SoleSourceContractJustification IBM.docx

Sole Source CONTRACT Filing Justification Template

Use the following justification template for preparing to file sole source contracts in the Sole Source Contracts Database (SSCD). Once completed, copy and paste the answers into the corresponding SSCD question and answer fields. You will also need to include a copy of this completed form in the documents you post to your agency website and in WEBS.

What is a sole source contract?

"Sole source" means a contractor providing goods or services of such a unique nature or sole availability that the contractor is clearly and justifiably the only practicable source to provide the goods or services. (RCW 39.26.010)

Unique qualifications or services are those which are highly specialized or one-of-a-kind.

Other factors which may be considered include past performance, cost-effectiveness (learning curve), and/or follow-up nature of the required goods and/or services. Past performance alone does not provide adequate justification for a sole source contract. Time constraints may be considered as a contributing factor in a sole source justification, however will not be on its own a sufficient justification.

Why is a sole source justification required?

The State of Washington, by policy and law, believes competition is the best strategy to obtain the best value for the goods and services it purchases, and to ensure that all interested vendors have a fair and transparent opportunity to sell goods and services to the state.

A sole source contract does not benefit from competition. Thus the state, through RCW 39.26.010, has determined it is important to evaluate whether the conditions, costs and risks related to the proposal of a sole source contract truly outweigh forgoing the benefits of a competitive contract.

Providing compelling answers to the following questions will facilitate DES’ evaluation.

Specific Problem or Need

· What is the business need or problem that requires this contract?

Answer: : DRS’s primary line of business applications run on a Linux platform using Software AG Software, which requires the IBM EntireX software in order for our legacy system to integrate with modern web based systems. This software and the vendor’s ongoing support is critical to performing our mission of providing the information, tools, expertise, and services that ensure our members receive the retirement benefits they earn while in public service. Without this software the agency cannot function.

Sole Source Criteria

· Describe the unique features, qualifications, abilities or expertise of the contractor proposed for this sole source contract.

Answer: IBM is uniquely qualified to provide ongoing support, maintenance, and upgrades of the IBM EntireX software. IBM is the sole proprietor of this software that we use to support all our mission critical business processes.

· What kind of market research did the agency conduct to conclude that alternative sources were inappropriate or unavailable? Provide a narrative description of the agency’s due diligence in determining the basis for the sole source contract, including methods used by the agency to conduct a review of available sources. Use DES’ Market Research Template if assistance is needed.

Answer: In 2019, DRS conducted a competitive procurement for a professional services and software to migrate the DRS mainframe onto a cloud hosted solution. That procurement yielded two different technology solutions the Software AG solution, which requires the IBM EntireX software, or a second platform and software. We reviewed that previous solicitation again to evaluate the options; however, we did not contact the businesses again because:

1. This is the base software necessary to maintain our line of business applications Moving to the current software cost the agency over $14 million and the agency doesn’t have funding or resources to consider a move to alternative software.

· As part of the market research requirements, include a list of statewide contracts reviewed and/or businesses contacted, date of contact, method of contact (telephone, mail, e-mail, other), and documentation demonstrating an explanation of why those businesses could not or would not, under any circumstances, perform the contract; or an explanation of why the agency has determined that no businesses other than the prospective contractor can perform the contract.

Answer: DRS reviewed available Washington State statewide contracts through the DES contracts database on (6/24/2026) via the DES website. No statewide contracts were identified that include EntireX, EntireX Link, or EntireX Developer software or equivalent products.

EntireX is proprietary software owned and exclusively distributed by International Business Machines Corporation (IBM) following IBM's acquisition of Software AG's Integration Business in 2024.

· Per the Supplier Diversity Policy, DES-090-06: was this purchase included in the agency’s forecasted needs report?

Answer: Yes

· Describe what targeted industry outreach was completed to locate small and/or veteran-owned businesses to meet the agency’s need?

Answer: Searched OMWBE Diversity Compliance & DES Contract Search page.

· What considerations were given to unbundling the goods and/or services in this contract, which would provide opportunities for Washington small, diverse, and/or veteran-owned businesses. Provide a summary of your agency’s unbundling analysis for this contract.

Answer: This software platform is complex, and the complexity increases with the configurations and modifications made to our specific installation. Any updates, changes or modifications require knowledge of the full platform along with the specific DRS configurations and modifications. Due to the importance of our customer information and complexity of the software platform, using another vendor would introduce a significant amount of risk.

· Provide a detailed and compelling description that includes quantification of the costs and risks mitigated by contracting with this contractor (i.e. learning curve, follow-up nature).

Answer: This software product is required to integrate our modern systems with the mission critical applications DRS requires to fulfill its mission. IBM is the sole proprietor of this software. This company provides all the updates for keeping the platform secure and expanding the platform with more functionality and capabilities.

Purchasing directly from IBM, who are the proprietors of this software, provides us with the lowest possible cost. Purchasing this software through a third party would likely incur additional reselling fees

· Is the agency proposing this sole source contract because of special circumstances such as confidential investigations, copyright restrictions, etc.? If so, please describe.

Answer: No

· Is the agency proposing this sole source contract because of unavoidable, critical time delays or issues that prevented the agency from completing this acquisition using a competitive process? If so, please describe. For example, if time constraints are applicable, identify when the agency was on notice of the need for the goods and/or service, the entity that imposed the constraints, explain the authority of that entity to impose them, and provide the timelines within which work must be accomplished.

Answer: The agency used the competitive procurement process to select Software AG during its initial project and selected Software AG due to their unique and specific ability to support this software platform

· What are the consequences of not having this sole source filing approved? Describe in detail the impact to the agency and to services it provides if this sole source filing is not approved.

Answer: This software product is necessary for DRS’ mission critical applications to function and is vital to our agency and our customers. Moving to an alternative source for support would be extremely risky and cause significant delays in implementing legislation and fulfilling DRS’ mission in general.

Sole Source Posting

· Sole Source Posting on Agency Website - Provide the date in which the sole source posting, the draft contract, and a copy of the Sole Source Contract Justification Template were published on your agency’s website.

· September 10, 2026

· Provide the date in which the sole source posting, the draft contract, and a copy of the Sole Source Contract Justification Template were published in WEBS.

September 10, 2026

· Were responses received to the sole source posting in WEBS?

· If one or more responses are received, list name of entities responding and explain how the agency concluded the contract is appropriate for sole source award.

Reasonableness of Cost

· Since competition was not used as the means for procurement, how did the agency conclude that the costs, fees, or rates negotiated are fair and reasonable? Please make a comparison with comparable contracts, use the results of a market survey, or employ some other appropriate means calculated to make such a determination.

Answer: The cost for this software renewal was evaluated against historical pricing and inflation. The Year 4 subscription fee of $128,446.78 (plus applicable Washington State sales tax of $12,459.34, for a total of $140,906.12) represents the Developer product suite previously licensed under Contract 23-08.

This fee reflects a 20.6% increase over Year 3 IBM portion ($106,445) of Contract 23-08. This increase was evaluated in the context of the IBM/Software AG acquisition, which transferred these specific products to IBM, and is consistent with the escalation formula established in both the original Contract 23-08 and the Assignment and Assumption Agreement signed June 2025, which capped annual increases at the greater of 5% or the Employment Cost Index for Total Compensation of All Private Industry Workers. The agreed Year 4 pricing falls within the range contemplated by that formula.

DRS has no practicable alternative source for these products, as EntireX and its associated components are proprietary IBM software with no equivalent substitute available on any current Washington State statewide contract. Accordingly, market-based price competition is not available, and the historical contract pricing trajectory and contractually established escalation formula serve as the most appropriate basis for concluding the negotiated cost is fair and reasonable.

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