DoD Awards IBM $132M for IT Enterprise Support, Raising Value and Competition Questions
Contract Overview
Contract Amount: $132,491,522 ($132.5M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Defense
Start Date: 2020-09-30
End Date: 2026-03-30
Contract Duration: 2,007 days
Daily Burn Rate: $66.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 6
Pricing Type: TIME AND MATERIALS
Sector: IT
Official Description: THIS IS A FIRM FIXED PRICE MOD TO A INDEFINITE DELIVERY, INDEFINITE QUANTITY CONTRACT IN SUPPORT OF W52P1J-18-D-A032 / W31P4Q20F0558 INFORMATION TECHNOLOGY ENTERPRISE SUPPORT FOR LDAC.
Place of Performance
Location: HUNTSVILLE, MADISON County, ALABAMA, 35898
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $132.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: THIS IS A FIRM FIXED PRICE MOD TO A INDEFINITE DELIVERY, INDEFINITE QUANTITY CONTRACT IN SUPPORT OF W52P1J-18-D-A032 / W31P4Q20F0558 INFORMATION TECHNOLOGY ENTERPRISE SUPPORT FOR LDAC. Key points: 1. Significant contract value of $132.5M for IT enterprise support. 2. Full and open competition was utilized, suggesting potential for competitive pricing. 3. Contract type (Time and Materials) and fixed-price modification warrant scrutiny for cost control. 4. The sector is IT services, a critical area for government operations.
Value Assessment
Rating: questionable
The contract's value is substantial at $132.5M. While awarded under full and open competition, the use of Time and Materials (T&M) for a significant portion, modified with a fixed price, raises questions about cost control and potential for overruns compared to fixed-price contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the modification to a firm fixed price on an IDIQ contract suggests a shift in risk or scope, and the impact on the final price needs careful evaluation.
Taxpayer Impact: The use of full and open competition aims to ensure taxpayer funds are used efficiently. However, the T&M component and subsequent fixed-price modification require oversight to prevent unnecessary costs.
Public Impact
Citizens expect efficient use of taxpayer funds, especially for large IT contracts. Transparency in contract modifications and pricing structures is crucial for public trust. The long duration (2007-2026) indicates a long-term reliance on this IT support.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Time and Materials pricing model
- Fixed-price modification on IDIQ
- Long contract duration
Positive Signals
- Full and open competition utilized
- Awarded to a major IT provider
Sector Analysis
This contract falls within the IT services sector, specifically 'Other Computer Related Services'. Government spending in this area is consistently high, with benchmarks varying widely based on service complexity and duration. The $132.5M over its extended period is significant.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as 'sb' is false. Further analysis would be needed to determine if small business participation was sought or subcontracted.
Oversight & Accountability
The use of an IDIQ contract with modifications, including a recent firm fixed price mod, requires diligent oversight to ensure adherence to original scope and prevent scope creep. Tracking performance and costs against the established benchmarks is essential.
Related Government Programs
- Other Computer Related Services
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for cost overruns due to T&M component
- Lack of clarity on specific deliverables for the fixed-price modification
- Long contract duration may indicate vendor lock-in
- Limited insight into performance metrics and quality of service
Tags
other-computer-related-services, department-of-defense, al, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $132.5 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. THIS IS A FIRM FIXED PRICE MOD TO A INDEFINITE DELIVERY, INDEFINITE QUANTITY CONTRACT IN SUPPORT OF W52P1J-18-D-A032 / W31P4Q20F0558 INFORMATION TECHNOLOGY ENTERPRISE SUPPORT FOR LDAC.
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 $132.5 million.
What is the period of performance?
Start: 2020-09-30. End: 2026-03-30.
What was the rationale for modifying the contract to a firm fixed price after operating under Time and Materials?
The modification to a firm fixed price suggests an attempt to gain better cost certainty for a specific portion of the work. This could be driven by a desire to cap expenses, manage budget fluctuations, or reflect a clearer understanding of the scope and effort required for the defined deliverables. It aims to shift cost risk from the government to the contractor for that specific modification.
How does the Time and Materials component impact the overall cost-effectiveness and risk of this contract?
The Time and Materials (T&M) component introduces inherent cost uncertainty, as the final price is directly tied to the labor hours and material costs incurred. This can lead to higher overall costs compared to fixed-price contracts if not managed rigorously. It shifts cost risk to the government and necessitates strong oversight to prevent inefficiencies and ensure fair pricing for the effort expended.
What specific IT enterprise support services are being provided under this contract?
The contract is for 'Information Technology Enterprise Support for LDAC'. While the specific details of LDAC (likely a system or program) are not provided, this typically encompasses a broad range of IT services including system maintenance, network operations, help desk support, software updates, cybersecurity, and potentially infrastructure management to ensure the smooth functioning of the government's IT environment.
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: 6
Pricing Type: TIME AND MATERIALS (Y)
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: $198,476,969
Exercised Options: $132,491,522
Current Obligation: $132,491,522
Subaward Activity
Number of Subawards: 468
Total Subaward Amount: $152,433,331
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
Start Date: 2020-09-30
Current End Date: 2026-03-30
Potential End Date: 2026-03-30 12:03:00
Last Modified: 2026-01-14
More Contracts from International Business Machines Corporation
- Navy Enterprise Resource Planning (ERP) Technical Support Services (netss) — $837.8M (Department of Defense)
- This Requirement IS for the Creation, Maintenance, Enforcement, Analysis and Updates of the Standards and Governance Established by the Current DTC and Provide Technical and Operational Support to the DTC for Saas, Paas, and Emerging Technologies — $621.7M (Department of Veterans Affairs)
- Eadis Software Development — $580.5M (Department of Homeland Security)
- THE Government Intends to Establish a Single-Award Delivery Order Base Plus Four 1year Option Periods for the Renewal of IBM Software Maintenance and the Purchase of More Additional IBM Software Licenses Against the General Services Administrations Federal Supply Schedule Program. Previous Order SS00-15-30081 — $525.4M (Social Security Administration)
- Uscis Transformation Program Solutions Architect (SA) — $376.3M (Department of Homeland Security)
View all International Business Machines Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)