USDA's $20.8M HR system contract to Deloitte Consulting shows fair value despite limited competition

Contract Overview

Contract Amount: $20,803,601 ($20.8M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Agriculture

Start Date: 2009-09-29

End Date: 2015-03-31

Contract Duration: 2,009 days

Daily Burn Rate: $10.4K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: LABOR HOURS

Sector: IT

Official Description: HCM EMPOW HR APPLICATION DEVELOPMENT, MAINTENANCE, AND TRAINING.

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Agriculture obligated $20.8 million to DELOITTE CONSULTING LLP for work described as: HCM EMPOW HR APPLICATION DEVELOPMENT, MAINTENANCE, AND TRAINING. Key points: 1. The contract's value appears reasonable when benchmarked against similar IT services, though specific performance metrics are not publicly detailed. 2. Competition was limited, with only three bidders, potentially impacting price discovery and value for taxpayers. 3. The contract duration and delivery order nature suggest a phased approach to IT modernization. 4. This contract falls within the broader category of administrative management and general management consulting services. 5. The use of labor hours pricing can introduce cost uncertainty if not carefully managed and monitored. 6. Oversight likely resides within the Forest Service's IT and procurement divisions, with potential IG involvement.

Value Assessment

Rating: fair

The total award of $20.8 million over approximately 5.5 years suggests an average annual spend of around $3.8 million. Benchmarking against similar large-scale HR system development and maintenance contracts, this figure appears within a reasonable range, particularly considering the complexity of enterprise-wide human resources applications. However, without detailed breakdowns of labor categories, hours, and specific deliverables, a precise value-for-money assessment is challenging. The contract's pricing mechanism (labor hours) necessitates robust oversight to ensure efficiency and prevent cost overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a competitive delivery order, indicating it was likely competed among pre-qualified vendors on a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. However, with only three bidders participating, the level of competition was limited. This suggests that while some level of market research and outreach occurred, the pool of potential offerors may have been restricted, or the specific requirements of the task order may have narrowed the field. Limited competition can sometimes lead to higher prices than would be achieved in a broader, more open competition.

Taxpayer Impact: With only three bidders, taxpayers may not have benefited from the most competitive pricing possible. A more robust competition could have driven down costs or resulted in a higher quality solution for the same price.

Public Impact

Federal employees within the Department of Agriculture will benefit from improved HR systems, potentially leading to more efficient payroll, benefits, and personnel management. The contract delivers application development, maintenance, and training services for the HCM (Human Capital Management) Empower HR application. The geographic impact is likely nationwide, supporting the HR functions across all branches of the Department of Agriculture. This contract supports IT professionals and consultants involved in software development, system integration, and training delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Labor hour pricing can lead to cost overruns if not meticulously managed and monitored for efficiency.
Limited competition (3 bidders) may have resulted in a higher price than a more open bidding process.
The long contract duration (over 5 years) requires sustained oversight to ensure continued relevance and performance.
Specific performance metrics and outcomes are not readily available for a comprehensive assessment of effectiveness.

Positive Signals

The contract was competitively awarded, indicating some level of market vetting and vendor selection process.
Deloitte Consulting LLP is a large, established firm with significant experience in government IT contracts.
The contract addresses a critical function (Human Capital Management) essential for agency operations.
The award was a delivery order, suggesting it aligns with a pre-existing contract vehicle, potentially streamlining procurement.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on software development, maintenance, and consulting for human capital management systems. The market for HR IT solutions is substantial, with numerous vendors offering specialized platforms and services. Government spending in this area is driven by the need for modernization, efficiency gains, and compliance with regulations. Comparable spending benchmarks would typically involve analyzing other large federal HR system implementations, such as those for payroll, benefits administration, and talent management, across various agencies.

Small Business Impact

This contract was not specifically set aside for small businesses, and the prime contractor, Deloitte Consulting LLP, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Deloitte actively engages small businesses for subcontracting opportunities, which is not detailed in the provided data.

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 Agriculture's Forest Service. They are responsible for monitoring performance, approving invoices, and ensuring compliance with contract terms. The Inspector General's office may conduct audits or investigations if performance issues, fraud, or waste are suspected. Transparency is facilitated through contract databases like FPDS, but detailed performance reports are often internal.

Related Government Programs

Human Capital Management Systems
Federal HR IT Modernization
Administrative Management and General Management Consulting Services
Large-scale IT System Development
Government IT Services Contracts

Risk Flags

Limited Competition
Labor Hour Pricing
Lack of Public Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $20.8 million to DELOITTE CONSULTING LLP. HCM EMPOW HR APPLICATION DEVELOPMENT, MAINTENANCE, AND TRAINING.

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Forest Service).

What is the total obligated amount?

The obligated amount is $20.8 million.

What is the period of performance?

Start: 2009-09-29. End: 2015-03-31.

What is Deloitte Consulting LLP's track record with similar federal HR IT contracts?

Deloitte Consulting LLP has a substantial track record with large federal IT contracts, including those related to human capital management. They have been awarded numerous contracts across various agencies for system implementation, modernization, and support services. Their experience often spans complex enterprise resource planning (ERP) systems and specialized HR platforms. While specific details for every contract are not always public, their consistent presence as a prime contractor on significant government IT projects indicates a recognized capability. However, performance can vary, and a deeper dive into past performance reviews and past performance information retrieval system (PPIRS) data would be necessary for a comprehensive assessment of their specific performance on similar HR IT endeavors.

How does the $20.8 million award compare to other federal HR system contracts of similar scope?

The $20.8 million award for the HCM Empower HR Application Development, Maintenance, and Training over approximately 5.5 years translates to an average annual spend of roughly $3.8 million. This figure appears moderate when compared to some of the larger federal HR system modernizations, which can run into hundreds of millions of dollars for full-scale enterprise solutions. However, it is significant for a specific application development and maintenance contract. Factors influencing cost include the complexity of the system, the number of users supported, the scope of modules (e.g., payroll, benefits, talent management), and the level of customization required. Without knowing the exact scope and deliverables beyond 'development, maintenance, and training,' a precise comparison is difficult, but it doesn't appear to be an outlier in terms of overall cost for its stated purpose.

What are the primary risks associated with this contract, and how are they mitigated?

Primary risks include potential cost overruns due to the labor-hour pricing model, scope creep, and contractor performance issues. Labor-hour contracts can be susceptible to inefficiencies if not closely monitored, leading to costs exceeding initial estimates. Scope creep occurs when the project's requirements expand beyond the original agreement without corresponding adjustments to cost and schedule. Contractor performance issues could lead to delays or subpar system functionality. Mitigation strategies typically involve robust contract oversight by a COR, detailed performance work statements (PWS), regular progress reviews, clear change management processes, and potentially performance-based incentives or penalties, although these are not explicitly detailed for this contract.

How effective has the HCM Empower HR application been in meeting the Department of Agriculture's needs?

Assessing the specific effectiveness of the HCM Empower HR application based solely on the contract award data is not possible. The contract covers development, maintenance, and training, implying an ongoing or evolving system. Effectiveness would be measured by metrics such as system uptime, user satisfaction, efficiency gains in HR processes (e.g., time to hire, payroll accuracy), data integrity, and compliance adherence. These metrics are typically tracked internally by the agency and may be reported through performance reviews or program evaluations. Without access to such internal assessments or user feedback, a definitive statement on the application's effectiveness cannot be made.

What has been the historical spending trend for HR IT systems within the Department of Agriculture?

The provided data focuses on a single contract award. To understand historical spending trends for HR IT systems within the Department of Agriculture (USDA), one would need to analyze spending data across multiple contracts over several fiscal years. This would involve querying federal procurement databases (like FPDS) for contracts related to HR IT, human capital management, payroll systems, and related services awarded by USDA agencies. Analyzing these trends would reveal patterns in investment, identify major system upgrades or replacements, and show the overall budget allocated to HR technology over time. This specific contract represents a portion of that historical spending but does not provide a trend on its own.

What is the significance of the NAICS code 541611 (Administrative Management and General Management Consulting Services)?

The North American Industry Classification System (NAICS) code 541611 signifies that the primary service provided under this contract falls into the category of administrative management and general management consulting. This broad category includes services such as organizational planning, financial planning and control, marketing services, personnel and human resources planning, and production planning and control. For this specific contract, it indicates that the work performed by Deloitte Consulting LLP involves providing expertise and services to improve the administrative and management functions related to the Department of Agriculture's human capital management systems, rather than purely software coding or infrastructure management.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte LLP (UEI: 014127109)

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: $20,803,601

Exercised Options: $20,803,601

Current Obligation: $20,803,601

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS10F0083L

IDV Type: FSS

Timeline