Deloitte Consulting LLP awarded $68.3M for engineering services, with a significant portion allocated to cost-plus-fixed-fee task orders

Contract Overview

Contract Amount: $68,281,485 ($68.3M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of Defense

Start Date: 2015-09-28

End Date: 2025-03-10

Contract Duration: 3,451 days

Daily Burn Rate: $19.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF SYSTEMS ENGINEERING&TECHNICAL ASSISTANCE SUPPORT

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92106

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $68.3 million to DELOITTE CONSULTING LLP for work described as: IGF::OT::IGF SYSTEMS ENGINEERING&TECHNICAL ASSISTANCE SUPPORT Key points: 1. The contract's cost-plus-fixed-fee structure warrants scrutiny for potential cost overruns. 2. Competition was robust, suggesting a competitive pricing environment for these engineering services. 3. The contract duration extends over a decade, indicating a long-term need for these services. 4. Performance is managed by the Defense Contract Management Agency, a key oversight body. 5. The services fall under engineering, a critical sector for defense operations. 6. A substantial portion of the contract value is tied to fixed-fee task orders, which can limit contractor risk but may also reduce incentives for efficiency.

Value Assessment

Rating: fair

The total award of $68.3 million over nearly 10 years suggests a substantial investment in engineering support. While the specific services rendered under this contract are not detailed, the cost-plus-fixed-fee (CPFF) pricing structure, which covers a portion of the contract, can lead to higher costs compared to fixed-price contracts if not managed carefully. Benchmarking the per-hour rates or total cost against similar large-scale engineering support contracts for the Department of Defense would be necessary for a definitive value assessment. The presence of multiple delivery orders under this IDV indicates a need for ongoing services, but the overall value-for-money depends heavily on the efficiency and effectiveness of the delivered engineering solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The fact that there were two bidders suggests a moderate level of competition for this specific award. While full and open competition is generally preferred for maximizing taxpayer value, the limited number of bidders could imply that the market for such specialized engineering services is concentrated or that the bidding process itself presented barriers to entry for a wider range of firms. Further analysis into the number of proposals received versus the number of bidders would provide a clearer picture of the competitive landscape.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down prices through market forces. However, with only two bidders, the potential for significant price reductions may have been constrained compared to scenarios with more robust competition.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its complex operations and systems. Services delivered likely include technical analysis, system design, integration, and testing to enhance defense capabilities. The contract's geographic impact is primarily within California, where the Defense Contract Management Agency is located, but the services may support national defense initiatives. Workforce implications include the employment of engineers and technical specialists by Deloitte Consulting LLP and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may incentivize cost increases if not rigorously monitored.
Long contract duration (over 9 years) increases the risk of scope creep or evolving requirements not being optimally managed.
Limited number of bidders (2) could indicate potential market concentration or barriers to entry, impacting price discovery.

Positive Signals

Awarded under full and open competition, ensuring a broad initial market solicitation.
Managed by the Defense Contract Management Agency, a specialized oversight entity.
The contract has a defined end date, providing a clear timeframe for service delivery.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS code 541330), a critical component of the broader professional, scientific, and technical services industry. The market for defense engineering services is substantial, driven by the government's continuous need for advanced technological solutions and system support. Spending in this sector is often characterized by long-term contracts, high technical complexity, and significant government oversight. Comparable spending benchmarks would typically involve analyzing the average contract values and durations for similar engineering support services awarded to large prime contractors within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside (SS=false, SB=false). Consequently, there are no direct subcontracting requirements mandated for small businesses within this specific award. This means that opportunities for small businesses to participate would likely be through direct subcontracting by Deloitte Consulting LLP, rather than through a formal set-aside program. The absence of set-asides may limit the direct flow-down of work to the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract is provided by the Defense Contract Management Agency (DCMA), a specialized agency within the Department of Defense responsible for ensuring contractors meet their contractual obligations. Accountability measures are embedded within the contract terms, including performance standards and reporting requirements. Transparency is facilitated through contract databases, although detailed performance metrics and specific task order details may be subject to security or proprietary restrictions. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services Contracts
Professional, Scientific, and Technical Services
Department of Defense IT and Systems Support
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Cost-Plus-Fixed-Fee Structure
Long Contract Duration
Limited Competition (Bidders)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.3 million to DELOITTE CONSULTING LLP. IGF::OT::IGF 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $68.3 million.

What is the period of performance?

Start: 2015-09-28. End: 2025-03-10.

What is the historical spending trend for this specific contract vehicle or similar engineering support contracts awarded to Deloitte Consulting LLP by the Department of Defense?

Analyzing historical spending for this contract vehicle (IDV) reveals a total award of $68,281,485.15, with a start date of September 28, 2015, and an end date of March 10, 2025, spanning approximately 9.5 years. The data indicates that this is a significant, long-term engagement. To assess historical trends, one would need to examine the annual disbursement of funds against the total award value. Without access to granular disbursement data over time, it's challenging to pinpoint specific spending patterns year-over-year. However, the substantial total award suggests consistent funding allocation. For comparative analysis, one would look at other large engineering support IDVs awarded by the DoD to major contractors like Deloitte, assessing their total values, durations, and funding profiles to understand if this contract is typical or an outlier in terms of scale and longevity.

How does the pricing structure (Cost Plus Fixed Fee) compare to industry benchmarks for similar engineering services, and what are the associated risks?

The Cost Plus Fixed Fee (CPFF) pricing structure involves the government reimbursing the contractor for allowable costs plus a fixed fee representing profit. This structure is common for research and development or services where the scope is not well-defined upfront, offering flexibility. However, it carries inherent risks for the government, primarily the potential for cost overruns, as the contractor is incentivized to incur costs to cover their expenses, while their profit (the fixed fee) remains constant. Industry benchmarks often show that fixed-price contracts, where applicable, can yield better value for the government due to the contractor bearing more risk. For CPFF contracts, rigorous oversight, detailed cost tracking, and robust negotiation of the fixed fee are crucial to mitigate risks and ensure value. The 'fair' rating for value assessment reflects this inherent risk associated with CPFF.

What is the track record of Deloitte Consulting LLP in delivering similar engineering services to the Department of Defense, particularly concerning performance and cost control?

Deloitte Consulting LLP is a major government contractor with a broad portfolio of services, including extensive experience in engineering and technical support for the Department of Defense. Their track record generally includes successful delivery on complex projects, leveraging their significant resources and expertise. However, like any large contractor, performance can vary across contracts. For this specific contract, the 'fair' value assessment suggests that while services are likely being delivered, there may be areas for improvement in cost efficiency or value realization, potentially linked to the CPFF structure. A deeper dive into past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) for this specific contract or similar engagements would provide more granular insights into their performance, adherence to schedule, and effectiveness in managing costs.

Given the 'full and open competition' with only two bidders, what does this imply about the market concentration for specialized defense engineering services?

The fact that this contract, despite being competed 'full and open,' attracted only two bidders suggests a potentially concentrated market for these specific specialized defense engineering services. This could be due to several factors: the high technical expertise required, the significant resources needed to bid and perform, existing long-term relationships between the government and incumbent contractors, or perhaps the specific requirements of the solicitation limited the pool of capable firms. While 'full and open' competition is the ideal, a low number of bidders can reduce the competitive pressure on pricing and innovation. It raises questions about whether the solicitation was structured in a way that inadvertently limited broader participation or if the market itself is inherently limited to a few large players capable of undertaking such extensive and complex work.

What are the potential risks associated with the long duration (over 9 years) of this contract, and how are they being mitigated?

The extended duration of this contract, from late 2015 to early 2025, presents several risks. Firstly, requirements can evolve significantly over such a long period, potentially leading to scope creep or the contract becoming misaligned with current needs if not actively managed. Secondly, long-term contracts can sometimes reduce the urgency for contractors to innovate or improve efficiency, as they have a guaranteed revenue stream. Thirdly, the cost-plus-fixed-fee structure, combined with a long duration, increases the risk of cost escalation if not meticulously monitored. Mitigation strategies typically involve robust contract management, regular reviews of performance and requirements, formal change management processes, and potentially incorporating mechanisms for periodic re-pricing or performance-based incentives to ensure continued value and alignment with evolving defense objectives.

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: N0002414R3464

Offers Received: 2

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: $73,941,109

Exercised Options: $73,941,109

Current Obligation: $68,281,485

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017814D7917

IDV Type: IDC

Timeline