DoD Awards IBM $73M for ERP Support, Raising Concerns Over Limited Competition and Value
Contract Overview
Contract Amount: $72,913,202 ($72.9M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Defense
Start Date: 2018-08-31
End Date: 2020-08-30
Contract Duration: 730 days
Daily Burn Rate: $99.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: PIRMD SUPPORT SERVICES - ERP POR SUSTAINMENT AND ENHANCEMENT
Place of Performance
Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17055
Plain-Language Summary
Department of Defense obligated $72.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: PIRMD SUPPORT SERVICES - ERP POR SUSTAINMENT AND ENHANCEMENT Key points: 1. Significant contract value of $73M for ERP support services. 2. IBM is the sole awardee, raising questions about competition. 3. Potential risks include vendor lock-in and suboptimal pricing. 4. IT sector spending on sustainment and enhancement is substantial.
Value Assessment
Rating: questionable
The contract value of $73M for ERP sustainment and enhancement appears high given the duration and the nature of the services. Without detailed cost breakdowns or benchmarks for similar ERP support contracts, it's difficult to definitively assess value for money.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Although listed as full and open competition, the award went to a single entity (IBM) via a delivery order. This suggests that while the initial contract vehicle may have allowed for broad competition, the specific task order might have had limited effective competition, potentially impacting price discovery.
Taxpayer Impact: Taxpayer funds are being utilized for this contract. The effectiveness of competition and pricing assessment will directly influence the overall financial impact on taxpayers.
Public Impact
Ensures continued operation of critical ERP systems for the Navy. Potential for cost overruns if pricing is not optimized. Impacts the IT services market, particularly for large system integrators. Supports a major technology vendor, IBM.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited effective competition despite 'full and open' designation.
- Potential for inflated pricing due to lack of robust competition.
- Long-term reliance on a single vendor for critical system support.
Positive Signals
- Ensures continuity of essential ERP services.
- Awarded to a well-established IT services provider.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on enterprise resource planning (ERP) system sustainment and enhancement. Government spending on IT, particularly for maintaining and upgrading complex systems like ERPs, is a significant portion of the federal IT budget.
Small Business Impact
The data indicates that small businesses were not directly involved in this specific award, as the contract was awarded to IBM. There is no indication of subcontracting opportunities for small businesses within this delivery order.
Oversight & Accountability
Oversight is crucial to ensure that the services provided by IBM meet the Navy's requirements and that the pricing remains fair throughout the contract's duration. Regular performance reviews and cost audits would be beneficial.
Related Government Programs
- Other Computer Related Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for cost overruns.
- Lack of demonstrated competitive pressure on pricing.
- Risk of vendor lock-in for critical ERP systems.
- Limited transparency on specific enhancement details.
- Questionable value for money without further cost-benefit analysis.
Tags
other-computer-related-services, department-of-defense, pa, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $72.9 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. PIRMD SUPPORT SERVICES - ERP POR SUSTAINMENT AND ENHANCEMENT
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 $72.9 million.
What is the period of performance?
Start: 2018-08-31. End: 2020-08-30.
What specific enhancements are included in this contract, and how do they align with the Navy's strategic IT goals?
The contract details 'enhancement' as a service, but without further specifics, it's unclear what these entail. Understanding the nature of these enhancements is key to assessing their strategic value and ensuring they contribute to the Navy's long-term IT modernization efforts rather than just maintaining the status quo.
How was the 'full and open competition' process managed to ensure genuine market engagement for this delivery order?
While the contract vehicle may have been competed broadly, the award of a delivery order to a single vendor warrants scrutiny. An analysis of the solicitation process for this specific order, including any justifications for limiting proposals or the evaluation criteria used, would clarify the extent of actual competition achieved.
What is the projected return on investment or efficiency gain expected from the ERP sustainment and enhancement services provided by IBM?
Quantifying the expected benefits, such as improved system performance, reduced downtime, or enhanced user productivity, is essential for evaluating the contract's effectiveness. Without clear metrics and expected outcomes, it's challenging to determine if the $73M investment will yield tangible improvements for the Department of the Navy.
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
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
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: $76,434,725
Exercised Options: $76,105,639
Current Obligation: $72,913,202
Actual Outlays: $16,086,893
Subaward Activity
Number of Subawards: 143
Total Subaward Amount: $39,587,189
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: 2018-08-31
Current End Date: 2020-08-30
Potential End Date: 2021-09-21 00:00:00
Last Modified: 2021-10-13
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