Deloitte & Touche LLP awarded $26.2M for audit remediation and preparedness services to the Defense Health Agency

Contract Overview

Contract Amount: $26,201,237 ($26.2M)

Contractor: Deloitte & Touche LLP

Awarding Agency: Department of Defense

Start Date: 2019-09-30

End Date: 2023-03-30

Contract Duration: 1,277 days

Daily Burn Rate: $20.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: AUDIT REMEDIATION AND PREPAREDNESS AT NATIONAL CAPITAL REGION MEDICAL DIRECTORATE

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20889

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $26.2 million to DELOITTE & TOUCHE LLP for work described as: AUDIT REMEDIATION AND PREPAREDNESS AT NATIONAL CAPITAL REGION MEDICAL DIRECTORATE Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Services provided by a large, established firm with significant government contracting experience. 3. Contract duration of over three years suggests a substantial and ongoing need. 4. Fixed-price contract type may offer cost certainty but could limit flexibility. 5. The specific nature of audit remediation implies a focus on compliance and financial integrity. 6. No small business set-aside indicates the primary contractor is not a small business.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable sole-source awards. The fixed-price nature suggests an attempt at cost control, but the lack of competition raises concerns about whether the government secured the best possible price. The total award amount of $26.2 million over approximately 43 months indicates a significant investment in audit remediation and preparedness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or qualifications required for the service. The lack of competition means that price discovery through a bidding process was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses to compete and can result in taxpayers paying a premium due to the absence of competitive pressure on pricing.

Public Impact

The Defense Health Agency benefits from specialized expertise in audit remediation and preparedness. Services likely ensure compliance with financial regulations and improve internal controls within the agency. Geographic impact is focused on the National Capital Region Medical Directorate. Workforce implications are primarily for the contractor's personnel, with potential indirect benefits to DHA staff through improved processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source nature limits transparency in pricing and vendor selection.
Contract duration could indicate a long-term dependency on a single provider.

Positive Signals

Award to a well-established firm like Deloitte & Touche suggests a high likelihood of successful service delivery.
Fixed-price contract type provides cost predictability for the agency.
Focus on audit remediation addresses critical compliance and financial management needs.

Sector Analysis

The professional services sector, particularly accounting and auditing, is a significant area of federal spending. This contract falls under the 'Offices of Certified Public Accountants' (NAICS 541211) category. Federal agencies frequently contract for these services to ensure financial accountability, compliance with regulations, and efficient operations. Spending in this sector is driven by the complexity of government finances and the need for specialized expertise.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. The award to Deloitte & Touche LLP, a large professional services firm, suggests that the primary focus was on securing specialized expertise rather than promoting small business participation. This means opportunities for small businesses within this specific contract are likely minimal.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Defense Health Agency's contracting officers and program managers. As a sole-source award, transparency might be reduced compared to a competed contract. Accountability measures are inherent in the fixed-price contract type, requiring the contractor to deliver specified services. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Audit Services
Defense Contract Audit Agency
Financial Management Systems
Government Compliance Services

Risk Flags

Sole-source award limits competition.
Potential for higher costs due to lack of competitive bidding.
Scope definition critical for fixed-price contract success.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.2 million to DELOITTE & TOUCHE LLP. AUDIT REMEDIATION AND PREPAREDNESS AT NATIONAL CAPITAL REGION MEDICAL DIRECTORATE

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 Health Agency).

What is the total obligated amount?

The obligated amount is $26.2 million.

What is the period of performance?

Start: 2019-09-30. End: 2023-03-30.

What is the track record of Deloitte & Touche LLP with the Department of Defense and specifically the Defense Health Agency?

Deloitte & Touche LLP has a substantial track record of contracting with the U.S. federal government, including the Department of Defense and its various agencies. They are a major player in providing professional services such as auditing, consulting, and financial advisory. For the Defense Health Agency (DHA), Deloitte has likely been involved in numerous engagements related to financial management, IT systems, and operational improvements. While specific contract details beyond this award are not provided, their consistent presence in government contracting suggests a familiarity with federal requirements and a capacity to deliver complex services. Their extensive experience positions them as a go-to contractor for specialized needs within defense healthcare.

How does the $26.2 million award compare to other audit remediation contracts within the federal government?

Comparing this $26.2 million award requires context on the scope and duration of other audit remediation contracts. Federal audit remediation can range from relatively small, task-order-based engagements to multi-year, large-scale programs. Given this contract's duration of over three years (1277 days), the annual value is approximately $7.2 million. This figure is substantial but not extraordinary within the context of large federal IT or professional services contracts. However, without knowing the specific deliverables and the complexity of the audit issues being addressed, a direct comparison is difficult. Sole-source awards can sometimes be higher than competitively bid contracts due to the lack of price pressure.

What are the primary risks associated with a sole-source award for audit remediation services?

The primary risk associated with a sole-source award for audit remediation services is the potential for inflated costs due to the absence of competitive bidding. Taxpayers may not receive the best value for their money if market forces are not allowed to drive down prices. Another risk is a potential lack of innovation or urgency from the contractor, as they may feel less pressure to perform exceptionally when competition is not a factor. Furthermore, sole-source awards can sometimes indicate a lack of adequate planning or market research by the agency, leading to a situation where only one vendor is perceived as capable. This can also limit opportunities for emerging or specialized firms to enter the federal market.

How effective are fixed-price contracts in ensuring value for money in professional services like audit remediation?

Fixed-price contracts aim to ensure value for money by shifting the risk of cost overruns to the contractor. For the government, this provides budget certainty, as the price is set upfront. In professional services like audit remediation, effectiveness depends on how well the scope of work is defined. If the scope is clear and stable, a fixed-price contract can be very effective in controlling costs. However, if the scope is complex, evolving, or poorly defined, fixed-price contracts can lead to disputes, change orders, or the contractor cutting corners to maintain profitability. For audit remediation, where the exact nature of findings might not be fully known at the outset, careful scope management is crucial for realizing value.

What is the typical spending pattern for audit remediation and preparedness services within the Department of Defense?

Spending on audit remediation and preparedness within the Department of Defense (DoD) is generally substantial and ongoing, driven by the complexity of its operations and stringent compliance requirements. The DoD is subject to numerous audits, including the annual financial statement audit, which consistently identifies areas needing remediation. Consequently, the DoD frequently procures services related to financial improvement and audit remediation (FIAR). Spending patterns can fluctuate based on audit findings, legislative mandates, and the agency's strategic priorities. While specific historical data for this particular contract is not available, the overall trend indicates a consistent need for such services across various branches and agencies within the DoD.

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) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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: $26,201,237

Exercised Options: $26,201,237

Current Obligation: $26,201,237

Actual Outlays: $965,936

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline