IBM awarded $40.5M for IRS IT services under full and open competition

Contract Overview

Contract Amount: $40,534,330 ($40.5M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2012-08-15

End Date: 2016-02-28

Contract Duration: 1,292 days

Daily Burn Rate: $31.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 32

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF CRITICAL FUNCTION - NEW MEF O&M TASK ORDER

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $40.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::CT::IGF CRITICAL FUNCTION - NEW MEF O&M TASK ORDER Key points: 1. Value for money appears reasonable given the contract's duration and fixed-price nature. 2. Full and open competition suggests a competitive pricing environment. 3. The contract involves IT services, a critical function for the IRS. 4. Performance is benchmarked against similar IT service contracts. 5. This contract falls within the IT services sector for the Treasury Department. 6. The award was a delivery order against a larger contract vehicle.

Value Assessment

Rating: good

The total award amount of $40.5 million over approximately 3.5 years suggests a moderate annual spend for IT services. Benchmarking against similar IT support contracts for federal agencies indicates that this pricing is within expected ranges, especially considering the complexity of IRS systems. The firm fixed-price structure incentivizes the contractor to manage costs effectively, contributing to a potentially good value proposition for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 32 bidders suggests a robust and competitive marketplace for these IT services. A high number of bidders typically leads to more competitive pricing and a wider selection of qualified contractors, benefiting the government.

Taxpayer Impact: The extensive competition for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario.

Public Impact

Taxpayers benefit from improved IT infrastructure and services supporting tax administration. Essential IT operations and maintenance for the Internal Revenue Service are delivered. The primary geographic impact is within Maryland, where the services are likely performed or managed. The contract supports the IT workforce within the contractor organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if follow-on work is not competitively procured.
Reliance on a single contractor for critical IT functions could pose a risk if performance falters.

Positive Signals

Firm fixed-price contract provides cost certainty.
Full and open competition indicates a healthy market and potential for competitive pricing.
The contract duration is defined, allowing for periodic re-evaluation of needs and competition.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer-related services. The federal IT services market is substantial, with agencies consistently investing in maintaining and upgrading their technological infrastructure. This contract represents a portion of the IRS's overall IT spending, which is crucial for its operational efficiency and ability to serve taxpayers. Comparable spending benchmarks for IT operations and maintenance contracts can vary widely based on scope and complexity.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses (sb: false). While IBM is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on the specific terms of the contract and the prime contractor's strategy.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the IRS's program officials. The firm fixed-price nature provides some cost control. Transparency is generally maintained through contract award databases. Depending on the nature of the IT services, specific Inspector General oversight related to IT systems and financial integrity may apply.

Related Government Programs

IRS IT Modernization Efforts
Federal Civilian Agency IT Services
Information Technology Professional Services

Risk Flags

Potential for scope creep given the contract duration.
Reliance on a single vendor for critical IT functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $40.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::CT::IGF CRITICAL FUNCTION - NEW MEF O&M TASK ORDER

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 $40.5 million.

What is the period of performance?

Start: 2012-08-15. End: 2016-02-28.

What is the track record of International Business Machines Corporation (IBM) in performing similar IT services for the federal government?

IBM has a long and extensive history of providing a wide array of IT services to numerous federal agencies. This includes infrastructure management, software development, cloud services, cybersecurity, and data analytics. Their track record generally demonstrates a capacity to handle large-scale, complex IT projects. However, like any large contractor, specific performance on individual contracts can vary. Reviewing past performance evaluations and any documented issues on similar IRS or Treasury contracts would provide a more granular understanding of their specific suitability for this task order.

How does the awarded amount compare to the estimated value or ceiling of the parent contract vehicle?

The provided data indicates this is a delivery order (aw: DELIVERY ORDER) with a specific award amount (a: 40534330.12). Without access to the details of the parent contract vehicle (e.g., a GWAC or IDIQ), it's impossible to determine the total ceiling or estimated value. Delivery orders are typically issued against pre-existing indefinite-delivery, indefinite-quantity (IDIQ) contracts or similar vehicles. The award amount represents the committed funding for this specific order, not necessarily the total potential value of the underlying contract.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not specify the key performance indicators (KPIs) or service level agreements (SLAs) for this contract. These critical details are typically outlined in the contract's statement of work (SOW) or performance work statement (PWS). For IT services, common KPIs might include system uptime, response times for issue resolution, data security compliance metrics, and project delivery timelines. The effectiveness of the contract and the value received are heavily dependent on the rigor and enforcement of these performance standards.

What is the historical spending trend for similar IT services at the IRS?

Historical spending on IT services by the IRS is substantial and has generally trended upwards over the years, driven by the need for modernization, enhanced cybersecurity, and improved taxpayer services. Agencies like the IRS often face significant investments in maintaining legacy systems while simultaneously migrating to newer technologies. Specific trends for 'Other Computer Related Services' (na: 541519) would require analyzing historical contract awards data for the IRS over several fiscal years. This particular contract, awarded in 2012, reflects spending during that period.

What is the risk associated with the contract's duration and the potential for scope creep?

The contract duration is approximately 1292 days (dur: 1292), which translates to about 3.5 years. This is a moderate duration for IT services. The primary risk associated with duration, especially for fixed-price contracts, is ensuring the scope remains well-defined. Scope creep, where additional requirements are added without corresponding adjustments to price or schedule, can erode value. Robust change management processes and clear initial requirements are crucial to mitigate this risk. Given the firm fixed-price nature, any approved scope changes would necessitate formal modifications to the contract.

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: 32

Pricing Type: FIRM FIXED PRICE (J)

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: $43,476,940

Exercised Options: $43,476,940

Current Obligation: $40,534,330

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00022

IDV Type: IDC

Timeline