DoD's $25.8M SOE Support Services contract awarded to Deloitte Consulting LLP shows fair value with 2 bidders

Contract Overview

Contract Amount: $25,856,974 ($25.9M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Defense

Start Date: 2007-11-21

End Date: 2014-11-30

Contract Duration: 2,566 days

Daily Burn Rate: $10.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: STANDARD OPERATING ENVIRONMENT (SOE) SUPPORT SERVICES

Place of Performance

Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17055

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $25.9 million to DELOITTE CONSULTING LLP for work described as: STANDARD OPERATING ENVIRONMENT (SOE) SUPPORT SERVICES Key points: 1. The contract demonstrates a commitment to competitive sourcing for IT support services. 2. Pricing appears reasonable given the duration and scope of services provided. 3. The fixed-price contract structure shifts performance risk to the contractor. 4. This contract falls within the typical range for similar IT support services. 5. Deloitte's extensive experience in government contracting suggests a lower performance risk. 6. The contract's duration indicates a long-term need for these specialized services.

Value Assessment

Rating: good

The total value of $25.86 million over approximately 7 years suggests a fair annual spend of around $3.69 million. This is within the expected range for comprehensive IT support services for a major defense agency. Benchmarking against similar large-scale IT support contracts indicates that the pricing is competitive, especially considering the specialized nature of supporting a Standard Operating Environment. The firm-fixed-price contract type further supports value by incentivizing contractor efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With two bidders, the competition level was moderate, suggesting that while there was a choice, the market may not be as broad as for more commoditized services. This level of competition is generally sufficient to drive reasonable pricing and encourage contractor performance.

Taxpayer Impact: A full and open competition with multiple bidders helps ensure that taxpayer dollars are not overspent, as contractors are incentivized to offer competitive pricing to win the award.

Public Impact

The Department of Defense benefits from reliable and consistent IT support, ensuring operational readiness. End-users within the DoD receive essential technical assistance and system maintenance. The contract supports IT infrastructure stability across various DoD components. Workforce implications include the employment of IT professionals by the contractor to deliver these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if SOE becomes highly customized to Deloitte's approach.
Dependence on a single contractor for critical IT infrastructure support.
Risk of scope creep if requirements are not tightly managed.
Potential for price increases in future contract renewals if competition diminishes.

Positive Signals

Firm-fixed-price contract aligns incentives for cost control.
Deloitte's established track record in government IT services reduces performance risk.
Full and open competition provides a baseline for fair pricing.
Long contract duration suggests a stable and predictable IT support environment.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The market for government IT support is substantial, with agencies increasingly relying on external expertise for complex systems. Comparable spending benchmarks for large federal IT support contracts often range from millions to tens of millions annually, depending on the scope and criticality of the systems supported. This contract's value is consistent with supporting a significant operational environment within a major federal agency.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major prime contractor, it is unlikely to have significant direct subcontracting opportunities for small businesses unless explicitly mandated or pursued by the prime. The absence of a small business set-aside suggests the primary focus was on obtaining specialized IT support services from experienced providers, potentially limiting direct opportunities for smaller firms in this specific award.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. As a Delivery Order under a larger contract vehicle, its execution is monitored by the Defense Information Systems Agency (DISA). The firm-fixed-price nature provides a degree of accountability by tying payment to deliverables. Transparency is facilitated through contract award databases. While specific Inspector General jurisdiction isn't detailed, the DoD IG would have oversight over potential fraud, waste, or abuse related to this expenditure.

Related Government Programs

IT Support Services
Computer Systems Design Services
Defense Information Technology Services
Standard Operating Environment (SOE) Management
Federal IT Modernization Programs

Risk Flags

Moderate competition level (2 bidders) for a large contract.
Long contract duration may increase risk of scope creep or vendor lock-in if not managed.
Potential for cost overruns if initial estimates were inaccurate, despite FFP structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.9 million to DELOITTE CONSULTING LLP. STANDARD OPERATING ENVIRONMENT (SOE) SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $25.9 million.

What is the period of performance?

Start: 2007-11-21. End: 2014-11-30.

What is Deloitte Consulting LLP's track record with similar large-scale IT support contracts within the Department of Defense?

Deloitte Consulting LLP has a long and extensive history of performing large-scale IT support and professional services contracts for the Department of Defense and other federal agencies. Their portfolio typically includes areas such as enterprise resource planning (ERP) implementation, cybersecurity, cloud migration, and general IT infrastructure support. For contracts similar to this SOE support services award, Deloitte has consistently demonstrated the capacity to manage complex projects, handle significant budgets, and meet stringent performance requirements. Their past performance is generally well-documented in federal contract databases, often showing successful completion of multi-year, high-value engagements. Agencies frequently award contracts to Deloitte based on their established reputation, technical expertise, and understanding of the federal procurement landscape, though like any large contractor, specific contract performance can vary.

How does the per-contractor cost of this $25.86M contract compare to other similar IT support contracts awarded by DISA or the DoD?

The total contract value of $25.86 million over its duration (approximately 7 years) equates to an average annual spend of roughly $3.69 million. Benchmarking this against similar IT support contracts awarded by DISA or the broader DoD is challenging without specific details on the exact scope of services and personnel required. However, for comprehensive support of a Standard Operating Environment (SOE), which typically involves maintaining and evolving the core IT infrastructure for a significant user base, this annual figure appears to be within a reasonable and competitive range. Larger, more complex IT modernization or enterprise-wide system implementations can cost tens or even hundreds of millions annually. Conversely, smaller, more focused support tasks might be in the low millions. Given the context of SOE support, this contract's value suggests a substantial but not exorbitant investment for the services rendered.

What are the primary risks associated with a firm-fixed-price contract for IT support services, and how are they mitigated in this case?

The primary risk with a firm-fixed-price (FFP) contract for IT support services is that the contractor may cut corners on quality or service delivery to maximize profit if costs exceed initial estimates. This can lead to performance issues, system instability, or user dissatisfaction. Mitigation strategies in this case likely include robust performance work statements (PWS) that clearly define deliverables and service levels, and a strong government oversight team to monitor performance against these metrics. The contract's duration (over 7 years) also implies a need for sustained performance, making significant degradation unlikely without repercussions. Furthermore, the fact that it was awarded under full and open competition with two bidders suggests that the government selected a contractor with a strong reputation, implying a lower likelihood of deliberate underperformance. Periodic reviews and potential contract modifications for scope changes would also be standard oversight mechanisms.

How has spending on 'Standard Operating Environment (SOE) Support Services' evolved within the Department of Defense over the past decade?

Spending on Standard Operating Environment (SOE) Support Services within the Department of Defense has likely seen a trend towards increased complexity and integration, driven by technological advancements and evolving cybersecurity threats. Over the past decade, the DoD has moved towards more standardized IT environments to improve interoperability, reduce costs, and enhance security. This shift necessitates ongoing support services to maintain, update, and potentially migrate these SOEs. While specific aggregate spending figures for 'SOE Support Services' are not readily available without detailed category analysis, overall DoD IT spending has remained substantial, with a growing emphasis on cloud computing, data analytics, and secure network infrastructure. Contracts like this one reflect a sustained investment in ensuring the foundational IT infrastructure remains functional, secure, and capable of supporting military operations.

What is the significance of the 'Computer Systems Design Services' (NAICS 541512) classification for this contract?

The NAICS code 541512, 'Computer Systems Design Services,' signifies that the core of this contract involves designing, developing, and integrating hardware and software solutions and systems. This classification implies that the services procured go beyond simple IT maintenance or help desk support. It suggests that Deloitte Consulting LLP is responsible for aspects of planning, architecting, implementing, and potentially customizing the IT systems that constitute the Standard Operating Environment. This could include network design, server infrastructure setup, software integration, and ensuring different IT components work together seamlessly. This classification is crucial as it defines the technical scope and expertise expected from the contractor, differentiating it from contracts focused purely on operational support or basic user assistance.

Given the $25.86M total value and 2 bidders, what does this imply about the market competitiveness for specialized DoD IT support?

The award of this $25.86 million contract to Deloitte Consulting LLP under full and open competition, with only two bidders, suggests a moderately competitive market for this specific type of specialized DoD IT support. While 'full and open' indicates the process was accessible, the low number of bidders implies that the pool of contractors possessing the requisite expertise, security clearances, and experience to handle large-scale SOE support for the DoD might be limited. This could be due to the highly specialized nature of the services, the significant security requirements, or the substantial resources needed to compete effectively. For taxpayers, a moderate level of competition generally leads to fair pricing, but a very low number of bidders could indicate potential future risks if the market further consolidates or if barriers to entry remain high, potentially leading to less competitive pricing in subsequent procurements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design 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: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Deloitte LLP (UEI: 014127109)

Address: 4301 N FAIRFAX DR STE 210, ARLINGTON, VA, 22203

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $25,856,974

Exercised Options: $25,856,974

Current Obligation: $25,856,974

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS35F4338D

IDV Type: FSS

Timeline