Deloitte Consulting LLP awarded $40.7M for ACA/Application Development O&M, with a significant portion for contractor support

Contract Overview

Contract Amount: $40,714,379 ($40.7M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of the Treasury

Start Date: 2016-09-29

End Date: 2020-08-31

Contract Duration: 1,432 days

Daily Burn Rate: $28.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CL::IGF FOR CLOSELY ASSOCIATED - CONTRACTOR SUPPORT FOR RELEASE LEVEL TECHNICAL SUPPORT (RLTS) AFFORDABLE CARE ACT (ACA)/APPLICATION DEVELOPMENT (AD) OPERATIONS AND MAINTENANCE (O&M).

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $40.7 million to DELOITTE CONSULTING LLP for work described as: IGF::CL::IGF FOR CLOSELY ASSOCIATED - CONTRACTOR SUPPORT FOR RELEASE LEVEL TECHNICAL SUPPORT (RLTS) AFFORDABLE CARE ACT (ACA)/APPLICATION DEVELOPMENT (AD) OPERATIONS AND MAINTENANCE (O&M). Key points: 1. Contract value of $40.7M over approximately 4 years indicates substantial investment in IT operations and maintenance. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process. 3. Fixed-price contract type aims to control costs, but requires careful scope management to avoid overruns. 4. The primary focus on contractor support for technical assistance highlights reliance on external expertise for critical ACA systems. 5. The contract's duration and value suggest a long-term need for these services within the IRS. 6. The North American Industry Classification System (NAICS) code 541519 points to a broad range of computer-related services.

Value Assessment

Rating: fair

The total award of $40.7 million over roughly four years averages to about $10 million annually. Benchmarking this against similar IT O&M contracts for large federal agencies is challenging without more specific service details. However, the fixed-price nature suggests an expectation of predictable costs. The value appears substantial, reflecting the complexity and criticality of ACA systems.

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 a bid. This typically leads to a more robust price discovery process and potentially better value for the government. The number of bidders is not specified, but the competition type suggests multiple entities vied for this award.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation from contractors.

Public Impact

Taxpayers benefit from the continued operation and maintenance of critical Affordable Care Act (ACA) systems. The contract ensures the availability of technical support for ACA applications, crucial for program administration. Services delivered are primarily IT operations, maintenance, and contractor support for release level technical support. The geographic impact is likely national, given the scope of the ACA and IRS operations. Workforce implications may include reliance on Deloitte's personnel for specialized IT support, potentially reducing the need for extensive in-house specialized staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specialized knowledge becomes concentrated within Deloitte.
Risk of scope creep in fixed-price contracts if requirements are not clearly defined and managed.
Dependence on a single contractor for critical ACA IT infrastructure could pose a risk if performance falters.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that can lead to better value.
Fixed-price contract type provides cost certainty for the government, assuming effective scope management.
The contract duration indicates a stable, long-term need for these essential IT services.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on application development, operations, and maintenance (O&M). The market for federal IT O&M is substantial, with agencies continually investing in maintaining and modernizing legacy systems and supporting complex platforms like those for the ACA. Comparable spending benchmarks would typically involve looking at other large-scale IT support contracts for civilian agencies, often in the multi-million dollar range annually.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside requirement. However, the prime contractor, Deloitte Consulting LLP, may engage small businesses as subcontractors, though this is not specified in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury and the Internal Revenue Service (IRS). Accountability measures are inherent in the fixed-price contract type, requiring delivery of specified services. Transparency is generally facilitated through federal contract databases. Inspector General jurisdiction would likely reside with the Treasury Inspector General for Tax Administration (TIGTA).

Related Government Programs

Affordable Care Act IT Systems
IRS Application Development
Federal IT Operations and Maintenance
Contractor Support Services
Department of the Treasury IT Spending

Risk Flags

Potential for vendor lock-in
Scope creep risk in fixed-price contracts
Dependence on single contractor for critical systems

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $40.7 million to DELOITTE CONSULTING LLP. IGF::CL::IGF FOR CLOSELY ASSOCIATED - CONTRACTOR SUPPORT FOR RELEASE LEVEL TECHNICAL SUPPORT (RLTS) AFFORDABLE CARE ACT (ACA)/APPLICATION DEVELOPMENT (AD) OPERATIONS AND MAINTENANCE (O&M).

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $40.7 million.

What is the period of performance?

Start: 2016-09-29. End: 2020-08-31.

What is the historical spending pattern for ACA/Application Development O&M at the IRS?

Historical spending on ACA/Application Development O&M at the IRS is not detailed in the provided data. However, the award of a $40.7 million contract to Deloitte Consulting LLP from September 2016 to August 2020 suggests a significant and sustained investment in these critical IT functions. This single contract indicates a substantial annual spend in the range of $10 million. To understand the broader historical pattern, one would need to examine prior contracts for similar services, potentially from other vendors, and analyze trends in IT spending related to the ACA and its supporting applications over a longer period. This would involve looking at budget allocations, contract awards, and task orders issued by the IRS for IT O&M.

How does the pricing of this contract compare to similar IT O&M contracts?

Direct pricing comparison is difficult without detailed service breakdowns and market data for comparable contracts. The contract is 'FIRM FIXED PRICE,' which aims to provide cost certainty. The total value of $40.7 million over approximately four years averages to about $10 million annually. This figure needs to be assessed against the scope of work, the criticality of the ACA systems supported, and the specific technical support provided. Benchmarking would require identifying contracts with similar service levels, system complexities, and agency types. Without such comparative data, assessing whether this represents excellent, fair, or questionable value for money is speculative. The 'fair' rating reflects the fixed-price structure and competitive award, balanced against the lack of specific benchmarking data.

What are the key risks associated with this contract for the IRS?

Key risks include potential vendor lock-in, as Deloitte gains deep knowledge of critical ACA systems. Scope creep is another risk, particularly in fixed-price contracts, if requirements are not meticulously managed, potentially leading to cost overruns or reduced quality if the contractor absorbs unexpected work. Dependence on a single contractor for essential IT operations poses a performance risk; any disruption in Deloitte's service delivery could impact the functioning of vital ACA systems. Furthermore, the long-term nature of the contract necessitates ongoing performance monitoring and contract management to ensure continued alignment with IRS objectives and taxpayer needs.

What is Deloitte Consulting LLP's track record with the IRS and similar federal contracts?

Deloitte Consulting LLP is a major federal contractor with a significant presence across numerous government agencies, including the IRS. While this specific contract data doesn't detail their performance history, Deloitte has a broad portfolio of IT, consulting, and professional services contracts with the federal government. Their track record generally involves large-scale system implementations, IT modernization, and operational support. For the IRS, they have been involved in various tax system modernization efforts and IT support roles. A comprehensive assessment would require reviewing past performance evaluations, contract modifications, and any documented issues or successes on prior IRS or similar large-scale federal IT contracts.

How effective are contractor support models for critical federal IT systems like the ACA?

Contractor support models can be highly effective for critical federal IT systems when managed properly. They provide access to specialized expertise, scalability, and potentially faster deployment of resources than might be available internally. For systems like the ACA, which require continuous operation, maintenance, and updates, leveraging contractors like Deloitte can ensure high availability and technical proficiency. However, effectiveness hinges on clear performance metrics, robust oversight, well-defined scopes of work, and strong government project management. Risks include knowledge transfer gaps, potential for contractor priorities to diverge from agency goals, and ensuring long-term institutional knowledge is maintained within the agency.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related 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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Financial Advisory Services LLP (UEI: 216754602)

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: $539,773,566

Exercised Options: $494,609,917

Current Obligation: $40,714,379

Actual Outlays: $9,758,588

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $4,068,440

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00016

IDV Type: IDC

Timeline