Deloitte Consulting LLP awarded $18.5M for IHS accounting application support, raising value-for-money questions

Contract Overview

Contract Amount: $18,553,287 ($18.6M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Health and Human Services

Start Date: 2011-05-24

End Date: 2014-12-31

Contract Duration: 1,317 days

Daily Burn Rate: $14.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TECHNICAL SUPPORT FOR OPERATION AND MAINTENANCE OF THE INDIAN HEALTH SERVICE ACCOUNTING APPLICATION.

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $18.6 million to DELOITTE CONSULTING LLP for work described as: TECHNICAL SUPPORT FOR OPERATION AND MAINTENANCE OF THE INDIAN HEALTH SERVICE ACCOUNTING APPLICATION. Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract's duration of over three years indicates a significant, ongoing need for these services. 3. The use of Time and Materials pricing may lead to cost overruns if not closely managed. 4. The North American Industry Classification System (NAICS) code 541611 points to management consulting services. 5. The contract was awarded to a single vendor, Deloitte Consulting LLP. 6. The contract's value is substantial, requiring careful scrutiny of performance and pricing.

Value Assessment

Rating: fair

The contract value of $18.5 million over approximately three years for technical support of an accounting application appears to be within a reasonable range for specialized IT services. However, without specific benchmarks for similar accounting application support contracts within the Indian Health Service (IHS) or comparable federal agencies, a definitive value-for-money assessment is challenging. The Time and Materials (T&M) pricing structure, while flexible, can present risks if not managed with strict oversight to prevent scope creep and ensure efficient resource utilization. Benchmarking against industry standards for IT support and consulting services would be necessary for a more precise evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. The presence of two bids suggests a moderate level of competition for this requirement. While two bidders are better than one, a higher number of bids typically leads to more robust price discovery and potentially lower costs for the government. The specific details of the bidding process and the evaluation criteria used would provide further insight into the effectiveness of the competition.

Taxpayer Impact: A competitive process, even with two bidders, generally benefits taxpayers by encouraging vendors to offer more competitive pricing. However, the limited number of bids warrants scrutiny to ensure the government secured the best possible value.

Public Impact

The primary beneficiaries are the Indian Health Service (IHS) staff who rely on the accounting application for financial management. The services delivered include technical support, operation, and maintenance of the IHS accounting application. The geographic impact is primarily within the IHS operational areas, supporting its financial infrastructure nationwide. Workforce implications include the need for skilled IT professionals to maintain and support the application.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation due to Time and Materials pricing structure.
Limited competition (two bidders) may have resulted in a higher price than a more robustly competed contract.
Dependence on a single contractor for critical accounting application support.

Positive Signals

Awarded through full and open competition, ensuring a fair process.
Contract addresses a critical operational need for the Indian Health Service.
The contractor, Deloitte Consulting LLP, is a well-established firm with significant experience.

Sector Analysis

The IT services sector, particularly consulting and support for specialized government applications, is a significant area of federal spending. This contract falls within the administrative management and general management consulting services category (NAICS 541611). Federal agencies frequently contract for such services to maintain and upgrade their complex IT systems. Comparable spending benchmarks for similar IT support contracts within federal health agencies would provide context for the $18.5 million award, but generally, such specialized support commands substantial investment.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary contractor, Deloitte Consulting LLP, is a large business, and any subcontracting would be at their discretion.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Indian Health Service. Accountability measures would be tied to the performance work statement and delivery milestones. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal IT Modernization Programs
Health Information Technology Services
Accounting and Financial Management Systems Support
Department of Health and Human Services IT Contracts

Risk Flags

Potential for cost overruns due to T&M pricing.
Limited competition may impact price competitiveness.
Need for robust contract oversight to ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $18.6 million to DELOITTE CONSULTING LLP. TECHNICAL SUPPORT FOR OPERATION AND MAINTENANCE OF THE INDIAN HEALTH SERVICE ACCOUNTING APPLICATION.

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Indian Health Service).

What is the total obligated amount?

The obligated amount is $18.6 million.

What is the period of performance?

Start: 2011-05-24. End: 2014-12-31.

What is the track record of Deloitte Consulting LLP in providing similar IT support services to federal health agencies?

Deloitte Consulting LLP is a major federal contractor with extensive experience across various agencies, including health-focused ones like HHS. They have a history of providing IT modernization, system implementation, and operational support services. For the Indian Health Service (IHS) specifically, their track record would involve past performance on contracts related to financial systems, health IT, and administrative support. A review of their past performance evaluations and any past issues or successes on similar contracts would be crucial for assessing their capability and reliability in fulfilling this specific requirement. Their large size and established presence suggest a capacity to handle complex projects, but specific performance metrics on prior IHS contracts would offer the most direct evidence.

How does the $18.5 million contract value compare to similar IT support contracts for accounting applications within the federal government?

Assessing the $18.5 million contract value requires comparison with similar federal contracts for accounting application support. Contracts for enterprise resource planning (ERP) systems, financial management software maintenance, and specialized IT support within large federal agencies can range from a few million to tens or even hundreds of millions of dollars, depending on scope, duration, and complexity. Given that this contract covers operation and maintenance for the IHS accounting application over approximately three years, the value appears to be in a moderate range. However, a precise benchmark would necessitate analyzing contracts with similar NAICS codes (e.g., 541512, 541611) and service types (application support, maintenance, technical services) awarded to agencies of comparable size and IT infrastructure complexity. The Time and Materials pricing also adds a variable element that makes direct comparison challenging without detailed cost breakdowns.

What are the primary risks associated with the Time and Materials (T&M) pricing structure used in this contract?

The primary risk associated with the Time and Materials (T&M) pricing structure is the potential for cost overruns and a lack of cost certainty for the government. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual labor hours and materials used, plus a fixed fee or profit margin. This can incentivize contractors to extend project timelines or use more resources than strictly necessary, as their profit is directly tied to the amount of time and materials expended. For the government, effective oversight and diligent contract management are crucial to mitigate these risks. This includes closely monitoring labor hours, verifying the necessity of materials, and ensuring that the work performed aligns with the contract's objectives and scope. Without robust oversight, T&M contracts can become significantly more expensive than initially anticipated.

How effective is the competition level (two bidders) in ensuring optimal value for taxpayers on this contract?

A competition level with only two bidders, while meeting the 'full and open' criteria, generally offers less assurance of optimal value for taxpayers compared to a scenario with multiple competitive bids. With more bidders, the government can leverage a wider range of pricing and technical solutions, driving down costs through market forces. Two bidders still provide some level of price discovery and comparison, preventing a sole-source situation. However, it increases the risk that the government may not have received the most competitive pricing available in the market. The government's negotiation strategy and the specific technical requirements of the contract also play a role. If the requirements were highly specialized, limiting the pool of potential bidders, then two bids might represent a reasonable outcome. Nevertheless, a higher number of bids is generally preferred for maximizing taxpayer value.

What are the historical spending patterns for IT support services within the Indian Health Service (IHS)?

Analyzing historical spending patterns for IT support services within the Indian Health Service (IHS) is essential for contextualizing the $18.5 million award. Federal agencies like the IHS typically allocate significant portions of their budgets to IT operations and maintenance, including software support, hardware infrastructure, and network services. Historical data would reveal trends in spending on similar accounting or financial management applications, the types of contracts utilized (e.g., T&M vs. fixed-price), and the average contract values over time. Understanding these patterns can help identify whether spending on this particular contract is consistent with past investments, shows an increasing or decreasing trend, or deviates significantly, potentially signaling a need for further investigation into efficiency or necessity. Without specific historical IHS IT spending data, it's difficult to provide precise figures, but such analysis is a standard practice in federal budget and contract oversight.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte LLP (UEI: 014127109)

Address: 1725 DUKE ST, ALEXANDRIA, VA, 08

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership

Financial Breakdown

Contract Ceiling: $18,553,287

Exercised Options: $18,553,287

Current Obligation: $18,553,287

Parent Contract

Parent Award PIID: GS10F0083L

IDV Type: FSS

Timeline