DoD's $1.62B corrective action contract with Deloitte raises questions on value and competition

Contract Overview

Contract Amount: $162,003,217 ($162.0M)

Contractor: Deloitte & Touche LLP

Awarding Agency: Department of Defense

Start Date: 2018-04-19

End Date: 2023-07-23

Contract Duration: 1,921 days

Daily Burn Rate: $84.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TASK 3: CORRECTIVE ACTIONS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20330

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $162.0 million to DELOITTE & TOUCHE LLP for work described as: TASK 3: CORRECTIVE ACTIONS Key points: 1. Significant contract value for corrective actions suggests potential for systemic issues or extensive remediation needs. 2. Sole provider for corrective actions may indicate a lack of market alternatives or specialized capabilities. 3. Long contract duration (over 5 years) warrants scrutiny of ongoing necessity and potential for cost creep. 4. Fixed-price contract type offers some cost certainty but may not fully capture the dynamic nature of corrective actions. 5. The absence of small business involvement raises concerns about equitable distribution of federal contracting opportunities. 6. High spending in this category could signal underlying compliance or performance challenges within the agency.

Value Assessment

Rating: questionable

The $1.62 billion awarded to Deloitte & Touche LLP for corrective actions over a five-year period is substantial. Benchmarking this against similar corrective action contracts is challenging due to the specialized nature of such services and the potential for unique agency requirements. However, the sheer scale suggests a need to rigorously assess whether the pricing reflects fair market value for the services rendered, especially considering the fixed-price nature which typically aims for cost efficiency. Without more granular data on the specific corrective actions undertaken and their complexity, a definitive value-for-money assessment is difficult, but the magnitude warrants close examination.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the data does not specify the number of bidders or the evaluation process. A full and open competition is generally preferred as it fosters a competitive environment that can lead to better pricing and service innovation. The fact that Deloitte & Touche LLP was ultimately awarded the contract suggests they offered the most advantageous proposal based on the agency's criteria.

Taxpayer Impact: A full and open competition is positive for taxpayers as it theoretically drives down costs through market forces. However, the substantial value of this contract means that even with competition, significant taxpayer funds are being utilized.

Public Impact

The Department of Defense benefits from this contract by receiving services to address identified issues and improve operational effectiveness. The primary service delivered is corrective action, which could encompass a wide range of activities from financial auditing to process improvement. The geographic impact is primarily within the District of Columbia, where the agency's headquarters or relevant offices are located. Workforce implications may include the need for specialized accounting and auditing professionals within Deloitte, and potentially internal agency staff involved in overseeing or implementing the corrective actions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The high dollar value of corrective actions may indicate systemic issues within the Department of Defense that require extensive and costly remediation.
The duration of the contract (over 5 years) raises questions about the long-term nature of the problems being addressed and the potential for ongoing reliance on external support.
Lack of small business participation (sb: false) suggests missed opportunities for economic inclusion and potentially less diverse solutions.
The specific nature of 'corrective actions' is broad and could mask inefficiencies or a lack of internal capacity to address issues proactively.

Positive Signals

Awarding to a reputable firm like Deloitte & Touche LLP suggests a commitment to addressing issues with established expertise.
The 'full and open competition' designation indicates an effort to ensure a fair and transparent procurement process.
A fixed-price contract type can provide budget predictability for the agency, assuming the scope is well-defined.

Sector Analysis

This contract falls within the professional services sector, specifically accounting and auditing services, which are critical for government oversight and compliance. The market for these services is large and competitive, with major accounting firms often securing large federal contracts. The Department of Defense, as a massive entity, frequently requires such specialized support to manage its complex operations and ensure accountability. Benchmarking against other large federal contracts for similar audit and corrective action services would be necessary for a precise value assessment, but the scale here is notable.

Small Business Impact

The contract data indicates that small business participation was not a factor (sb: false). This suggests that the contract was not set aside for small businesses, nor does it appear that subcontracting opportunities for small businesses were a significant consideration in the award. This could mean that the scope of work required highly specialized expertise typically found in larger firms, or it could represent a missed opportunity to leverage the agility and innovation of the small business sector in addressing the Department of Defense's needs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's internal audit and contracting oversight mechanisms. The Inspector General's office for the Department of Defense would likely have jurisdiction to investigate any potential fraud, waste, or abuse related to this significant expenditure. Transparency is facilitated by contract award data, but the specifics of the corrective actions and their outcomes would require deeper investigation beyond publicly available contract details.

Related Government Programs

Department of Defense Financial Improvement and Audit Readiness (FIAR)
Government Auditing Services
Contract Audit Follow-up
Compliance and Remediation Services

Risk Flags

High contract value for corrective actions.
Long contract duration.
Lack of small business participation.
Broadly defined service category ('corrective actions').

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $162.0 million to DELOITTE & TOUCHE LLP. TASK 3: CORRECTIVE ACTIONS

Who is the contractor on this award?

The obligated recipient is DELOITTE & TOUCHE LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $162.0 million.

What is the period of performance?

Start: 2018-04-19. End: 2023-07-23.

What specific types of corrective actions were undertaken under this contract, and what was the primary driver for initiating them?

The provided data does not specify the exact nature of the 'corrective actions' covered by this $1.62 billion contract. Corrective actions in a federal context can range widely, from addressing financial audit findings, implementing new compliance procedures, rectifying process inefficiencies, or responding to investigative findings. Given the magnitude of the contract and the awarding agency (Department of Defense), it is plausible that these actions relate to complex financial management issues, audit readiness, or systemic operational improvements. To understand the primary driver, one would need to access internal DoD documentation, audit reports, or program management reviews that detail the specific problems necessitating these extensive corrective measures.

How does the $1.62 billion spending on corrective actions compare to historical spending in this category for the Department of Defense?

The provided data offers a single contract award of $1.62 billion for corrective actions. To compare this to historical spending, one would need to analyze aggregate federal spending data (e.g., from USASpending.gov or agency budget reports) for similar contract categories or functional areas over multiple fiscal years. A significant increase or decrease in spending on corrective actions could indicate changes in the agency's compliance posture, the effectiveness of its internal controls, or shifts in audit requirements. Without historical context, it is difficult to ascertain if this $1.62 billion represents a typical, elevated, or reduced level of investment in remediation.

What was the competitive landscape like for this contract, and did full and open competition result in a demonstrably lower price?

The contract was awarded under 'full and open competition,' which theoretically allows for the widest possible participation and encourages competitive pricing. However, the data does not specify the number of bids received or the evaluation criteria used. While full and open competition is a positive indicator for price discovery, the substantial value of $1.62 billion means that even a competitive price could represent a significant expenditure. To assess if the price was demonstrably lower, one would need to compare the awarded price against independent cost estimates, benchmark pricing for similar services, or analyze the pricing structures of non-selected bidders, none of which are provided in the current data.

What are the key performance indicators (KPIs) used to measure the success and effectiveness of the corrective actions performed by Deloitte & Touche LLP?

The provided contract data does not include specific Key Performance Indicators (KPIs) for this contract. Effective oversight of corrective action contracts typically involves defining measurable outcomes related to the problems being addressed. For example, if the corrective actions relate to financial auditing, KPIs might include the reduction of audit findings, the successful implementation of new accounting systems, or improved audit readiness scores. Without these defined KPIs, it is challenging to objectively assess the effectiveness of Deloitte's performance and the value delivered to the Department of Defense beyond the completion of contracted tasks.

Are there any known issues or past performance concerns associated with Deloitte & Touche LLP regarding federal contracts of similar scope or value?

The provided data identifies Deloitte & Touche LLP as the contractor but does not include specific details about their past performance on federal contracts, particularly those involving corrective actions of this magnitude. Reputable firms like Deloitte generally have extensive experience, but like any large contractor, they may have faced scrutiny or challenges on specific engagements. A thorough assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any debarment or suspension actions, or publicly reported issues related to their federal contracting history. Without this information, it's impossible to definitively assess their track record for this specific contract.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

Solicitation ID: FA701417R5002

Pricing Type: FIRM FIXED PRICE (J)

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: $162,191,989

Exercised Options: $162,191,989

Current Obligation: $162,003,217

Actual Outlays: $48,752,769

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $78,308,367

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA701418D5000

IDV Type: IDC

Timeline