DoD's $37.7M audit support contract awarded to Deloitte & Touche LLP was not competed

Contract Overview

Contract Amount: $37,672,275 ($37.7M)

Contractor: Deloitte & Touche LLP

Awarding Agency: Department of Defense

Start Date: 2016-09-06

End Date: 2018-10-31

Contract Duration: 785 days

Daily Burn Rate: $48.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: AUDIT SUPPORT, IGF::OT::IGF

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $37.7 million to DELOITTE & TOUCHE LLP for work described as: AUDIT SUPPORT, IGF::OT::IGF Key points: 1. The contract's value of $37.7 million represents a significant investment in audit support services. 2. Awarded as a sole-source contract, it bypasses competitive bidding processes. 3. The contract duration of 785 days suggests a substantial, ongoing need for these services. 4. The 'Other Accounting Services' NAICS code indicates a broad scope of potential audit activities. 5. The 'Cost Plus Fixed Fee' contract type may lead to cost overruns if not carefully managed. 6. The absence of small business set-asides raises questions about opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of audit support. However, the $37.7 million price tag for approximately two years of service suggests a high per-diem rate for the contractor. Without competitive bids, it's difficult to ascertain if this represents fair market value or if taxpayers received the best possible price. The 'Cost Plus Fixed Fee' structure also introduces risk, as the final cost could exceed initial projections if not managed diligently.

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 necessary qualifications or when urgency dictates a direct award. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no market pressure to drive down prices. It also limits opportunities for other qualified firms to secure government contracts.

Public Impact

The Department of Defense benefits from specialized audit support, potentially improving financial accountability. Services delivered likely include financial statement audits, internal control assessments, and compliance reviews. The geographic impact is primarily within the Department of Defense's operational areas, likely concentrated in Virginia where the contractor is based. Workforce implications include the employment of skilled accounting and auditing professionals by Deloitte & Touche LLP.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus contract type carries inherent risk of cost overruns.
Limited transparency into the selection process due to sole-source award.

Positive Signals

Award to a well-established firm like Deloitte & Touche LLP suggests access to experienced personnel.
The contract aims to fulfill a critical need for audit support within the DoD.
The fixed fee component provides some cost certainty compared to pure cost-reimbursement contracts.

Sector Analysis

The federal government's spending on accounting and auditing services is substantial, driven by regulatory requirements and the need for financial oversight. This contract falls within the broader professional services sector, which includes management consulting, IT services, and financial advisory. The market for these services is dominated by large, established firms, but also includes a segment of specialized small businesses. The DoD's reliance on such contracts underscores the complexity of its financial operations and the ongoing need for independent verification.

Small Business Impact

This contract does not appear to have included a small business set-aside. The sole-source nature of the award means that opportunities for small businesses to compete for this specific contract were bypassed. While Deloitte & Touche LLP may engage small businesses as subcontractors, the primary award did not prioritize small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting officers and potentially the Defense Contract Management Agency (DCMA). Inspector General (IG) jurisdiction would apply if any allegations of fraud, waste, or abuse arise. Transparency is limited due to the sole-source nature, but contract performance metrics and payment details are usually available through federal procurement databases.

Related Government Programs

DoD Financial Improvement and Audit Readiness (FIAR) initiatives
Federal audit services contracts
Professional services contracts
Accounting and Auditing Services

Risk Flags

Sole-source award bypasses competitive bidding.
Potential for cost overruns due to CPFF structure.
Limited transparency in award justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.7 million to DELOITTE & TOUCHE LLP. AUDIT SUPPORT, IGF::OT::IGF

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $37.7 million.

What is the period of performance?

Start: 2016-09-06. End: 2018-10-31.

What is the track record of Deloitte & Touche LLP in performing similar audit support services for the federal government?

Deloitte & Touche LLP is a major global professional services firm with extensive experience in providing audit, consulting, tax, and advisory services to both government and commercial clients. For the federal government, they have a long history of performing financial statement audits, internal control assessments, and other accounting-related services across various agencies. Their track record includes significant engagements with the Department of Defense and other large federal entities, often involving complex financial systems and regulatory compliance. While specific performance metrics for individual contracts are not always publicly detailed, their continued awards suggest a generally satisfactory performance history. However, the nature of sole-source awards means that direct comparisons of their performance against competitors for this specific contract are not available.

How does the value of this contract compare to similar audit support contracts awarded by the DoD or other federal agencies?

Comparing the $37.7 million value of this sole-source contract is difficult without knowing the precise scope of services and duration of comparable competitively awarded contracts. Generally, large-scale audit support for major federal agencies can range from tens to hundreds of millions of dollars over several years. Contracts for financial statement audits, particularly for entities as complex as the DoD, are substantial. However, the absence of competition for this specific award means we cannot benchmark its price against what multiple bidders might have offered. If this contract was competed, it's possible that the winning bid could have been lower, or conversely, that competition might have driven up prices for certain specialized services. The 'Cost Plus Fixed Fee' structure also adds a layer of uncertainty to the final expenditure.

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

The primary risks associated with a sole-source award for audit support services include a lack of price competition, which can lead to higher costs for the government and taxpayers. Without multiple bids, there's less incentive for the contractor to offer the most competitive pricing. Another risk is reduced innovation, as the absence of competition may lessen the drive for the contractor to develop novel or more efficient approaches. Furthermore, sole-source awards can raise concerns about fairness and equal opportunity for other qualified firms that were not given a chance to bid. There's also a potential for complacency on the part of the awarded contractor, as they do not face the immediate threat of losing future business to competitors on this specific contract.

What is the expected impact of this contract on the DoD's ability to achieve audit readiness or improve financial management?

This contract is intended to provide crucial support to the Department of Defense in its ongoing efforts to achieve audit readiness and improve overall financial management. Audit support services typically involve assisting with the preparation and validation of financial statements, assessing internal controls, and ensuring compliance with various financial regulations. By engaging a firm like Deloitte & Touche LLP, the DoD aims to leverage external expertise to navigate the complexities of its financial systems and reporting requirements. The success of this contract in achieving audit readiness will depend on the clarity of the SOW, the effectiveness of the contractor's performance, and the DoD's internal commitment and collaboration. Positive outcomes could include cleaner financial statements, better risk management, and increased accountability.

How does the 'Cost Plus Fixed Fee' contract type influence the financial risk for the government in this audit support engagement?

The 'Cost Plus Fixed Fee' (CPFF) contract type presents a mixed financial risk profile for the government. The 'Cost Plus' portion means the government agrees to reimburse the contractor for all allowable costs incurred during the performance of the contract. This introduces the risk that actual costs could exceed initial estimates, especially if the scope of work is not precisely defined or if unforeseen challenges arise. However, the 'Fixed Fee' component provides a degree of cost certainty regarding the contractor's profit. The fee is negotiated upfront and remains fixed regardless of the final cost incurred. This structure incentivizes the contractor to control costs to maximize their profit margin, as any savings below the estimated cost would increase their percentage of profit. The government's primary financial risk lies in managing and auditing the allowable costs to prevent overruns beyond the anticipated total expenditure.

What are the implications of awarding this contract as 'NOT COMPETED' for the broader federal contracting landscape?

Awarding this contract as 'NOT COMPETED' signifies a departure from the government's general preference for full and open competition. While sole-source awards are permissible under specific circumstances (e.g., only one responsible source exists, or urgency), frequent use can signal potential issues. It can reduce opportunities for small businesses and innovative new entrants to compete for government work. It also raises questions about the effectiveness of market research and acquisition planning within the agency. For the broader federal contracting landscape, it means that certain large contracts may be awarded without the benefit of competitive pressure, potentially impacting overall government spending efficiency and the diversity of the contractor base.

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) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0018916RZ077

Offers Received: 1

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, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $38,279,867

Exercised Options: $38,279,867

Current Obligation: $37,672,275

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $2,247,154

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline