Treasury's $55M IBM Contract for CDR Development: A Deep Dive into Value and Competition
Contract Overview
Contract Amount: $54,970,423 ($55.0M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of the Treasury
Start Date: 2011-07-14
End Date: 2014-08-25
Contract Duration: 1,138 days
Daily Burn Rate: $48.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 9
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: TTN #4015: CDR DEVELOPMENT CONTRACT
Place of Performance
Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20703
State: Maryland Government Spending
Plain-Language Summary
Department of the Treasury obligated $55.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: TTN #4015: CDR DEVELOPMENT CONTRACT Key points: 1. The contract awarded to IBM for CDR development represents a significant investment in IT infrastructure. 2. Full and open competition was utilized, suggesting a potentially competitive pricing environment. 3. The contract's duration and cost-plus-fixed-fee structure warrant scrutiny for potential cost overruns. 4. The IT sector, particularly data management and development, is a critical area for government operations.
Value Assessment
Rating: fair
The contract's cost-plus-fixed-fee structure can lead to higher costs if not managed tightly. Benchmarking against similar IT development contracts is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which generally promotes competitive pricing. However, the specific pricing mechanisms within the cost-plus-fixed-fee structure need careful monitoring to ensure value.
Taxpayer Impact: Taxpayer funds were used for this contract, and the ultimate value depends on the successful delivery of the CDR system and its long-term benefits.
Public Impact
Enhances IRS data processing capabilities, potentially improving taxpayer services and operational efficiency. Supports critical government functions by modernizing essential IT systems. The use of a large, established contractor like IBM may indicate a focus on reliability and expertise.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contracts can incentivize higher spending.
- Long contract duration increases risk of scope creep and cost escalation.
- Lack of specific performance metrics makes value assessment challenging.
Positive Signals
- Awarded under full and open competition.
- Contract supports modernization of critical IRS systems.
- Experienced contractor selected.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on software development and data management. Spending in this area is crucial for government modernization, with benchmarks varying widely based on project complexity and technology.
Small Business Impact
The contract was awarded to a large business (IBM) and there is no indication of small business participation. This suggests limited opportunities for small businesses in this specific procurement.
Oversight & Accountability
Oversight would focus on monitoring the contractor's adherence to the fixed fee, managing the cost elements, and ensuring timely delivery of the CDR system according to specifications.
Related Government Programs
- Other Computer Related Services
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- Potential for cost overruns due to cost-plus-fixed-fee structure.
- Long contract duration increases risk.
- Lack of detailed performance metrics.
- Limited transparency on specific cost components.
- No explicit small business participation.
Tags
other-computer-related-services, department-of-the-treasury, md, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $55.0 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. TTN #4015: CDR DEVELOPMENT CONTRACT
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 $55.0 million.
What is the period of performance?
Start: 2011-07-14. End: 2014-08-25.
What specific performance metrics were established to ensure the CDR system meets the IRS's needs effectively and efficiently?
The provided data does not detail specific performance metrics. Effective oversight would require clear, measurable performance indicators tied to the CDR system's functionality, reliability, and impact on IRS operations. Without these, assessing the contract's true effectiveness is challenging.
How does the cost-plus-fixed-fee structure compare to alternative contract types for similar IT development projects in terms of overall cost efficiency?
Cost-plus-fixed-fee contracts offer flexibility but can be less cost-efficient than fixed-price contracts if costs escalate beyond initial estimates. For IT development, fixed-price or performance-based contracts might offer better cost control, provided the scope is well-defined.
What is the anticipated long-term return on investment for the $55 million spent on the CDR development contract?
The return on investment is tied to the successful implementation and utilization of the CDR system. Potential benefits include improved data analysis, enhanced operational efficiency, better decision-making, and potentially reduced long-term IT maintenance costs. Quantifying this ROI requires post-implementation analysis.
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: 9
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $55,740,695
Exercised Options: $55,740,694
Current Obligation: $54,970,423
Subaward Activity
Number of Subawards: 68
Total Subaward Amount: $6,741,495
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: TIRNO11D00022
IDV Type: IDC
Timeline
Start Date: 2011-07-14
Current End Date: 2014-08-25
Potential End Date: 2015-09-24 00:00:00
Last Modified: 2017-07-10
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