DHS awards $37.8M to Deloitte for IT systems design, facing limited competition

Contract Overview

Contract Amount: $37,834,549 ($37.8M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Homeland Security

Start Date: 2022-09-30

End Date: 2026-03-03

Contract Duration: 1,250 days

Daily Burn Rate: $30.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OFO MANAGEMENT CONSULTING SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20229

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $37.8 million to DELOITTE CONSULTING LLP for work described as: OFO MANAGEMENT CONSULTING SERVICES Key points: 1. Value for money appears fair given the scope of IT systems design services. 2. Competition was full and open, but only three bids were received, suggesting potential for price improvement. 3. Risk indicators are moderate, with a long contract duration and fixed-price structure. 4. Performance context is within the critical area of border security IT systems. 5. Sector positioning is within IT consulting and computer systems design services.

Value Assessment

Rating: fair

The contract value of $37.8 million over approximately 3.5 years for computer systems design services is within a reasonable range for large-scale IT projects. However, with only three bids received, it's difficult to definitively benchmark the pricing against a highly competitive market. Further analysis of the specific deliverables and Deloitte's historical performance on similar contracts would be needed for a more precise value assessment. The firm fixed-price structure shifts risk to the contractor, which can be beneficial if managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive sign for taxpayer value. However, the receipt of only three bids suggests that the market may not have been as robustly engaged as possible for this specific requirement. While three bidders indicate some level of competition, it is less than ideal and could potentially lead to higher prices than if more firms had participated. This level of competition warrants further investigation into potential barriers to entry or market concentration.

Taxpayer Impact: While the competition was full and open, the limited number of bidders means taxpayers may not have benefited from the most aggressive pricing. A more competitive environment could have driven down costs.

Public Impact

The Department of Homeland Security, specifically U.S. Customs and Border Protection, benefits from enhanced IT systems. Services delivered include computer systems design, crucial for modernizing border security infrastructure. The geographic impact is primarily within the District of Columbia, where the contract is managed. Workforce implications include support for IT professionals and consultants involved in systems development and implementation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders in a full and open competition could indicate potential market issues or overly restrictive requirements.
Long contract duration (over 3 years) increases the risk of scope creep or evolving technological needs not being fully addressed.
Reliance on a single large contractor for critical IT systems design could pose a risk if performance issues arise.

Positive Signals

Award to a well-established contractor like Deloitte suggests a higher likelihood of successful project execution.
Firm fixed-price contract aligns contractor incentives with cost control and efficient delivery.
Full and open competition, despite fewer bidders, provides a baseline for accountability.

Sector Analysis

The IT consulting and computer systems design sector is highly competitive, with numerous firms offering a wide range of services. This contract falls within the government's broader IT services spending, which is substantial. Benchmarking against similar contracts for IT modernization and systems integration within federal agencies would provide further context on pricing and value. The market for specialized systems design services is often dominated by large, established players like Deloitte.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Deloitte Consulting LLP is a large business. There is no explicit information on subcontracting plans for small businesses within the provided data. The absence of a set-aside suggests that the primary focus was on obtaining services from the most capable contractor, rather than specifically promoting small business participation through this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Homeland Security's contracting officers and program managers. The contract's fixed-price nature provides some accountability by linking payment to deliverables. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Regular performance reviews and milestone tracking are standard oversight mechanisms.

Related Government Programs

Department of Homeland Security IT Modernization Programs
Customs and Border Protection Technology Modernization
Federal Civilian IT Consulting Services
Computer Systems Design Services Contracts

Risk Flags

Limited competition despite full and open award
Long contract duration may outpace technological evolution
Potential for vendor lock-in with a single large provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $37.8 million to DELOITTE CONSULTING LLP. OFO MANAGEMENT CONSULTING SERVICES

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $37.8 million.

What is the period of performance?

Start: 2022-09-30. End: 2026-03-03.

What is Deloitte's track record with DHS on similar IT systems design contracts?

Deloitte Consulting LLP has a significant history of contracting with the federal government, including the Department of Homeland Security (DHS). While specific details on past IT systems design contracts with DHS are not provided in this data snippet, Deloitte is a major player in federal IT services. Their track record generally includes large-scale system implementations, digital transformation initiatives, and management consulting for various agencies. Performance can vary, but they are typically considered a capable contractor. A deeper dive into past performance evaluations and contract close-outs for Deloitte with DHS would be necessary to fully assess their specific suitability and past success rates for this type of work.

How does the $37.8 million value compare to similar IT systems design contracts awarded by DHS?

The $37.8 million value for this 3.5-year contract for computer systems design services is substantial but not extraordinary within the context of large federal IT projects. DHS, particularly U.S. Customs and Border Protection (CBP), frequently awards multi-million dollar contracts for complex IT systems. Comparable contracts often involve system modernization, cybersecurity enhancements, or the development of new operational platforms. Without specific details on the scope and complexity of the systems being designed, a direct comparison is challenging. However, this amount aligns with the typical investment required for significant IT infrastructure upgrades or new system development within a large federal agency.

What are the primary risks associated with this contract, given its duration and fixed-price nature?

The primary risks associated with this contract stem from its long duration (1250 days, approximately 3.5 years) and firm fixed-price (FFP) structure. For the government, the risk is that the fixed price may not adequately account for evolving technological requirements or unforeseen complexities that arise over the contract's life, potentially leading to a system that is outdated upon delivery or requires costly modifications. For the contractor (Deloitte), the risk is underestimating the effort or encountering unexpected technical challenges, which could erode profit margins under the FFP terms. Scope creep, if not managed tightly through contract modifications, also poses a risk to both parties. Additionally, reliance on a single contractor for critical systems design can create dependency.

How effective is the 'full and open competition' with only three bidders in ensuring optimal pricing for taxpayers?

The effectiveness of 'full and open competition' in ensuring optimal pricing is diminished when only three bids are received. While this method theoretically allows any responsible source to compete, the low number of bidders suggests that the market may not be as robust as anticipated, or that the solicitation requirements were highly specific, potentially limiting the pool of qualified and interested contractors. Three bidders provide some level of price comparison, but it is less likely to drive prices down as aggressively as a scenario with five or more competitive offers. This situation warrants an analysis of why more bidders did not participate, which could inform future procurement strategies to encourage broader competition and better price discovery for the government.

What are the potential implications of awarding a large IT contract to a single vendor like Deloitte?

Awarding a large IT contract to a single vendor like Deloitte Consulting LLP has several implications. Positively, it can lead to streamlined communication, a unified vision for the project, and potentially faster decision-making due to a single point of contact and accountability. It allows the vendor to build deep expertise in the specific systems being developed. However, it also concentrates risk. If Deloitte underperforms, faces financial difficulties, or encounters significant technical hurdles, the entire project could be jeopardized. It also reduces the government's leverage in future negotiations or contract renewals, as switching vendors for complex, integrated systems can be extremely costly and time-consuming. This vendor lock-in effect is a significant consideration.

How does the 'Computer Systems Design Services' NAICS code (541512) typically relate to border security IT needs?

The NAICS code 541512, 'Computer Systems Design Services,' is highly relevant to border security IT needs. This code encompasses establishments primarily engaged in planning and designing computer systems that integrate hardware, software, and communication technologies. For agencies like U.S. Customs and Border Protection (CBP), this translates to designing and architecting systems for surveillance, data analysis, cargo screening, passenger processing, and border patrol operations. It involves understanding the unique operational requirements of border security and translating them into functional, secure, and efficient IT solutions. This can include everything from network infrastructure design to the development of specialized software applications for threat detection and information management.

Industry Classification

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

Solicitation ID: 70B03C22Q00000250

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Financial Advisory Services LLP

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: $37,834,549

Exercised Options: $37,834,549

Current Obligation: $37,834,549

Actual Outlays: $36,390,892

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $4,073,049

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 70B04C19A00000003

IDV Type: BPA

Timeline