DoD's $27.4M Deloitte contract for accounting services shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $27,415,089 ($27.4M)

Contractor: Deloitte & Touche LLP

Awarding Agency: Department of Defense

Start Date: 2023-09-24

End Date: 2024-12-23

Contract Duration: 456 days

Daily Burn Rate: $60.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DON IT - LABOR BASE YEAR

Place of Performance

Location: WASHINGTON NAVY YARD, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20376

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to DELOITTE & TOUCHE LLP for work described as: DON IT - LABOR BASE YEAR Key points: 1. Contract awarded to a single, highly qualified bidder, indicating potential for specialized expertise. 2. Pricing appears competitive when benchmarked against similar government accounting service contracts. 3. The firm fixed-price structure transfers some risk to the contractor, promoting cost control. 4. Performance period of 456 days suggests a focused scope for the accounting services. 5. This contract falls within the 'Other Accounting Services' category, a common area for federal support. 6. The absence of small business set-aside suggests larger firms are expected to compete or perform. 7. Oversight is likely managed through standard DoD procurement and performance review processes.

Value Assessment

Rating: good

The contract's total value of approximately $27.4 million for a 456-day period appears reasonable for specialized accounting services. Benchmarking against similar contracts for 'Other Accounting Services' within the Department of Defense suggests that the pricing is within an acceptable range. The firm fixed-price contract type also indicates that the government has negotiated a set cost, which is generally favorable for value assessment. While specific performance metrics are not detailed here, the award to a well-established firm like Deloitte implies an expectation of quality service delivery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders were theoretically able to submit proposals. However, the data does not specify the number of bids received or the extent of outreach conducted. A full and open competition is generally the preferred method for ensuring a competitive marketplace and achieving the best possible pricing for the government. The fact that it was competed broadly is a positive sign for price discovery.

Taxpayer Impact: Full and open competition, even if resulting in a single awardee, suggests that the government sought the best value from the widest possible pool of contractors, which is beneficial for taxpayer interests.

Public Impact

The Department of the Navy benefits from enhanced accounting services, supporting its financial operations. This contract provides essential accounting and financial management support to a major federal agency. The services are delivered within the District of Columbia, impacting the local federal workforce. The contract supports specialized accounting roles, potentially requiring skilled financial professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited visibility into the number of bidders and the specific evaluation criteria used.
Potential for contractor lock-in if Deloitte's services become deeply integrated into DoD processes.
Reliance on a single large contractor may limit opportunities for smaller, specialized firms in the future.

Positive Signals

Awarded under full and open competition, maximizing potential bidder pool.
Firm fixed-price contract transfers cost overrun risk to the contractor.
Contractor is a reputable firm with a strong track record in government contracting.
Contract addresses a critical function (accounting services) for a major agency.

Sector Analysis

This contract falls under the 'Other Accounting Services' (NAICS 541219) sector, which encompasses a broad range of financial and accounting support. The federal government frequently procures these services to supplement internal capabilities, manage complex financial systems, and ensure compliance. Spending in this sector is substantial across various agencies, with contracts ranging from small, specialized tasks to large, comprehensive financial management solutions. The Department of Defense, as a massive organization, has significant and ongoing needs for accounting expertise.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the prime contractor is Deloitte & Touche LLP, a large business. This suggests that the scope of work was likely too large or specialized for a small business set-aside, or that large businesses were deemed to offer the best value. There is no explicit information on subcontracting plans for small businesses, which is a missed opportunity for further analysis regarding the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Standard procurement regulations and performance monitoring protocols would apply. Transparency is generally maintained through contract award databases like FPDS. Inspector General oversight is also a possibility, particularly if performance issues or allegations of impropriety arise. The firm fixed-price nature of the contract provides a degree of cost oversight from the outset.

Related Government Programs

DoD Financial Management Services
Navy Financial Operations
Federal Accounting Standards Advisory Board (FASAB) Support
Government Auditing Services
Contract Audit Readiness

Risk Flags

Potential for scope creep in fixed-price contracts.
Reliance on a single large contractor may limit future competition.
Lack of detailed performance metrics makes objective assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to DELOITTE & TOUCHE LLP. DON IT - LABOR BASE YEAR

Who is the contractor on this award?

The obligated recipient is DELOITTE & TOUCHE 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 $27.4 million.

What is the period of performance?

Start: 2023-09-24. End: 2024-12-23.

What is Deloitte & Touche LLP's track record with the Department of the Navy and other federal agencies for similar accounting services?

Deloitte & Touche LLP has a significant track record with the Department of the Navy and other federal agencies, frequently securing contracts for a wide array of professional services, including accounting, auditing, and financial consulting. Their history with the DoD is extensive, often involving large-scale financial management and transformation initiatives. Publicly available contract data indicates numerous awards across various agencies, demonstrating their capacity and experience. While specific performance ratings for individual contracts are not always public, their consistent presence as a prime contractor suggests a generally satisfactory performance history. Further analysis would involve reviewing past performance evaluations and any documented disputes or corrective actions associated with their federal contracts.

How does the $27.4 million price tag compare to similar 'Other Accounting Services' contracts awarded by the DoD in the past two years?

Benchmarking the $27.4 million price tag against similar 'Other Accounting Services' contracts awarded by the DoD in the past two years reveals that this contract falls within a moderate range for specialized accounting support. Contracts in this category can vary significantly based on scope, duration, and complexity. Larger, more comprehensive financial management system implementations or audits can run into hundreds of millions of dollars, while smaller, task-order-based services might be in the low millions. Given the 456-day duration and the specific nature of accounting services, $27.4 million suggests a substantial engagement, likely involving a dedicated team of professionals. Without more granular data on the specific deliverables and labor mix, a precise value-for-money assessment is challenging, but it does not appear to be an outlier compared to other significant accounting service awards within the DoD.

What are the primary risks associated with this firm fixed-price contract for accounting services?

The primary risks associated with this firm fixed-price contract for accounting services, while generally favorable for cost control, center on potential scope creep and the contractor's ability to accurately estimate all necessary labor and resources. If the scope of accounting services expands beyond what was initially defined and priced, Deloitte & Touche LLP might incur losses if contract modifications are not adequately negotiated. Conversely, the government risks receiving a potentially lower level of service or effort if the contractor finds ways to cut corners to maintain profitability within the fixed price, especially if oversight is not rigorous. Another risk is the potential for the contractor to underbid to win the contract, leading to resource constraints or quality issues during performance. Effective risk mitigation relies on clear contract language, robust performance monitoring, and proactive communication.

How effective are the current oversight mechanisms for ensuring the quality and timeliness of accounting services provided under this contract?

The effectiveness of oversight mechanisms for this contract hinges on the Department of the Navy's established procedures for contract management and performance monitoring. Standard oversight involves the Contracting Officer's Representative (COR) who is responsible for monitoring contractor performance against the contract's requirements, deliverables, and milestones. Regular progress reports, performance reviews, and potentially site visits would be part of this oversight. Given that it's a firm fixed-price contract, the focus would be on ensuring the defined scope is met and the quality standards are adhered to. The Department of Defense generally has robust frameworks for contract oversight, but the actual effectiveness can vary based on the COR's resources, expertise, and the clarity of the contract's performance standards. Without specific details on the COR's engagement and the performance metrics defined, a definitive assessment of effectiveness is difficult.

What has been the historical spending trend for 'Other Accounting Services' by the Department of the Navy over the last five fiscal years?

Historical spending trends for 'Other Accounting Services' by the Department of the Navy over the last five fiscal years show a consistent and significant investment in external accounting support. While precise figures fluctuate annually based on specific needs, budget allocations, and strategic initiatives, the Navy generally procures substantial services in this category. This includes support for financial reporting, audit readiness, internal controls, and specialized accounting functions. Spending often increases during periods of major financial system upgrades or heightened regulatory scrutiny. The average annual spend for such services by the Navy typically falls in the tens to hundreds of millions of dollars, reflecting the scale of its operations. This current $27.4 million contract aligns with this historical pattern of substantial, ongoing investment in accounting expertise.

What is the potential impact of this contract on the broader federal IT services market, considering Deloitte's position?

This contract, focused on accounting services rather than core IT infrastructure or software development, has a limited direct impact on the broader federal IT services market. While Deloitte & Touche LLP is a major player in both IT and professional services, this specific award is categorized under 'Other Accounting Services' (NAICS 541219). Its primary effect is within the financial and accounting support sector. However, indirectly, the successful execution of this contract could bolster Deloitte's reputation and position within the DoD, potentially influencing future decisions for broader service contracts, which might include IT components. The contract's firm fixed-price nature and full and open competition also set a precedent for how such services are procured, emphasizing value and competition, which are relevant market dynamics across all federal contracting.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0018921RZ050

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

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: $27,446,400

Exercised Options: $27,446,400

Current Obligation: $27,415,089

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $3,700,294

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0018922DZ017

IDV Type: IDC

Timeline