DoD's $166.5M Navy ERP contract awarded to Accenture Federal Services shows potential for cost overruns

Contract Overview

Contract Amount: $166,507,936 ($166.5M)

Contractor: Accenture Federal Services LLC

Awarding Agency: Department of Defense

Start Date: 2017-08-22

End Date: 2020-08-31

Contract Duration: 1,105 days

Daily Burn Rate: $150.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF NAVY ERP SPECIAL PROJECTS SUPPORT

Place of Performance

Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17050

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $166.5 million to ACCENTURE FEDERAL SERVICES LLC for work described as: IGF::OT::IGF NAVY ERP SPECIAL PROJECTS SUPPORT Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract's cost-plus-fixed-fee structure carries inherent risk of cost escalation. 3. Performance period of 1105 days indicates a substantial, long-term engagement. 4. The contract is for IT services, specifically Other Computer Related Services. 5. Awarded as a Delivery Order, suggesting it's part of a larger contract vehicle. 6. No small business set-aside was utilized, potentially limiting small business participation.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee (CPFF) pricing structure presents a risk for cost overruns, as the government bears the brunt of increased expenses beyond the fixed fee. Without detailed breakdowns of labor categories, hours, and direct costs, a precise value-for-money assessment is difficult. However, CPFF contracts are often used when project scope is uncertain, which may justify the structure. Benchmarking against similar IT support contracts for large-scale enterprise resource planning (ERP) systems would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bidders suggests a reasonable level of competition for this type of specialized IT support. However, the specific number of bids does not inherently guarantee the best price, as the complexity of the requirement and the specialized nature of the services can influence participation.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions. The presence of multiple bidders suggests that the government likely received a range of proposals, increasing the likelihood of a fair market price.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives critical IT support for its ERP systems. Services delivered include support for enterprise resource planning systems, crucial for operational efficiency. The contract's geographic impact is likely concentrated within Navy installations and supporting offices, primarily in Pennsylvania. Workforce implications include the employment of IT professionals by Accenture Federal Services to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure increases risk of cost overruns.
Lack of specific performance metrics makes it difficult to assess contractor efficiency.
Potential for scope creep given the nature of ERP system support.
Limited transparency on how the fixed fee was determined.
Reliance on a single contractor for critical ERP support could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, indicating a broad search for qualified vendors.
The contract is for essential IT services supporting a major government system (ERP).
The contractor, Accenture Federal Services, is a well-established entity in government contracting.
The delivery order mechanism suggests it aligns with a pre-competed contract vehicle.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The market for ERP implementation and support is substantial, driven by the need for integrated business management solutions across large organizations like the Department of Defense. Comparable spending benchmarks would involve analyzing other large-scale IT support contracts for federal agencies, particularly those involving complex system integration and maintenance.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are likely limited to subcontracting roles, if any are offered by the prime contractor. The absence of a set-aside may reflect the specialized nature of the services required, which may be more readily provided by larger, established firms.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Navy. Accountability measures are usually tied to the contract's performance work statement and reporting requirements. Transparency is often limited to contract award data and high-level summaries, with detailed operational data being sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Enterprise Resource Planning Systems
Navy IT Modernization Programs
Federal Civilian ERP Systems Support
IT Professional Services Contracts
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Cost-plus-fixed-fee pricing structure
Potential for cost overruns
Long-term IT support requirement
Specialized ERP system support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $166.5 million to ACCENTURE FEDERAL SERVICES LLC. IGF::OT::IGF NAVY ERP SPECIAL PROJECTS SUPPORT

Who is the contractor on this award?

The obligated recipient is ACCENTURE FEDERAL SERVICES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $166.5 million.

What is the period of performance?

Start: 2017-08-22. End: 2020-08-31.

What is the specific nature of the 'special projects' supported by this contract?

The provided data indicates the contract is for 'IGF NAVY ERP SPECIAL PROJECTS SUPPORT' and falls under the NAICS code 541519 (Other Computer Related Services). While the exact nature of 'special projects' is not detailed, it generally implies tasks beyond routine maintenance or standard support for the Navy's Enterprise Resource Planning (ERP) systems. These could include system enhancements, integration with new platforms, data migration efforts, specialized reporting development, or troubleshooting complex, non-standard issues. The cost-plus-fixed-fee (CPFF) structure suggests these projects may have had an evolving scope or were difficult to define precisely at the outset, necessitating flexibility in pricing.

How does the $166.5 million value compare to similar ERP support contracts within the DoD?

Benchmarking this $166.5 million contract requires comparing it to similar IT support contracts for large-scale ERP systems within the Department of Defense or other federal agencies. Contracts for ERP support can vary significantly in price based on the specific system (e.g., SAP, Oracle), the scope of services (implementation, sustainment, modernization), the number of users, and the duration. A contract of this magnitude suggests a significant scope of work, likely encompassing support for a substantial portion of the Navy's ERP infrastructure over its 1105-day performance period. Without access to a database of comparable contracts with detailed scope and pricing, a precise comparison is challenging, but it appears to be a substantial investment typical for supporting complex enterprise systems.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this project?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract type for this Navy ERP support project is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. If the project's costs exceed initial estimates, the government is obligated to cover these additional expenses, while the contractor's fee remains constant. This can lead to the government paying more than initially budgeted. For the contractor, the risk lies in underestimating costs, which could reduce their effective profit margin if they cannot control expenses adequately. Effective oversight and robust cost tracking are crucial to mitigate these risks.

What is Accenture Federal Services' track record with large DoD IT contracts?

Accenture Federal Services (AFS) has a significant track record of performing large IT contracts for the Department of Defense and other federal agencies. They are a major player in the government contracting space, known for their expertise in areas like cloud computing, cybersecurity, data analytics, and enterprise resource planning (ERP) systems. AFS has been involved in numerous high-value contracts, including significant work with the Navy and other military branches on system modernization and digital transformation initiatives. Their history suggests they possess the resources and experience to handle complex projects like the Navy ERP support contract, though performance can vary across individual contracts.

How does the duration of the contract (1105 days) impact the assessment of its value?

The contract duration of 1105 days (approximately 3 years) is a significant factor in assessing its value. A longer duration suggests a sustained need for the services and allows for a more stable working relationship between the government and the contractor. For value assessment, it implies that the $166.5 million award is spread over this period, making the annual spending approximately $48.5 million. This extended timeframe can facilitate deeper integration and understanding of the Navy's ERP systems by the contractor, potentially leading to more efficient and effective support. However, it also necessitates ongoing oversight to ensure performance remains high and costs are managed effectively throughout the contract's life.

What are the potential implications of awarding this contract as a Delivery Order?

Awarding this contract as a Delivery Order (DO) implies that it was issued under a pre-existing, larger contract vehicle, often a Multiple Award Indefinite Delivery/Indefinite Quantity (IDIQ) contract. This approach allows agencies to procure services more efficiently by having already competed the basic contract. For this specific Navy ERP support project, it means the foundational terms, conditions, and potentially some pricing structures were established during the initial competition for the IDIQ vehicle. The Delivery Order then specifies the exact scope, quantity, and delivery schedule for this particular requirement. This method can expedite the procurement process and leverage existing contract vehicles, potentially offering better pricing and faster delivery compared to a standalone new contract.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0018915R0005

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Accenture Public Limited Company

Address: 800 NORTH GLEBE RD #300, ARLINGTON, VA, 22203

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $201,906,567

Exercised Options: $201,906,567

Current Obligation: $166,507,936

Actual Outlays: $11,232,385

Subaward Activity

Number of Subawards: 270

Total Subaward Amount: $85,332,940

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0018916D0013

IDV Type: IDC

Timeline