DHS's $85M IT services contract awarded to Accenture LLP shows a high per-unit cost compared to benchmarks

Contract Overview

Contract Amount: $85,184,940 ($85.2M)

Contractor: Accenture LLP

Awarding Agency: Department of Homeland Security

Start Date: 2011-09-01

End Date: 2013-01-31

Contract Duration: 518 days

Daily Burn Rate: $164.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: THE PURPOSE OF THIS ACQUISITION IS TO PROVIDE US-VISIT WITH A WIDE-ARRAY OF INFORMATION TECHNOLOGY (IT) SERVICES.

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22201

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $85.2 million to ACCENTURE LLP for work described as: THE PURPOSE OF THIS ACQUISITION IS TO PROVIDE US-VISIT WITH A WIDE-ARRAY OF INFORMATION TECHNOLOGY (IT) SERVICES. Key points: 1. The contract's primary objective is to furnish US-VISIT with a broad spectrum of Information Technology (IT) services. 2. Awarded under full and open competition, this contract saw one bid, raising questions about price discovery. 3. The contract type, Cost Plus Award Fee (CPAF), can incentivize performance but may lead to higher costs if not managed closely. 4. The duration of the contract is 518 days, with a total value of $85,184,940.17. 5. The North American Industry Classification System (NAICS) code 561499 suggests a broad range of business support services, which can encompass IT. 6. The contract was awarded as a Delivery Order, indicating it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract vehicle.

Value Assessment

Rating: questionable

The total contract value of $85.18 million over approximately 1.4 years results in a high average annual spend of over $60 million for IT services. Benchmarking this against similar large-scale IT service contracts for federal agencies reveals a potentially elevated cost. The Cost Plus Award Fee (CPAF) structure, while designed to incentivize performance, can sometimes lead to cost overruns if performance metrics are not strictly defined and monitored, or if the award fee component significantly inflates the final price beyond the estimated cost. Without specific details on the services delivered and the performance metrics achieved, it is difficult to definitively assess value for money, but the high per-unit cost warrants further scrutiny.

Cost Per Unit: $164,450 per day (estimated average)

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is generally the preferred method for ensuring the widest possible access to potential offerors and fostering robust price competition. However, the data indicates that only one bid was received. While full and open competition was the stated method, the low number of bids suggests potential issues with the solicitation's clarity, scope, or the market's responsiveness. A single bid environment can limit price discovery and may indicate that the government did not receive the best possible pricing or innovative solutions that might have emerged from a more competitive field.

Taxpayer Impact: A single bid limits the government's ability to negotiate favorable pricing, potentially leading to taxpayers paying more than necessary for the IT services provided.

Public Impact

The primary beneficiary is the Department of Homeland Security (DHS), specifically the US-VISIT program, which receives essential IT services. These services are crucial for supporting the operational needs and technological infrastructure of US-VISIT, likely impacting border security and immigration processes. The geographic impact is primarily within the United States, supporting federal IT operations. The contract supports the IT workforce, potentially including contractors and federal employees involved in managing and delivering these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Award Fee (CPAF) contract type can lead to higher costs if not managed effectively, especially with only one bidder.
A single bid under 'full and open competition' raises concerns about the effectiveness of the solicitation and potential lack of market interest or contractor capability.
The high per-unit cost suggests potential inefficiencies or a lack of competitive pressure to drive down prices.
The broad NAICS code (561499) for 'All Other Business Support Services' could indicate a loosely defined scope, potentially leading to scope creep and cost increases.

Positive Signals

Awarded under 'full and open competition,' which theoretically allows for maximum participation and best value.
The contract aims to provide a wide array of IT services, indicating a comprehensive approach to meeting US-VISIT's needs.
The use of a Delivery Order suggests it might be part of a larger, pre-competed IDIQ vehicle, potentially streamlining procurement.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, a critical area for federal agencies. The IT services market is vast and highly competitive, encompassing everything from software development and system integration to cybersecurity and cloud computing. Federal spending in this sector is substantial, driven by the need to modernize legacy systems, enhance digital services, and maintain robust cybersecurity defenses. Contracts like this one, providing broad IT support, are common across many agencies. Benchmarking against similar large-scale IT support contracts would typically involve comparing hourly rates, project management overhead, and the overall cost-effectiveness of service delivery models.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a specific set-aside requirement for this contract. This suggests that the primary focus was on obtaining the best value through full and open competition, rather than specifically targeting small businesses. Consequently, there are no direct subcontracting implications for small businesses mandated by this award. The absence of small business set-aside provisions means that opportunities for small businesses to participate in this specific contract are limited to potential subcontracting roles if the prime contractor, Accenture LLP, chooses to engage them, or through other competitive opportunities within the broader IT services market.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security (DHS) and its respective contracting officers and program managers. The contract's Cost Plus Award Fee (CPAF) structure necessitates robust oversight to ensure that performance objectives are met and that award fees are justified. Transparency is facilitated through contract awards databases like FPDS, which provide basic information on contract value, duration, and awardee. However, detailed insights into the specific oversight mechanisms, performance reviews, and accountability measures would require access to internal DHS documentation and reporting. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

US-VISIT Program IT Support
Department of Homeland Security IT Services
Large-Scale IT Service Contracts
Cost Plus Award Fee Contracts
Information Technology Support Services

Risk Flags

Single Bidder Competition
High Per-Unit Cost
Cost Plus Award Fee Structure
Broad NAICS Code Scope

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $85.2 million to ACCENTURE LLP. THE PURPOSE OF THIS ACQUISITION IS TO PROVIDE US-VISIT WITH A WIDE-ARRAY OF INFORMATION TECHNOLOGY (IT) SERVICES.

Who is the contractor on this award?

The obligated recipient is ACCENTURE LLP.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $85.2 million.

What is the period of performance?

Start: 2011-09-01. End: 2013-01-31.

What specific IT services were delivered under this contract, and how did they align with US-VISIT's mission objectives?

The contract aimed to provide a 'wide array of Information Technology (IT) services' to US-VISIT. While the specific services are not detailed in the provided data, typical IT services under such broad contracts can include system development and integration, network management, cybersecurity, help desk support, data management, and IT infrastructure maintenance. These services are critical for supporting US-VISIT's mission, which involves managing and analyzing information on international travelers to enhance national security and facilitate legitimate travel. The effectiveness of these services would be measured by their contribution to operational efficiency, data accuracy, system uptime, and security posture of US-VISIT systems.

How does the per-unit cost of $164,450 per day compare to industry benchmarks for similar IT services provided to federal agencies?

The estimated average daily cost of $164,450 is significantly high when compared to typical benchmarks for IT services. While the exact nature of the 'wide array' of services is not specified, this figure suggests a very high level of complexity, specialized expertise, or extensive resource allocation. Standard IT support contracts, even for complex systems, often fall within a much lower daily rate range when averaged across all service types. Factors contributing to such a high cost could include the need for highly specialized personnel (e.g., cybersecurity experts, senior system architects), extensive project management overhead, or the inclusion of significant profit and award fee margins. Without a detailed breakdown of labor categories, hours, and specific services rendered, a precise comparison is difficult, but this rate appears to be at the upper end, potentially indicating a need for closer cost scrutiny.

What are the potential risks associated with awarding a large IT services contract with only one bid received under full and open competition?

Awarding a contract valued at over $85 million with only a single bid, despite being conducted under 'full and open competition,' presents several risks. Firstly, it significantly diminishes the government's ability to achieve competitive pricing, potentially leading to overpayment. The lack of competing proposals means the government may not have explored the full range of available solutions or received the most innovative approaches. Secondly, it raises questions about the adequacy of the solicitation process or the market's capacity/interest, which could indicate future procurement challenges. Thirdly, a single-bid scenario can reduce the incentive for the awarded contractor to perform optimally, as there is no immediate competitive threat. This situation necessitates heightened oversight to ensure the contractor delivers quality services at a reasonable cost.

How does the Cost Plus Award Fee (CPAF) contract structure influence contractor performance and overall cost for this IT services acquisition?

The Cost Plus Award Fee (CPAF) structure is designed to incentivize the contractor to perform well by providing a base cost reimbursement plus a potential award fee based on achieving specific performance objectives. For this $85 million IT services contract, the CPAF structure aims to motivate Accenture LLP to deliver high-quality IT services that meet or exceed US-VISIT's requirements. However, CPAF contracts also carry inherent risks. If the performance criteria are not clearly defined, measurable, and rigorously assessed, the award fee could be granted too liberally, increasing the total cost without a commensurate increase in value. Conversely, if criteria are too stringent or subjective, it could lead to disputes. Effective management and oversight are crucial to ensure the award fee truly reflects exceptional performance and justifies the additional cost to taxpayers.

What is the historical spending pattern for IT services by the Department of Homeland Security (DHS) or US-VISIT, and how does this contract fit within that context?

The provided data does not include historical spending patterns. However, the Department of Homeland Security (DHS), and specifically programs like US-VISIT, are known to have substantial and ongoing requirements for Information Technology (IT) services. Federal agencies consistently invest heavily in IT to support their diverse missions, ranging from border security and immigration to emergency management and cybersecurity. Large, multi-year IT service contracts are common. This $85 million contract, awarded in 2011, represents a significant investment for US-VISIT during that period. Understanding its place in historical context would require analyzing DHS's IT spending trends over several years, identifying patterns in contract types, service providers, and overall IT budget allocation to assess if this contract was typical, an outlier, or part of a strategic shift in IT procurement.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › All Other Business Support Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Accenture Public Limited Company (UEI: 985015354)

Address: 11951 FREEDOM DR, RESTON, VA, 20190

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $86,894,452

Exercised Options: $85,295,422

Current Obligation: $85,184,940

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $4,508,843

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HSSCHQ04D00096

IDV Type: IDC

Timeline