DoD's $18.4M Deloitte Contract for DSCA Reconciliation Support Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $18,360,639 ($18.4M)

Contractor: Deloitte & Touche LLP

Awarding Agency: Department of Defense

Start Date: 2022-10-01

End Date: 2025-12-31

Contract Duration: 1,187 days

Daily Burn Rate: $15.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: LABOR HOURS

Sector: IT

Official Description: DEFENSE SECURITY COOPERATION AGENCY RECONCILIATION SUPPORT.

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $18.4 million to DELOITTE & TOUCHE LLP for work described as: DEFENSE SECURITY COOPERATION AGENCY RECONCILIATION SUPPORT. Key points: 1. The contract awarded to Deloitte & Touche LLP for $18.4 million aims to support the Defense Security Cooperation Agency's reconciliation efforts. 2. While the contract was awarded under full and open competition, the specific services (NAICS 541519) and labor hour pricing raise questions about cost-effectiveness. 3. The duration of the contract (over 3 years) and the lack of explicit small business participation warrant further investigation into potential risks and value. 4. The sector is IT services, specifically 'Other Computer Related Services', which is a broad category where benchmarks can vary significantly.

Value Assessment

Rating: questionable

Pricing based on labor hours can be difficult to benchmark without detailed task breakdowns. The reported value of $18.4 million over nearly four years suggests a significant investment, but the absence of a fixed price or clear deliverables makes assessing value for money challenging compared to fixed-price contracts for similar IT support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the use of labor hours as the primary pricing mechanism might limit the incentive for the contractor to optimize efficiency, potentially impacting the final cost to taxpayers.

Taxpayer Impact: The impact on taxpayers is uncertain due to the labor-hour pricing model. While competition aims for fair pricing, the lack of defined outcomes could lead to costs exceeding initial expectations if not managed closely.

Public Impact

Taxpayers are funding critical reconciliation support for defense security cooperation, ensuring financial accuracy in international defense agreements. The contract's duration and value could impact the agency's ability to adapt to evolving reconciliation needs or explore more cost-effective solutions. Transparency in how labor hours translate to specific deliverables and outcomes is crucial for public trust and accountability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Labor hour pricing
Lack of explicit small business participation
Broad service category (NAICS 541519)

Positive Signals

Awarded under full and open competition
Supports critical defense security cooperation functions

Sector Analysis

This contract falls within the IT services sector, specifically 'Other Computer Related Services'. Spending in this area can vary widely based on complexity and duration. Benchmarking requires detailed understanding of the specific tasks performed, which is not fully evident from the provided data.

Small Business Impact

The data indicates that small businesses were not explicitly involved in this contract (ss: false, sb: false). This represents a missed opportunity to foster small business growth within the federal contracting space and could potentially limit the range of innovative solutions available.

Oversight & Accountability

Oversight will be critical to ensure that the labor hours billed by Deloitte & Touche LLP directly correlate with effective and necessary reconciliation support for DSCA. The Defense Finance and Accounting Service (DFAS) is responsible for this contract's administration.

Related Government Programs

Other Computer Related Services
Department of Defense Contracting
Defense Finance and Accounting Service Programs

Risk Flags

Potential for cost overruns due to labor hour pricing.
Limited visibility into specific deliverables and outcomes.
Lack of small business participation.
Extended contract duration may limit flexibility.
Risk of vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.4 million to DELOITTE & TOUCHE LLP. DEFENSE SECURITY COOPERATION AGENCY RECONCILIATION SUPPORT.

Who is the contractor on this award?

The obligated recipient is DELOITTE & TOUCHE LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Finance and Accounting Service).

What is the total obligated amount?

The obligated amount is $18.4 million.

What is the period of performance?

Start: 2022-10-01. End: 2025-12-31.

How does the labor hour cost structure compare to fixed-price contracts for similar reconciliation support services, and what mechanisms are in place to ensure cost efficiency?

Labor hour contracts often carry a higher risk of cost overruns compared to fixed-price agreements, as the contractor is compensated for time spent rather than specific deliverables. To ensure cost efficiency, robust oversight by DFAS is essential, including detailed review of timesheets, validation of tasks performed, and comparison against industry standards for similar roles. Performance metrics and clear task orders are crucial to manage this.

What specific risks are associated with relying on a single large contractor for reconciliation support over an extended period, particularly concerning adaptability and potential vendor lock-in?

Relying on a single contractor for an extended period can lead to vendor lock-in, making it difficult and costly to switch providers if performance declines or needs change. There's also a risk that the contractor may become less innovative or responsive over time. Furthermore, a lack of competition in future contract renewals could lead to inflated prices. Mitigation strategies include clear performance standards and contingency planning.

How effectively does this contract contribute to the overall mission of the Defense Security Cooperation Agency, and are there measurable outcomes demonstrating its success?

The effectiveness of this contract hinges on its ability to ensure accurate financial reconciliation for DSCA operations, which is vital for accountability and trust in international partnerships. Measurable outcomes could include reduced discrepancies, faster reconciliation cycles, improved audit readiness, and positive feedback from DSCA program managers. Without specific performance metrics tied to these outcomes, assessing the contract's true effectiveness remains challenging.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ042322Q0045

Offers Received: 2

Pricing Type: LABOR HOURS (Z)

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: $30,613,197

Exercised Options: $18,380,639

Current Obligation: $18,360,639

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $10,573,870

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00F029DA

IDV Type: FSS

Timeline