Treasury's $45.6M IBM Software Deal with Red River Technology Faces Scrutiny Over Competition
Contract Overview
Contract Amount: $45,623,444 ($45.6M)
Contractor: RED River Technology LLC
Awarding Agency: Department of the Treasury
Start Date: 2014-06-30
End Date: 2017-06-30
Contract Duration: 1,096 days
Daily Burn Rate: $41.6K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: IBM SOFTWARE CONSOLIDATION
Place of Performance
Location: ARMONK, WESTCHESTER County, NEW YORK, 10504
State: New York Government Spending
Plain-Language Summary
Department of the Treasury obligated $45.6 million to RED RIVER TECHNOLOGY LLC for work described as: IBM SOFTWARE CONSOLIDATION Key points: 1. The contract awarded to Red River Technology LLC for IBM software totals $45.6 million. 2. Competition was conducted under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES', raising questions about the process. 3. The contract duration is 1096 days, ending June 30, 2017. 4. The NAICS code 541519 suggests 'Other Computer Related Services'. 5. The award was a Delivery Order under a larger contract.
Value Assessment
Rating: questionable
The total award amount of $45.6 million for IBM software over three years appears high without clear benchmarks. The specific nature of the software and its consolidation benefits are not detailed, making a direct pricing comparison difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The competition method 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' indicates a limited initial competition. This approach may have restricted the pool of potential bidders and potentially impacted price discovery, leading to less competitive pricing.
Taxpayer Impact: The limited competition raises concerns about whether taxpayers received the best possible price for the IBM software consolidation.
Public Impact
Government agencies rely on software consolidation to streamline operations and reduce costs. The use of specific vendors like IBM can lead to vendor lock-in and higher prices. Transparency in procurement processes is crucial for public trust and efficient use of taxpayer funds. The 'exclusion of sources' clause warrants further investigation into the justification and impact on competition.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition due to source exclusion
- Potential for inflated pricing without robust competition
- Lack of detail on software consolidation benefits
Positive Signals
- Awarded under a firm fixed price contract
- Consolidation of software can lead to efficiencies
Sector Analysis
The IT services sector, particularly software procurement, is a significant area of government spending. Benchmarks for similar software consolidation contracts are highly variable and depend on the specific software suite and licensing agreements.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine the extent of small business participation.
Oversight & Accountability
The 'exclusion of sources' in the competition method suggests a need for strong oversight to ensure the justification was valid and that the process did not unduly limit competition. Accountability for the pricing and necessity of the software is paramount.
Related Government Programs
- Other Computer Related Services
- Department of the Treasury Contracting
- Bureau of the Fiscal Service Programs
Risk Flags
- Limited competition raises price fairness concerns.
- Lack of transparency in the 'exclusion of sources' justification.
- Potential for overspending without clear benchmarks.
- Contract duration extends over multiple fiscal years.
- Vendor lock-in risk with specialized software.
Tags
other-computer-related-services, department-of-the-treasury, ny, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $45.6 million to RED RIVER TECHNOLOGY LLC. IBM SOFTWARE CONSOLIDATION
Who is the contractor on this award?
The obligated recipient is RED RIVER TECHNOLOGY LLC.
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Bureau of the Fiscal Service).
What is the total obligated amount?
The obligated amount is $45.6 million.
What is the period of performance?
Start: 2014-06-30. End: 2017-06-30.
What was the specific justification for excluding other potential sources in the competition for this IBM software contract?
The justification for excluding other sources is critical. Typically, such exclusions are based on factors like unique capabilities, proprietary technology, or urgent needs where only a specific vendor can meet requirements. Without this specific justification, it's difficult to assess if the limited competition was warranted or if it was a missed opportunity for better pricing and broader vendor engagement.
How does the $45.6 million cost compare to industry benchmarks for similar IBM software consolidation efforts?
Comparing this $45.6 million cost requires detailed knowledge of the specific IBM software products, licensing models, and the scope of consolidation. Industry benchmarks are highly variable. A thorough analysis would involve comparing per-unit software costs, support fees, and implementation expenses against similar government or commercial contracts, considering the volume and duration.
What measurable efficiencies or cost savings were realized by the Department of the Treasury through this IBM software consolidation?
The effectiveness of this contract hinges on the realized efficiencies and cost savings from consolidating IBM software. Without documented metrics on reduced licensing fees, streamlined maintenance, improved IT support, or enhanced operational capabilities, it's challenging to determine the true value delivered to the taxpayer. Post-award reviews and performance reports are essential for this assessment.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 21 WATER ST STE 500, CLAREMONT, NH, 03743
Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $49,331,653
Exercised Options: $49,331,653
Current Obligation: $45,623,444
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Parent Contract
Parent Award PIID: NNG07DA25B
IDV Type: GWAC
Timeline
Start Date: 2014-06-30
Current End Date: 2017-06-30
Potential End Date: 2017-06-30 00:00:00
Last Modified: 2017-10-05
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