HHS awarded Accenture $830M for IT services, with a 2210-day duration and Cost Plus Award Fee structure

Contract Overview

Contract Amount: $829,577,337 ($829.6M)

Contractor: Accenture Federal Services LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2014-12-23

End Date: 2021-01-10

Contract Duration: 2,210 days

Daily Burn Rate: $375.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: FFM

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $829.6 million to ACCENTURE FEDERAL SERVICES LLC for work described as: FFM Key points: 1. The contract's Cost Plus Award Fee (CPAF) structure incentivizes performance but can lead to higher costs if not managed tightly. 2. With a duration of 2210 days, this represents a significant long-term investment in IT services. 3. The award was made under full and open competition, suggesting a robust bidding process. 4. The primary service category is Computer Systems Design Services, indicating a focus on IT infrastructure and solutions. 5. The contract's value places it among substantial IT service awards within the federal government. 6. The contractor, Accenture Federal Services LLC, is a major player in the federal IT contracting space.

Value Assessment

Rating: good

The total award of approximately $830 million over 2210 days suggests a significant investment in IT services by CMS. Benchmarking this against similar large-scale IT contracts for system design and integration within HHS or other health agencies would provide further context on value for money. The Cost Plus Award Fee (CPAF) structure allows for flexibility and performance incentives, but requires diligent oversight to ensure costs remain reasonable and aligned with objectives. Without specific per-unit cost data or detailed performance metrics, a definitive value assessment is challenging, but the scale and duration indicate a substantial, ongoing need.

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 fact that it is a definitive contract suggests a single award was made after a competitive process. The number of bidders is not specified, but full and open competition generally fosters a competitive environment that can lead to better pricing and innovative solutions.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a wide range of potential providers, driving down costs and improving service quality.

Public Impact

Beneficiaries include federal agencies within the Department of Health and Human Services, particularly CMS, which relies on these IT services for its operations. Services delivered likely encompass a broad range of computer systems design, development, integration, and maintenance. The geographic impact is primarily national, supporting federal health initiatives and data management. Workforce implications include employment opportunities within Accenture and potentially its subcontractors, as well as the federal employees who manage and utilize these IT systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Award Fee (CPAF) structure, while incentivizing, can lead to cost overruns if not meticulously managed and monitored.
The long duration of the contract (2210 days) presents a risk of technological obsolescence if not actively managed and updated.
The sheer scale of the contract value necessitates robust oversight to ensure funds are used efficiently and effectively.
Dependence on a single contractor for critical IT systems can pose a risk if the contractor faces financial instability or performance issues.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely yielded a strong proposal.
Accenture Federal Services LLC is a well-established contractor with significant experience in large-scale federal IT projects.
The CPAF structure, if managed well, can drive high performance and successful project outcomes.
The contract addresses critical IT needs for the Department of Health and Human Services, supporting vital government functions.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The federal IT services market is substantial, with agencies consistently investing in modernizing infrastructure, developing new systems, and maintaining existing ones. Comparable spending benchmarks for large-scale IT system design and integration contracts within the federal government often run into hundreds of millions of dollars, reflecting the complexity and criticality of these services. This contract's value aligns with major IT procurements aimed at supporting core government functions, such as those within the healthcare domain managed by HHS.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications specifically mandated by a small business set-aside. However, as a large prime contract awarded to a major IT services provider, there may be opportunities for small businesses to participate as subcontractors, depending on Accenture's subcontracting plan and the specific needs of the project. The absence of a set-aside means the primary competition was not focused on small business participation.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services (CMS), which awarded the contract. As a Cost Plus Award Fee (CPAF) contract, performance metrics and cost controls would be key areas of oversight. Transparency would be facilitated through contract reporting mechanisms and potentially through public contract databases. Inspector General jurisdiction would likely fall under the HHS Office of Inspector General (OIG), which investigates fraud, waste, and abuse in HHS programs and operations.

Related Government Programs

HHS IT Modernization
CMS Health IT Services
Federal Civilian IT Contracts
Large-Scale IT System Development
Government IT Services Procurement

Risk Flags

Long contract duration increases risk of technological obsolescence.
Cost Plus Award Fee structure requires diligent oversight to manage costs.
Potential for contractor performance issues over the contract's extended term.
Dependence on a single large contractor for critical IT functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $829.6 million to ACCENTURE FEDERAL SERVICES LLC. FFM

Who is the contractor on this award?

The obligated recipient is ACCENTURE FEDERAL SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $829.6 million.

What is the period of performance?

Start: 2014-12-23. End: 2021-01-10.

What is Accenture Federal Services LLC's track record with similar large-scale IT contracts within HHS or other federal agencies?

Accenture Federal Services LLC has a significant track record of performing large-scale IT contracts for various federal agencies, including the Department of Health and Human Services. They are known for their expertise in areas such as systems integration, cloud migration, data analytics, and cybersecurity. Historically, they have been awarded numerous multi-million dollar contracts for complex IT solutions. While specific performance details for every contract are not always public, their continued success in winning competitive bids suggests a generally positive performance history. However, like any large contractor, they may have faced challenges or criticisms on specific projects, which would require a deeper dive into individual contract performance reports and agency evaluations.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types in terms of cost efficiency for IT services?

The Cost Plus Award Fee (CPAF) contract type is designed to incentivize contractor performance by allowing for reimbursement of all allowable costs plus a fixed fee that is subject to an award amount based on performance against pre-defined criteria. Compared to Firm-Fixed-Price (FFP) contracts, CPAF offers more flexibility for the government when requirements are not well-defined or are expected to change, as it allows for adjustments in scope and cost. However, it can be less cost-efficient than FFP if the government's oversight is not rigorous, as costs can escalate. It generally provides better cost control than Cost Plus Incentive Fee (CPIF) or Cost Plus Fixed Fee (CPFF) contracts when performance incentives are clearly defined and measurable, but requires significant government effort in defining award criteria and evaluating performance.

What are the primary risks associated with a definitive contract of this magnitude and duration?

A definitive contract of this magnitude ($830 million) and duration (2210 days) carries several primary risks. Firstly, technological obsolescence is a significant concern; IT landscapes evolve rapidly, and a contract spanning over six years could result in outdated systems or solutions if not managed with foresight and adaptability. Secondly, contractor performance risk is elevated due to the long-term commitment; issues such as key personnel turnover, financial instability, or declining service quality can have prolonged impacts. Thirdly, cost control risk is inherent, especially with a CPAF structure, where inadequate oversight could lead to cost overruns. Finally, vendor lock-in can become a risk, making it difficult and costly to transition to alternative solutions or providers once the contract is established.

How has spending on Computer Systems Design Services by HHS evolved over the past five years?

Analyzing HHS spending on Computer Systems Design Services over the past five years would reveal trends in their investment in IT infrastructure and solutions. Generally, federal agencies, including HHS, have seen increasing IT expenditures driven by the need for modernization, cybersecurity enhancements, data analytics capabilities, and the implementation of new healthcare initiatives. Specific data for HHS would likely show fluctuations based on major project cycles, budget appropriations, and strategic shifts towards cloud computing or digital transformation. A detailed analysis would involve examining historical contract awards and spending reports for the relevant NAICS code (541512) within HHS to identify growth patterns, shifts in service focus, and the impact of legislative or policy changes on IT procurement.

What is the typical profit margin for contractors on large federal IT contracts awarded under full and open competition?

Profit margins for contractors on large federal IT contracts awarded under full and open competition can vary significantly based on contract type, complexity, risk, and market conditions. For Cost Plus Award Fee (CPAF) contracts, the base fee is typically lower than a fixed fee, but the potential for award fees can increase the overall profit. Historically, average profit margins for large federal IT contractors have ranged from 5% to 15%, with higher margins often associated with more specialized services, higher risk, or exceptional performance. However, these are averages, and specific contract profitability depends heavily on the contractor's efficiency, cost management, and ability to meet or exceed performance targets. Intense competition under full and open solicitations can also put downward pressure on profit margins.

Are there any specific performance metrics or award criteria associated with the 'Award Fee' component of this contract?

The provided data indicates the contract type is 'COST PLUS AWARD FEE' (pt: "COST PLUS AWARD FEE"), but it does not specify the exact performance metrics or award criteria used to determine the award fee. Typically, for CPAF contracts, the government establishes a set of measurable performance objectives related to technical execution, schedule adherence, cost control, and user satisfaction. The contractor earns a base fee regardless of performance, but the award fee is discretionary and is determined by the Contracting Officer's assessment of the contractor's performance against these criteria. These criteria are usually detailed in the contract's Performance Work Statement (PWS) or Statement of Objectives (SOO) and are crucial for incentivizing desired outcomes and ensuring value for the government.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Novetta Solutions, LLC

Address: 800 N GLEBE RD STE 300, ARLINGTON, VA, 22203

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $835,575,487

Exercised Options: $829,577,337

Current Obligation: $829,577,337

Actual Outlays: $-1,325,012

Subaward Activity

Number of Subawards: 736

Total Subaward Amount: $198,704,536

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline