DoD's $180M IBM Contract for IT Services: High Cost for 'Other Computer Related Services'

Contract Overview

Contract Amount: $180,133,513 ($180.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Defense

Start Date: 2021-09-27

End Date: 2026-09-13

Contract Duration: 1,812 days

Daily Burn Rate: $99.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: THE PURPOSE OF THIS REQUIREMENT IS TO PROVIDE INFORMATION TECHNOLOGY SERVICES AND SUPPORT ON BEHALF OF PD ALTESS.

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $180.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: THE PURPOSE OF THIS REQUIREMENT IS TO PROVIDE INFORMATION TECHNOLOGY SERVICES AND SUPPORT ON BEHALF OF PD ALTESS. Key points: 1. High contract value ($180M) for IT support services. 2. Sole provider IBM faces no direct competition for this order. 3. Potential risk of overpayment due to lack of competitive pricing. 4. Services fall under 'Other Computer Related Services' (NAICS 541519).

Value Assessment

Rating: questionable

The contract's total value is substantial. Without competitive benchmarks for 'Other Computer Related Services' (NAICS 541519), it's difficult to definitively assess if the pricing is optimal. The Cost Plus Fixed Fee structure can sometimes lead to higher costs if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Although the contract was awarded under full and open competition, the specific delivery order was placed with IBM. This suggests that while the initial contract vehicle allowed broad competition, this particular order might not have undergone a new round of competitive bidding, potentially limiting price discovery for this specific task.

Taxpayer Impact: The significant expenditure raises questions about taxpayer value, especially if the services could have been procured at a lower cost through more competitive means for this specific order.

Public Impact

Taxpayers are funding a large IT services contract for the Department of Defense. The specific nature of 'Other Computer Related Services' may not be widely understood by the public. The long duration (2021-2026) means sustained financial commitment. Reliance on a single large contractor, IBM, for critical support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value
Lack of specific per-unit cost data
Potential for cost overruns with CPFF contract type
Limited transparency on specific services rendered

Positive Signals

Awarded under full and open competition framework
Clear end date for contract performance
Defined agency (DoD) and sub-agency (Army)

Sector Analysis

This contract falls within the broad Information Technology sector, specifically focusing on 'Other Computer Related Services'. Spending in this area is significant across government, but benchmarks for this specific NAICS code can be challenging to establish due to the diverse nature of services it encompasses.

Small Business Impact

The data indicates this contract was awarded to IBM, a large corporation, and does not mention any subcontracting goals or participation from small businesses. Therefore, the direct benefit to small businesses from this specific contract appears minimal.

Oversight & Accountability

The contract is managed by the Department of the Army, a component of the Department of Defense. Oversight would typically involve contract officers, program managers, and potentially agency-level review boards to ensure performance and financial accountability.

Related Government Programs

Other Computer Related Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

High dollar value
Cost Plus Fixed Fee contract type
Sole provider for this order
Broad and potentially ambiguous service category (NAICS 541519)
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $180.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. THE PURPOSE OF THIS REQUIREMENT IS TO PROVIDE INFORMATION TECHNOLOGY SERVICES AND SUPPORT ON BEHALF OF PD ALTESS.

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 Army).

What is the total obligated amount?

The obligated amount is $180.1 million.

What is the period of performance?

Start: 2021-09-27. End: 2026-09-13.

What specific IT services are included under 'Other Computer Related Services' (NAICS 541519) in this contract, and how do their costs compare to industry standards?

The contract description is broad, encompassing 'Information Technology Services and Support'. Without a detailed breakdown of services like system integration, data processing, or specialized IT consulting, a direct cost comparison is difficult. Industry benchmarks for NAICS 541519 vary widely. Further detail is needed to assess if the $180M represents fair value for the specific tasks performed.

Given the Cost Plus Fixed Fee (CPFF) structure and the sole provider for this order, what mechanisms are in place to mitigate the risk of inflated costs and ensure efficient resource utilization?

CPFF contracts require robust oversight to manage costs. Mechanisms likely include detailed performance metrics, regular audits of expenditures, and strict adherence to the fixed fee component. The agency must actively monitor IBM's resource allocation and justify all costs incurred to ensure they are reasonable and necessary for fulfilling the contract's objectives.

How effectively does this contract support the PD ALTESS mission, and could similar IT support services be obtained more cost-effectively through alternative procurement methods?

The effectiveness hinges on the quality and timeliness of the IT services provided by IBM in supporting PD ALTESS. Given the lack of competition for this specific order, exploring alternative vehicles like government-wide acquisition contracts (GWACs) or task orders under different, more competitively bid IDIQs could potentially yield better pricing or more specialized services.

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 › IT AND TELECOM - DATA CENTER

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 8

Pricing Type: COST PLUS FIXED FEE (U)

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: $180,133,513

Exercised Options: $180,133,513

Current Obligation: $180,133,513

Actual Outlays: $17,831

Subaward Activity

Number of Subawards: 89

Total Subaward Amount: $134,938,101

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J18DA032

IDV Type: IDC

Timeline