DoD's $55.5M Deloitte contract for engineering services shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $55,516,527 ($55.5M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Defense

Start Date: 2020-11-19

End Date: 2024-09-09

Contract Duration: 1,390 days

Daily Burn Rate: $39.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SYSTEMS ENGINEERING&TECHNICAL ASSISTANCE SUPPORT

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92110

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $55.5 million to DELOITTE CONSULTING LLP for work described as: SYSTEMS ENGINEERING&TECHNICAL ASSISTANCE SUPPORT Key points: 1. Contract awarded to a single, highly qualified vendor, indicating specialized needs. 2. Pricing appears reasonable when benchmarked against similar engineering support contracts. 3. Risk indicators are moderate, with performance history and contract type being key factors. 4. This contract supports critical naval systems engineering and technical assistance. 5. The IT and Defense sectors are heavily reliant on such specialized engineering services. 6. Oversight is present through standard DoD contracting procedures and delivery order monitoring.

Value Assessment

Rating: good

The total value of $55.5 million over approximately 3.8 years suggests a significant investment in specialized engineering support. Benchmarking against similar large-scale engineering services contracts within the Department of Defense indicates that the overall pricing is within an acceptable range, reflecting the complexity and expertise required. While specific cost breakdowns are not provided, the fixed-fee component suggests some level of cost control. The value proposition hinges on the successful delivery of critical technical assistance to naval systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. However, the data indicates only three bids were received, which is on the lower side for a contract of this magnitude and scope. This level of competition, while technically open, may not have been sufficient to drive the most aggressive pricing or foster the broadest range of innovative solutions. The selection of Deloitte Consulting LLP implies they offered the best value among the limited pool of bidders.

Taxpayer Impact: While the competition was open, the limited number of bids suggests taxpayers may not have benefited from the full potential of market competition, potentially leading to a slightly higher cost than if more vendors had participated.

Public Impact

The Department of the Navy benefits directly through enhanced systems engineering and technical assistance. Naval operations and readiness are supported by the expertise provided under this contract. The contract is geographically focused on California, where significant naval operations and facilities are located. Highly skilled engineers and technical professionals are employed to fulfill the contract requirements. This contract contributes to the modernization and sustainment of critical naval defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) for a large contract could indicate potential barriers to entry or a concentrated market.
Reliance on a single contractor for a significant duration may pose risks if performance degrades or needs change significantly.
The 'Cost Plus Fixed Fee' (CPFF) contract type, while common, can sometimes lead to less incentive for cost efficiency compared to fixed-price contracts if not managed tightly.

Positive Signals

Awarded to a well-established and reputable contractor (Deloitte Consulting LLP) with a strong track record in government contracting.
The contract is for essential engineering and technical support, crucial for naval system effectiveness.
The duration and value indicate a strategic, long-term need being addressed by the Department of Defense.
The contract was competed under 'full and open' procedures, ensuring a fair opportunity for qualified vendors.

Sector Analysis

The engineering services sector is a critical component of the defense industrial base, providing specialized expertise for complex system development, integration, and sustainment. This contract falls within the broader category of professional, scientific, and technical services, which is a substantial market within the federal government. The Department of Defense is a major consumer of these services, often requiring highly specialized knowledge in areas like systems engineering, cybersecurity, and advanced research. Comparable spending benchmarks in this sector often involve multi-million dollar contracts for similar technical assistance.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, Deloitte Consulting LLP, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contractors often engage small businesses for specialized support.

Oversight & Accountability

Oversight for this contract is managed through the Department of the Navy's contracting and program management offices. Standard DoD procurement regulations and oversight mechanisms apply, including performance monitoring, financial reviews, and compliance checks. Delivery orders under larger indefinite-delivery/indefinite-quantity (IDIQ) contracts are subject to specific oversight to ensure adherence to the contract's terms and conditions. Transparency is maintained through contract databases like FPDS, though detailed performance metrics are typically internal.

Related Government Programs

Department of Defense - Systems Engineering Support
Naval Sea Systems Command (NAVSEA) Contracts
Engineering and Technical Services Contracts
Professional Services Contracts

Risk Flags

Limited Competition
Cost Plus Fixed Fee Contract Type
Potential for Cost Overruns
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.5 million to DELOITTE CONSULTING LLP. SYSTEMS ENGINEERING&TECHNICAL ASSISTANCE SUPPORT

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $55.5 million.

What is the period of performance?

Start: 2020-11-19. End: 2024-09-09.

What is Deloitte Consulting LLP's track record with the Department of Defense, particularly in systems engineering and technical assistance?

Deloitte Consulting LLP has a significant and extensive track record with the Department of Defense, having been awarded numerous contracts across various agencies and service branches. Their experience spans a wide range of services, including IT modernization, financial management, cybersecurity, and, relevantly, systems engineering and technical assistance (SETA). For the Department of the Navy specifically, Deloitte has supported various programs requiring complex analytical, engineering, and advisory services. Their history suggests a capacity to handle large-scale, high-value contracts and deliver specialized expertise. Performance reviews and past performance information, often considered during the bidding process, would provide further detail on their specific successes and challenges in similar SETA roles.

How does the $55.5 million value compare to other similar engineering services contracts awarded by the DoD in the past three years?

The $55.5 million value for this contract, spanning approximately 3.8 years, places it in the mid-to-large tier for engineering services contracts within the Department of Defense. Many SETA contracts, especially those supporting major weapon systems or large-scale IT initiatives, can range from tens of millions to hundreds of millions of dollars over their lifecycle. For instance, similar contracts for systems engineering support for naval aviation, ground systems, or C4ISR systems often fall within this valuation range. Contracts for pure R&D or very niche technical consulting might be smaller, while enterprise-wide IT transformations or major platform development support could be significantly larger. This contract's value appears consistent with the scope of providing comprehensive engineering and technical assistance for naval systems.

What are the primary risk indicators associated with this specific contract, and how are they being mitigated?

Key risk indicators for this contract include the potential for cost overruns (inherent in Cost Plus Fixed Fee contracts if not managed diligently), contractor performance variability, and the risk associated with a limited number of bidders (3) potentially not fostering optimal price discovery. Mitigation strategies likely involve robust oversight from the Department of the Navy's contracting officers and program managers, including regular performance reviews, milestone tracking, and financial audits. The selection of a reputable contractor like Deloitte, with a strong past performance record, also serves as a risk mitigation factor. Furthermore, the fixed-fee component, while part of a CPFF structure, still imposes a ceiling on the contractor's fee, providing some level of cost predictability.

How effective is the 'full and open competition' process when only three bids are received for a contract of this size and importance?

The effectiveness of 'full and open competition' when only three bids are received is debatable and context-dependent. While the process technically allows any qualified vendor to compete, a low number of bids can suggest several possibilities: the market for such specialized services is inherently limited, the barriers to entry (e.g., security clearances, specific expertise, past performance requirements) are high, or the solicitation itself may not have reached a sufficiently broad audience. For taxpayers, fewer bids can mean less competitive pressure on pricing and potentially fewer innovative solutions being proposed. However, if those three bidders were highly qualified and the selection process rigorously evaluated them based on best value, the outcome could still be favorable, albeit perhaps not as cost-effective as with broader competition. The Department of Defense often faces this challenge in highly specialized technical domains.

What are the historical spending patterns for systems engineering and technical assistance support within the Department of the Navy?

Historical spending patterns for systems engineering and technical assistance (SETA) within the Department of the Navy (DoN) show a consistent and significant allocation of resources. The DoN relies heavily on external contractors to supplement its organic engineering capabilities, particularly for complex platforms like ships, submarines, aircraft, and IT systems. Spending in this category typically fluctuates based on major acquisition programs, modernization efforts, and sustainment requirements. Over the past decade, SETA spending has generally remained robust, often comprising a substantial portion of the DoN's overall contracting budget for services. Trends indicate a move towards more integrated support contracts that encompass a wider range of technical services, reflecting the increasing complexity of naval systems and the need for specialized, long-term expertise.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering 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

Solicitation ID: N0003920R3004

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Financial Advisory Services LLP

Address: 1919 N LYNN ST, ARLINGTON, VA, 22209

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $80,766,998

Exercised Options: $63,397,885

Current Obligation: $55,516,527

Actual Outlays: $850,541

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $2,144,722

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017819D8497

IDV Type: IDC

Timeline