GSA awards $102.5M IT services contract to Deloitte, raising questions about competition and value

Contract Overview

Contract Amount: $102,476,485 ($102.5M)

Contractor: Deloitte Consulting LLP

Awarding Agency: General Services Administration

Start Date: 2022-04-19

End Date: 2023-02-18

Contract Duration: 305 days

Daily Burn Rate: $336.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: EITS BRIDGE

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

General Services Administration obligated $102.5 million to DELOITTE CONSULTING LLP for work described as: EITS BRIDGE Key points: 1. The contract's cost-plus award fee structure can incentivize contractor performance but may also lead to higher costs if not carefully managed. 2. Awarded on a sole-source basis, the lack of competition limits price discovery and potentially reduces the government's leverage. 3. The contract duration of 305 days is relatively short, suggesting a focused scope or a bridge to a more comprehensive solution. 4. The specific IT services provided under this contract require further analysis to benchmark against similar offerings. 5. Deloitte's extensive experience in government contracting suggests a capable provider, but the absence of competition makes performance assessment challenging. 6. The contract's value of $102.5 million places it in the mid-to-large tier for IT services within the federal government.

Value Assessment

Rating: fair

The contract's value of $102.5 million for 305 days of IT services is substantial. Without detailed service descriptions and performance metrics, a direct comparison to similar contracts is difficult. The cost-plus award fee (CPAF) pricing structure, while offering incentives for performance, can lead to cost overruns if not rigorously overseen. Benchmarking the per-unit cost against market rates for similar IT system design services is challenging due to the lack of specific service details and the sole-source nature of the award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one vendor possesses the necessary qualifications or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from multiple bids, which could have driven down the price through competitive pressure. This limits the ability to assess if the awarded price represents the best value achievable in a competitive market.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, it's harder to ensure the government secured the most cost-effective solution for these IT services.

Public Impact

Federal agencies utilizing General Services Administration (GSA) IT services benefit from the expertise provided by Deloitte Consulting LLP. The contract supports the delivery of computer systems design services, crucial for modernizing and maintaining federal IT infrastructure. The primary geographic impact is within Virginia, where the contract is administered. The contract likely supports a workforce of IT professionals employed by Deloitte, contributing to the IT sector's employment landscape.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus award fee structure requires robust oversight to prevent cost overruns.
Lack of transparency in the specific services rendered makes value assessment difficult.
Short contract duration may indicate a temporary solution or bridge, requiring future procurements.

Positive Signals

Award to a large, experienced contractor like Deloitte suggests a high likelihood of technical capability.
The contract is managed by the General Services Administration, a key agency for federal procurement oversight.
The contract falls under the 'Computer Systems Design Services' NAICS code, indicating a focus on essential IT functions.

Sector Analysis

The federal IT services market is vast and highly competitive, with agencies spending billions annually on systems design, integration, and support. This contract, valued at over $100 million, falls within the mid-to-large size category for IT services. It operates within the broader 'Computer Systems Design Services' sector, which includes a wide range of activities from software development to IT infrastructure management. Comparable spending benchmarks for similar IT system design contracts vary widely based on scope, duration, and complexity, but this award is significant.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to a large prime contractor like Deloitte suggests that opportunities for small businesses may be limited unless they are part of Deloitte's supply chain or are engaged in future, smaller procurements. The absence of small business set-asides in this significant award means direct benefits to the small business IT ecosystem are unlikely.

Oversight & Accountability

Oversight for this contract is primarily managed by the General Services Administration (GSA). As a sole-source award, it requires particularly diligent oversight to ensure that the services provided are necessary, performed effectively, and that costs are reasonable. The Cost Plus Award Fee (CPAF) structure necessitates close monitoring of performance metrics and award fee determinations. Transparency regarding the specific deliverables and performance evaluations would enhance accountability.

Related Government Programs

GSA IT Schedule 70
IT Professional Services
Computer Systems Design Services
Cloud Computing Services
Cybersecurity Services

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus award fee structure requires diligent oversight to control costs.
Limited transparency on specific services and performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $102.5 million to DELOITTE CONSULTING LLP. EITS BRIDGE

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $102.5 million.

What is the period of performance?

Start: 2022-04-19. End: 2023-02-18.

What specific IT services are being provided under this contract, and how do they align with GSA's mission?

The contract falls under NAICS code 541512 for Computer Systems Design Services. While the specific services are not detailed in the provided data, this category typically encompasses a broad range of activities including IT consulting, systems integration, custom software development, and IT infrastructure design. These services are crucial for GSA's mission to modernize federal IT systems, improve efficiency, and provide effective technology solutions to other government agencies. Understanding the precise nature of the services would allow for a more accurate assessment of their alignment with GSA's strategic objectives and operational needs.

How does the Cost Plus Award Fee (CPAF) structure impact the overall cost-effectiveness of this contract?

The CPAF structure allows the contractor to recover allowable costs plus a fee that is composed of a base amount and an award amount. The award amount is determined by the government based on the contractor's performance against pre-defined metrics. While CPAF can incentivize high performance and quality, it also carries a risk of higher costs if the award criteria are not stringent or if the government's oversight is insufficient. Without detailed performance metrics and award fee determinations, it's difficult to assess if this structure is maximizing value for taxpayers or simply increasing the potential for higher expenditures compared to a fixed-price contract.

What are the implications of awarding this contract on a sole-source basis for future IT procurements by GSA?

Awarding this $102.5 million contract on a sole-source basis means that GSA did not explore competitive options, potentially missing out on better pricing or innovative solutions from other vendors. This can set a precedent, making it easier to justify sole-source awards in the future, which could reduce overall competition in the federal IT market. Agencies should generally strive for full and open competition to ensure best value. Sole-source awards should be reserved for truly unique situations where competition is genuinely not feasible, and the justification should be robust and transparent.

What is Deloitte's track record with similar large-scale IT services contracts within the federal government?

Deloitte Consulting LLP is a major government contractor with a significant history of performing large-scale IT services contracts across various federal agencies. They possess extensive experience in areas such as systems integration, digital transformation, cloud migration, and cybersecurity. While their broad experience suggests a high capability to deliver complex IT solutions, the specific performance history on contracts with similar scope, pricing structures (like CPAF), and objectives as this GSA award would be necessary for a comprehensive assessment. Publicly available contract data and performance reviews, where accessible, would provide further insight.

How does the $102.5 million contract value compare to historical spending on similar IT services by GSA or other agencies?

The $102.5 million contract value is substantial and falls within the upper range for individual IT services contracts, particularly those with a duration of approximately one year (305 days). GSA and other large federal agencies frequently award contracts in the tens to hundreds of millions of dollars for IT modernization, system development, and support services. To benchmark this specific contract's value, one would need to compare it against contracts for similar 'Computer Systems Design Services' (NAICS 541512) awarded over the past few years, considering factors like contract type, duration, and the specific services rendered. Without such a detailed comparison, it's difficult to definitively state if this represents high or low spending relative to the market.

What are the potential risks associated with a Cost Plus Award Fee (CPAF) contract for IT services, and how are they mitigated?

The primary risk with CPAF contracts is the potential for cost escalation, as the contractor is reimbursed for all allowable costs plus a fee. The 'award' portion of the fee is performance-dependent, incentivizing the contractor to meet or exceed specific metrics. Risks include the contractor potentially incurring higher costs to achieve higher award fees, or the government setting weak performance standards, leading to excessive fees for mediocre performance. Mitigation strategies involve clearly defining objective performance standards, robust government oversight of costs and performance, and rigorous evaluation processes for determining award fees. Regular audits and performance reviews are critical.

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 › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 47QFCA22R0025

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Touche Tohmatsu Limited

Address: 1919 N LYNN ST, ARLINGTON, VA, 22209

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

Financial Breakdown

Contract Ceiling: $133,415,487

Exercised Options: $133,415,487

Current Obligation: $102,476,485

Actual Outlays: $101,084,406

Subaward Activity

Number of Subawards: 85

Total Subaward Amount: $50,572,270

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline