IBM, Dell Win Places in $494 Million Pentagon IT Contract

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The U.S. Department of Defense wrapped up the workweek Friday with the announcement of nine new contracts, worth more than $791 million in total. One single contract, however, accounted for fully 62% of the funds on offer.

The winners of that contract, a $494 million firm-fixed-price, multiple-award, task-order contract for the supply of hardware, software, and related integration services needed for the U.S. Army's "Information Technology Enterprise Solution-2" (ITES-2S) enterprise business systems project, include:

  • Dell's (UNKNOWN: DELL.DL  ) Federal Systems business
  • International Business Machines (NYSE: IBM  )
  • And four privately owned companies -- Unicom Government, CDW Government, Iron Bow Technologies, and World Wide Technology.

The specific type of contract being awarded is best described as an "umbrella" contract, setting a maximum amount of funds that can be spent (the $494 million). Dell, IBM, and the other contract winners will now need to bid against each other to sell the Army equipment and software in response to specific task orders, up until said ceiling value has been reached.

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  • Report this Comment On July 20, 2013, at 12:16 AM, applefan1 wrote:

    That sounds like a BS contract. They STILL have to bid against one another? Firm fixed price? What does THAT mean? Sounds like a dumb way to waste money on red tape. IBM doesn't make laptops, desktops like they used to and Dell doesn't make mainframes like IBM does. How stupid.

    These contracts should be arranged so it eliminates the constant bidding wars since that only leads to problems. Lowest bidder wins doesn't mean it's the best solution.

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