Deloitte's $45.6M Army contract for custom programming services shows fair value with 4 bidders

Contract Overview

Contract Amount: $45,580,577 ($45.6M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Defense

Start Date: 2015-04-15

End Date: 2020-06-14

Contract Duration: 1,887 days

Daily Burn Rate: $24.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: ARMY EQUIPPING ENTERPRISE SYSTEM AE2S

Place of Performance

Location: FORT BELVOIR, FAIRFAX County, VIRGINIA, 22060

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $45.6 million to DELOITTE CONSULTING LLP for work described as: ARMY EQUIPPING ENTERPRISE SYSTEM AE2S Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. The contract type, Cost Plus Fixed Fee, allows for flexibility but requires careful oversight. 3. Performance period of 1887 days suggests a long-term need for these services. 4. The North American Industry Classification System (NAICS) code 541511 points to specialized IT services. 5. The contract was awarded to a single vendor, Deloitte Consulting LLP. 6. The contract value is substantial, reflecting significant investment in Army IT infrastructure.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or detailed cost breakdowns. However, the presence of four bidders suggests a competitive environment that likely influenced pricing. The Cost Plus Fixed Fee structure means the government pays for allowable costs plus a fixed fee, which can be efficient if costs are well-managed. Further analysis would require comparing the fixed fee percentage and the final cost to industry averages for similar custom programming services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The fact that four bids were received indicates a healthy level of competition for this particular requirement. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government.

Taxpayer Impact: The full and open competition and multiple bidders suggest that taxpayer dollars were likely used more efficiently, as the Army could select the most cost-effective and technically capable offer.

Public Impact

The primary beneficiary is the Department of the Army, receiving custom computer programming services to support its enterprise systems. This contract likely supports critical IT infrastructure and operational capabilities for the Army. The services delivered are expected to enhance the efficiency and effectiveness of Army operations through improved software and systems. The geographic impact is likely national, supporting Army-wide IT needs, with a specific focus on operations within Virginia where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to cost overruns if not meticulously monitored.
The long performance period (1887 days) increases the risk of scope creep or evolving technological needs not being met.
Reliance on a single vendor for custom programming over an extended period could limit future flexibility and innovation.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
The presence of four bidders indicates market interest and potential for strong vendor performance.
The contract supports a critical function within the Department of Defense, implying strategic importance and likely robust oversight.

Sector Analysis

This contract falls within the Custom Computer Programming Services sector, a significant part of the broader IT services industry. This sector is characterized by high demand for specialized software development, system integration, and IT consulting. The market size for IT services supporting the federal government is substantial, with agencies like the Department of Defense being major clients. This contract represents a typical investment in maintaining and upgrading complex IT systems essential for military operations.

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. However, the prime contractor, Deloitte Consulting LLP, may engage small businesses as subcontractors, but this information is not detailed in the provided data. The absence of a small business set-aside means the competition was open to all eligible firms, regardless of size.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Army. The Cost Plus Fixed Fee structure necessitates close monitoring of costs and the fixed fee to ensure value for money. Transparency is generally maintained through contract reporting mechanisms, though specific details on public accessibility of performance reports are not provided. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Army Enterprise Systems
Department of Defense IT Modernization Programs
Custom Software Development Contracts
IT Services for Military Operations

Risk Flags

Potential for cost overruns due to CPFF structure
Risk of technological obsolescence over the contract's long duration
Possibility of scope creep impacting budget and timeline
Reliance on a single vendor for critical IT services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.6 million to DELOITTE CONSULTING LLP. ARMY EQUIPPING ENTERPRISE SYSTEM AE2S

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $45.6 million.

What is the period of performance?

Start: 2015-04-15. End: 2020-06-14.

What is the track record of Deloitte Consulting LLP with similar government contracts?

Deloitte Consulting LLP is a major federal contractor with a long history of securing and performing on large-scale IT and professional services contracts across various government agencies, including the Department of Defense. Their portfolio often includes custom software development, system integration, cloud migration, and cybersecurity services. While specific performance details for individual contracts are not always publicly available, their consistent presence as a prime contractor suggests a generally satisfactory performance record. However, like any large firm, they may have faced past performance issues or disputes on specific projects, which would typically be documented in government past performance databases. A deeper dive into their contract history would reveal the types of services most frequently provided, the agencies they serve most often, and any reported issues or commendations.

How does the value of this contract compare to similar custom programming services contracts awarded by the Department of the Army?

The total value of this contract, approximately $45.6 million over roughly five years (1887 days), places it in the mid-to-large range for custom computer programming services within the Department of the Army. Comparable contracts often range from a few million to tens or even hundreds of millions of dollars, depending on the scope, complexity, and duration. Contracts for enterprise-wide system development or modernization tend to be at the higher end. The average annual value of this contract is around $9.1 million, which is a reasonable figure for specialized IT services supporting a large organization. Without specific details on the deliverables and complexity, a precise comparison is difficult, but it aligns with typical spending for significant IT development projects within the DoD.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type for custom programming?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type, like the one awarded to Deloitte for the Army Enterprise Equipping System (AE2S), revolve around cost control and potential for contractor inefficiency. While the fixed fee provides the contractor with an incentive to control costs (as the fee is fixed regardless of the final cost), there's still a risk that the contractor may not be as diligent in managing expenses as they would be under a fixed-price contract. The government bears the risk of cost overruns beyond the allowable costs. For custom programming, where requirements can evolve and technical challenges are common, accurately estimating costs upfront is difficult. This can lead to the government paying more than anticipated if the contractor's actual costs exceed initial estimates, even though the fee remains constant. Robust oversight and detailed cost accounting are crucial to mitigate these risks.

How effective are competition levels like 'full and open' with 4 bidders in ensuring value for taxpayer money?

A 'full and open' competition with four bidders is generally considered a strong indicator of effective price discovery and value for taxpayer money. This level of competition signifies that the requirement was well-defined enough to attract multiple capable vendors, and the bidding process was accessible. With four distinct offers, the Army likely received a range of technical approaches and pricing structures, allowing them to select the best value proposition. The presence of multiple bidders inherently drives down prices as companies compete to win the contract. While 'more bidders are always better' is a common adage, four bidders typically represent a robust market response that balances competition with the administrative effort required to evaluate numerous proposals. This scenario suggests a good balance between achieving competitive pricing and ensuring the government secures the necessary technical capabilities.

What are the implications of the contract duration (1887 days) on the potential for technological obsolescence or scope creep?

A contract duration of 1887 days, approximately 5.17 years, presents a significant risk of technological obsolescence and scope creep, particularly in the fast-paced IT sector. Custom programming services are highly susceptible to rapid advancements in technology. By the end of this contract period, the software or systems developed could be based on technologies that are no longer cutting-edge or may even be nearing the end of their support lifecycle. Scope creep is another major concern; over such a long period, requirements can change due to evolving military needs, new strategic directives, or unforeseen operational challenges. Without rigorous change management processes and flexibility built into the contract, the scope can expand significantly, leading to cost increases and delays beyond the original intent. Regular reviews and potential contract modifications would be essential to manage these risks effectively.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91CRB14R0022

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Touche Tohmatsu Limited

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: $45,580,577

Exercised Options: $45,580,577

Current Obligation: $45,580,577

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $7,365,083

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline