Treasury's $31.8M IBM Contract for Computer Systems Design Services Awarded Competitively
Contract Overview
Contract Amount: $31,804,585 ($31.8M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of the Treasury
Start Date: 2007-10-31
End Date: 2012-04-30
Contract Duration: 1,643 days
Daily Burn Rate: $19.4K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: MEF RELEASE 6
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033
State: Virginia Government Spending
Plain-Language Summary
Department of the Treasury obligated $31.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: MEF RELEASE 6 Key points: 1. Significant contract value of $31.8 million awarded to a major IT vendor. 2. Competition type is 'COMPETITIVE DELIVERY ORDER', indicating some level of market engagement. 3. Risk of vendor lock-in and potential cost overruns due to 'COST PLUS FIXED FEE' structure. 4. Spending falls within the IT sector, specifically Computer Systems Design Services.
Value Assessment
Rating: fair
The contract uses a Cost Plus Fixed Fee (CPFF) pricing structure, which can lead to cost overruns if not managed carefully. Benchmarking against similar CPFF contracts for Computer Systems Design Services is necessary to assess value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Awarded as a 'COMPETITIVE DELIVERY ORDER', suggesting competition occurred, though details on the number of bidders and the specific solicitation are not provided. This method aims for price discovery but can be influenced by the fixed fee component.
Taxpayer Impact: Taxpayer funds are utilized for IT services. The competitive nature of the award is a positive sign for cost-effectiveness, but the CPFF structure warrants close monitoring.
Public Impact
Impacts IRS operations through essential computer systems design. Leverages a large, established IT vendor, potentially ensuring stability and expertise. The long duration (over 4 years) suggests a critical, ongoing need for these services. Potential for indirect impact on taxpayers through improved IRS efficiency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee pricing structure
- Long contract duration
- Lack of specific competition details
Positive Signals
- Competitive award type
- Major IT vendor with proven capabilities
Sector Analysis
This contract falls under the Information Technology sector, specifically Computer Systems Design Services. Spending benchmarks for similar services vary widely based on complexity and vendor, but $31.8M over four years is a substantial investment.
Small Business Impact
The contract was awarded to INTERNATIONAL BUSINESS MACHINES CORPORATION, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award.
Oversight & Accountability
Oversight would typically involve contract officers and technical monitors within the Department of the Treasury to ensure IBM meets the terms of the Cost Plus Fixed Fee agreement and delivers the required services effectively.
Related Government Programs
- Computer Systems Design Services
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- Potential for cost overruns due to CPFF structure
- Lack of transparency on specific competitive bids
- Long contract duration may indicate inflexibility
- No explicit small business participation noted
Tags
computer-systems-design-services, department-of-the-treasury, va, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $31.8 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. MEF RELEASE 6
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 Treasury (Internal Revenue Service).
What is the total obligated amount?
The obligated amount is $31.8 million.
What is the period of performance?
Start: 2007-10-31. End: 2012-04-30.
What was the total profit margin realized by IBM under this Cost Plus Fixed Fee contract, and how does it compare to industry averages for similar services?
Determining the exact profit margin requires access to IBM's cost accounting data and the fixed fee amount. A comparison to industry averages for CPFF contracts in Computer Systems Design Services would reveal if the government paid a premium. Without this data, assessing the true value for money is challenging.
Were there any performance issues or cost overruns reported during the contract's execution, and how were they addressed by the agency?
Agencies typically track contractor performance and budget adherence. Any significant cost overruns or performance deficiencies would likely trigger corrective actions, contract modifications, or dispute resolution processes. Reviewing contract performance reports and modification history would provide insight into these risks.
How effectively did the competitive delivery order process ensure fair pricing and optimal selection of a vendor for these critical IT services?
The effectiveness hinges on the rigor of the competition. A well-defined solicitation, clear evaluation criteria, and a sufficient number of qualified bidders generally lead to fair pricing. However, the CPFF structure itself can complicate direct price comparisons, making the evaluation of technical merit and management approach crucial.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
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: $38,028,984
Exercised Options: $38,028,984
Current Obligation: $31,804,585
Parent Contract
Parent Award PIID: TIRNO06D00019
IDV Type: IDC
Timeline
Start Date: 2007-10-31
Current End Date: 2012-04-30
Potential End Date: 2012-04-30 00:00:00
Last Modified: 2012-12-03
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