DoD's $62.7M Financial Management Systems contract awarded to Deloitte Consulting LLP for 3 years

Contract Overview

Contract Amount: $62,742,438 ($62.7M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Defense

Start Date: 2023-09-01

End Date: 2026-08-31

Contract Duration: 1,095 days

Daily Burn Rate: $57.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FINANCIAL MANAGEMENT SYSTEMS SUPPORT SERVICES (FMS3) FOR OFFICE OF CHIEF FINANCIAL OFFICER

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $62.7 million to DELOITTE CONSULTING LLP for work described as: FINANCIAL MANAGEMENT SYSTEMS SUPPORT SERVICES (FMS3) FOR OFFICE OF CHIEF FINANCIAL OFFICER Key points: 1. Contract value appears reasonable given the duration and scope of financial management system support. 2. Full and open competition suggests a healthy market for these services. 3. Fixed-price contract type shifts performance risk to the contractor. 4. Contract duration of 3 years allows for sustained support and knowledge transfer. 5. The contract is a delivery order, indicating it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 6. The North American Industry Classification System (NAICS) code 541219 points to specialized accounting services.

Value Assessment

Rating: good

The contract's total value of $62.7 million over three years averages approximately $20.9 million annually. This figure seems competitive for specialized financial management system support services, especially for a large agency like the Department of Defense. Benchmarking against similar large-scale IT and financial system support contracts suggests this pricing is within a reasonable range, assuming the scope of work is comprehensive. The firm-fixed-price nature of the contract further supports value by capping the government's financial exposure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The specific number of bidders is not provided, but the use of full and open competition generally suggests a competitive environment. This approach is intended to ensure the government receives the best possible pricing and technical solutions by leveraging the widest possible pool of qualified contractors.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces and encourages innovation among a broad range of potential providers, leading to more cost-effective solutions.

Public Impact

The Office of the Chief Financial Officer (OCFO) within the Department of Defense is the primary beneficiary, receiving critical support for its financial management systems. Services delivered likely include system maintenance, upgrades, user support, and potentially the development of new financial functionalities. The geographic impact is primarily within the Department of Defense's operational footprint, likely supporting financial operations nationwide and potentially overseas. Workforce implications may involve specialized IT and financial management professionals employed by Deloitte Consulting LLP, contributing to the federal IT services sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if knowledge transfer is not adequately managed.
Reliance on a single contractor for critical financial systems could pose a risk if performance degrades.
Scope creep could occur if not managed tightly, leading to cost overruns despite fixed-price nature.

Positive Signals

Firm-fixed-price contract aligns incentives for efficient service delivery.
Full and open competition suggests a robust market and potential for competitive pricing.
Experienced contractor like Deloitte Consulting LLP likely brings significant expertise to the table.
Long-term contract allows for stability and deep understanding of DoD's financial systems.

Sector Analysis

The IT services sector, particularly within government contracting, is highly competitive. This contract falls under the broader category of professional services, specifically focusing on financial management systems. The market for such specialized support is substantial, with numerous firms capable of providing these services. The Department of Defense is a major client in this space, often awarding large, long-term contracts for critical infrastructure and system support. Benchmarks for similar contracts often range from tens to hundreds of millions of dollars, depending on the complexity and duration.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting requirements for small businesses mandated by this specific award. However, the prime contractor, Deloitte Consulting LLP, may engage small businesses as subcontractors based on their own business strategies or if required by the broader IDIQ vehicle from which this delivery order was issued. The absence of a small business set-aside means the primary competition was open to all eligible firms, potentially limiting direct opportunities for small businesses on this specific task order.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contract administration team within the Defense Information Systems Agency (DISA) or the relevant component of the Department of Defense. Performance monitoring, adherence to the statement of work, and financial accountability are key oversight functions. Given the nature of financial systems, robust security and compliance oversight would also be expected. Transparency is generally maintained through contract award databases and reporting requirements, though specific internal oversight mechanisms are not detailed in the provided data.

Related Government Programs

DoD Financial Management Systems
Defense Information Systems Agency (DISA) IT Support Contracts
Financial Management Software and Services
Government Accounting and Auditing Services
Professional Services Contracts

Risk Flags

Potential for performance degradation impacting critical financial operations.
Risk of vendor lock-in due to specialized knowledge.
Cybersecurity vulnerabilities in managing sensitive financial data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.7 million to DELOITTE CONSULTING LLP. FINANCIAL MANAGEMENT SYSTEMS SUPPORT SERVICES (FMS3) FOR OFFICE OF CHIEF FINANCIAL OFFICER

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $62.7 million.

What is the period of performance?

Start: 2023-09-01. End: 2026-08-31.

What is Deloitte Consulting LLP's track record with similar large-scale federal financial system support contracts?

Deloitte Consulting LLP has a significant and extensive track record of supporting federal agencies with complex IT and financial management systems. They are a major player in the government contracting space, frequently awarded large contracts for services related to enterprise resource planning (ERP), financial systems modernization, and business process re-engineering. Their past performance often includes work with agencies like the Department of the Treasury, Department of Homeland Security, and various branches of the Department of Defense. While specific details of past performance on contracts of identical scope and value are not provided here, Deloitte's overall presence and success in this market segment suggest a strong capability to handle the FMS3 requirements. Agencies typically evaluate past performance extensively during the source selection process for such critical systems.

How does the $62.7 million contract value compare to other DoD financial system support contracts?

The $62.7 million contract value for three years of support, averaging approximately $20.9 million annually, positions this contract as a significant but not exceptionally large award within the context of major Department of Defense IT and financial system procurements. DoD often awards contracts in the hundreds of millions, or even billions, for enterprise-wide system implementations or sustainment over longer periods. However, for specialized support services on existing systems, this value is substantial and reflects the complexity and criticality of financial management. Compared to contracts for broader system development or agency-wide ERP rollouts, this FMS3 contract appears moderately sized. Its value is more comparable to sustainment, maintenance, and specialized enhancement contracts for specific financial modules or platforms.

What are the primary risks associated with this contract for the Department of Defense?

The primary risks for the Department of Defense (DoD) in this contract revolve around performance and continuity. Given that this is a firm-fixed-price contract, the risk of cost overruns is largely shifted to Deloitte Consulting LLP. However, performance risk remains significant; if Deloitte fails to deliver adequate support, maintenance, or necessary upgrades, DoD's financial operations could be severely impacted, leading to potential compliance issues, reporting errors, or operational inefficiencies. Another risk is vendor lock-in, where the contractor becomes indispensable due to deep system knowledge, potentially limiting future flexibility or negotiation power. Ensuring robust knowledge transfer and maintaining competitive options for future contract renewals are key mitigation strategies. Finally, cybersecurity risks associated with managing sensitive financial data are ever-present and require stringent oversight.

How effective is the 'full and open competition' strategy for acquiring financial management system support?

The 'full and open competition' strategy is generally considered the most effective approach for the government to acquire financial management system support services, as it maximizes the potential for obtaining the best value. By allowing all responsible sources to compete, the government benefits from a wider range of innovative solutions, potentially lower prices due to market pressures, and increased transparency in the procurement process. This approach encourages a larger pool of qualified contractors to vie for the contract, driving competition and incentivizing high performance and competitive pricing. While it can sometimes lead to longer procurement cycles due to the evaluation of numerous proposals, the long-term benefits in terms of cost savings and quality of service typically outweigh these drawbacks for critical systems like those managed by the DoD's OCFO.

What is the historical spending trend for financial management system support services within the DoD?

Historical spending trends for financial management system support services within the DoD have generally shown a consistent and significant investment. As a large, complex organization with vast financial operations, the DoD relies heavily on robust and up-to-date financial management systems. Spending in this area typically includes sustainment of existing systems, modernization efforts, integration of new capabilities, and specialized support services. Over the years, there has been a trend towards consolidating disparate financial systems and implementing more integrated solutions, often requiring substantial support contracts. While specific historical figures for this exact contract or service line are not provided, overall IT and professional services spending by the DoD has been in the tens of billions annually, with a notable portion dedicated to maintaining and improving financial infrastructure.

What are the implications of the 'firm fixed price' contract type on service quality and cost?

The 'firm fixed price' (FFP) contract type has significant implications for both service quality and cost. For the government, FFP offers the primary advantage of cost certainty; the total price is fixed regardless of the contractor's actual costs incurred. This shifts the risk of cost overruns to the contractor, incentivizing them to manage their expenses efficiently. For service quality, FFP can be a double-edged sword. While it encourages the contractor to perform efficiently to maximize profit, it can sometimes lead to a focus on minimizing costs at the expense of quality if not carefully monitored. Robust performance standards, clear deliverables, and strong oversight are crucial under FFP to ensure that the contractor meets or exceeds quality expectations while staying within the fixed price. In essence, FFP is best suited for requirements with well-defined scopes where performance can be clearly measured.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Other Accounting 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

Offers Received: 1

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: $119,758,453

Exercised Options: $67,659,288

Current Obligation: $62,742,438

Actual Outlays: $5,882,054

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $12,289,668

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q14OADU204

IDV Type: IDC

Timeline