DoD's $49M custom programming contract with Deloitte Consulting awarded without competition

Contract Overview

Contract Amount: $49,107,569 ($49.1M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Defense

Start Date: 2015-09-28

End Date: 2020-09-28

Contract Duration: 1,827 days

Daily Burn Rate: $26.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $49.1 million to DELOITTE CONSULTING LLP for work described as: IGF::OT::IGF Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not carefully managed. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. A single award to Deloitte Consulting LLP suggests a lack of broader market engagement. 4. The contract duration of 1827 days (approx. 5 years) indicates a long-term need for these services. 5. The North American Industry Classification System (NAICS) code 541511 points to custom computer programming services. 6. The contract's value of over $49 million warrants scrutiny regarding its necessity and efficiency.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparison to similar custom programming services. The cost-plus-fixed-fee structure, while offering flexibility, can be less cost-effective than fixed-price contracts if scope creep or inefficiencies occur. The absence of competition further complicates a direct value assessment, as there's no market-driven price point to compare against. However, the significant duration and value suggest a substantial requirement that, if met effectively, could represent reasonable value, but the lack of competitive pressure is a concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary qualifications, or in cases of urgent need. The lack of competition means that the Department of Defense did not benefit from a bidding process that could have driven down prices or spurred innovation from a wider range of contractors. The rationale for this sole-source award would need to be thoroughly documented to ensure it was justified.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, there's less assurance that the government secured the best possible price and terms for these custom computer programming services.

Public Impact

The primary beneficiaries are likely Department of Defense components requiring specialized custom computer programming. The services delivered are custom software development and related IT support, crucial for operational capabilities. The geographic impact is primarily within the United States, likely supporting DoD operations nationwide. Workforce implications include the employment of skilled IT professionals by Deloitte Consulting LLP to fulfill the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize higher spending if not managed tightly.
Sole-source awards limit opportunities for other capable vendors, including small businesses.
Long contract duration without competition raises concerns about sustained value and adaptability.

Positive Signals

Deloitte Consulting LLP is a well-established contractor with significant experience.
The contract addresses a specific, likely critical, need within the Department of Defense.
The fixed-fee component provides some cost certainty compared to pure cost-reimbursement contracts.

Sector Analysis

The custom computer programming services sector is a significant part of the IT industry, characterized by high demand for specialized skills. This contract falls within the broader IT services market, which is essential for government operations. Comparable spending benchmarks for custom software development can vary widely based on complexity, duration, and required expertise. The $49 million value over five years places this contract in the mid-to-large size category for IT service procurements within the federal government.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The sole-source nature of the award further limits opportunities for small businesses to participate, either as prime contractors or potentially as subcontractors unless specifically included by the prime. This could represent a missed opportunity to foster small business growth within the federal IT contracting landscape.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and oversight mechanisms. The Defense Contract Management Agency (DCMA) is listed as the servicing agency, suggesting they are involved in monitoring performance and compliance. Transparency regarding the specific deliverables and performance metrics would be crucial for effective oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Services
Custom Software Development Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source IT Procurements

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.1 million to DELOITTE CONSULTING LLP. IGF::OT::IGF

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $49.1 million.

What is the period of performance?

Start: 2015-09-28. End: 2020-09-28.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements require a formal justification and approval (J&A) document that outlines why full and open competition is not feasible or not in the government's best interest. Reasons can include unique capabilities of a single source, urgent and compelling needs, or specific follow-on work requirements. Without access to the J&A, it is impossible to definitively state the rationale. However, the lack of competition inherently raises concerns about whether alternative solutions were adequately explored or if the market could have provided better value.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for custom programming services in terms of cost-effectiveness?

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined or is expected to evolve, as is common in custom programming. The government pays the contractor's actual costs plus a fixed fee, which is negotiated upfront. While the fixed fee provides some cost ceiling for the contractor's profit, the 'cost' portion can be variable. Compared to fixed-price contracts, CPFF can be less cost-effective for the government if costs escalate due to inefficiencies or scope creep, as the government bears the risk of cost overruns. However, it can be more appropriate than fixed-price contracts when technical uncertainties are high, preventing accurate upfront pricing. For custom programming, a well-defined scope and a competitive fixed-price bid would generally be considered more cost-effective if achievable.

What is the typical performance period for contracts of this nature and value?

The typical performance period for custom computer programming services contracts, especially those valued in the tens of millions of dollars, can vary significantly but often range from one to five years, with options for extensions. This contract has a duration of 1827 days, which is approximately five years. This duration is not unusual for large-scale IT development projects that require substantial design, development, testing, and implementation phases, or ongoing support and maintenance. Longer durations can provide stability for the contractor and the program, but also necessitate robust oversight to ensure continued relevance and value.

What are the potential risks associated with a sole-source, long-term IT contract?

Several risks are associated with sole-source, long-term IT contracts. Firstly, the lack of competition can lead to inflated prices and reduced incentive for the contractor to innovate or improve efficiency, as there is no market pressure. Secondly, the government may become locked into a specific technology or vendor, making it difficult and costly to switch if needs change or better solutions emerge. Thirdly, long-term reliance on a single vendor can create dependency and reduce the government's internal IT expertise. Finally, without ongoing competitive evaluation, the contractor may have less motivation to deliver exceptional value, potentially leading to complacency or substandard performance over time.

How does the NAICS code 541511 (Custom Computer Programming Services) define the scope of work typically covered?

NAICS code 541511 covers establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer. This includes developing custom computer games, translating, coding and programming activities, and providing specialized programming services. It specifically excludes the sale or licensing of software (which falls under software publishers), and the provision of computer facilities management services. Contracts under this code typically involve the creation of unique software applications, databases, or system integrations tailored to specific client requirements, rather than off-the-shelf software solutions.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003915R0037

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Financial Advisory Services LLP

Address: 1725 DUKE ST, ALEXANDRIA, VA, 22314

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

Financial Breakdown

Contract Ceiling: $49,495,326

Exercised Options: $49,495,326

Current Obligation: $49,107,569

Actual Outlays: $78,544

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $7,502,997

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline