastructure upgrade. The CPFF pricing model necessitates careful oversight to ensure cost efficiency.
Public Impact
Enhances Navy's operational efficiency through integrated systems. Supports modernization of critical defense infrastructure. Potential for improved data management and decision-making across naval operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee pricing can incentivize higher spending.
- Large IT projects are prone to scope creep and delays.
- Dependency on a single vendor for critical system support.
Positive Signals
- Awarded through full and open competition.
- Supports essential defense modernization efforts.
Sector Analysis
The IT services sector, particularly for large-scale enterprise resource planning, is characterized by significant investment and long project lifecycles. Government IT spending benchmarks vary widely based on project complexity and scope.
Small Business Impact
This contract was awarded to a large corporation (IBM) and does not appear to have specific set-asides for small businesses. The nature of large ERP projects often limits direct small business participation as prime contractors.
Oversight & Accountability
The Department of Defense's contracting oversight mechanisms are crucial for managing CPFF contracts. Regular audits and performance reviews are necessary to ensure accountability and prevent cost overruns.
Related Government Programs
- Other Computer Related Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost Plus Fixed Fee pricing structure.
- Potential for scope creep in large IT projects.
- Long-term dependency on a single vendor.
- Complexity of integrating ERP with existing defense systems.
- Cybersecurity risks associated with sensitive defense data.
Tags
other-computer-related-services, department-of-defense, pa, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $176.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. NAVY ERP PROJECTS SUPPORT
Who is the contractor on this award?
The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $176.9 million.
What is the period of performance?
Start: 2018-09-24. End: 2020-09-23.
What is the projected return on investment for this ERP system upgrade in terms of operational efficiency gains?
Quantifying the ROI for large ERP systems is complex and often takes years to materialize. Key metrics would include reduced manual processes, improved data accuracy, faster reporting cycles, and better resource allocation. The Navy would need to establish baseline metrics before implementation and track progress post-deployment to assess efficiency gains.
What are the primary risks associated with vendor lock-in for this critical Navy IT system?
Vendor lock-in poses risks of escalating costs for maintenance, upgrades, and future modifications, as the incumbent vendor may have proprietary knowledge. It can also limit the Navy's flexibility to adopt newer technologies or switch providers if performance or pricing becomes unfavorable. Strong contract management and clear exit strategies are vital.
How will the effectiveness of this ERP support be measured and validated over the contract period?
Effectiveness will likely be measured through key performance indicators (KPIs) tied to system uptime, user satisfaction, successful data migration, integration with other Navy systems, and timely delivery of support services. Regular performance reviews and milestone achievements will be assessed against contract requirements and objectives.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: N0018915R0005
Offers Received: 3
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $247,905,000
Exercised Options: $247,905,000
Current Obligation: $176,903,692
Actual Outlays: $26,171,372
Subaward Activity
Number of Subawards: 757
Total Subaward Amount: $292,439,021
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0018916D0018
IDV Type: IDC
Timeline
Start Date: 2018-09-24
Current End Date: 2020-09-23
Potential End Date: 2022-05-07 00:00:00
Last Modified: 2022-05-04
More Contracts from International Business Machines Corporation
- Navy Enterprise Resource Planning (ERP) Technical Support Services (netss) — $837.8M (Department of Defense)
- This Requirement IS for the Creation, Maintenance, Enforcement, Analysis and Updates of the Standards and Governance Established by the Current DTC and Provide Technical and Operational Support to the DTC for Saas, Paas, and Emerging Technologies — $621.7M (Department of Veterans Affairs)
- Eadis Software Development — $580.5M (Department of Homeland Security)
- THE Government Intends to Establish a Single-Award Delivery Order Base Plus Four 1year Option Periods for the Renewal of IBM Software Maintenance and the Purchase of More Additional IBM Software Licenses Against the General Services Administrations Federal Supply Schedule Program. Previous Order SS00-15-30081 — $525.4M (Social Security Administration)
- Uscis Transformation Program Solutions Architect (SA) — $376.3M (Department of Homeland Security)
View all International Business Machines Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)