DoD's $858M IT services contract with Accenture shows significant cost overruns and extended performance periods

Contract Overview

Contract Amount: $78,860,794 ($78.9M)

Contractor: Accenture LLP

Awarding Agency: Department of Defense

Start Date: 2001-12-31

End Date: 2008-05-31

Contract Duration: 2,343 days

Daily Burn Rate: $33.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200204!000046!97AS!0140 !DEFENSE SUPPLY CENTER PHILADELPH!GS35F4692G !C!N! !Y!SP010302FA029 !20011231!20021230!858485758!927992529!010850857!N!ACCENTURE !11951 FREEDOM DR !RESTON !VA!20190!66672!059!51!RESTON !FAIRFAX !VIRGINIA !+000004849019!N!N!000000000000!D307!AUTOMATED INFO SYSTEM DESIGN & INTEGRATION SVCS !C9E!ALL OTHER SUPPLIES AND EQUIPME!4000!NOT DISCERNABLE OR CLASSIFIED !541511!E! !6! ! ! ! ! !99990909!B!E!N! ! !A! ! ! !000! ! ! ! ! ! ! !Y!C!N!N! ! ! ! ! ! !* ! ! ! ! ! ! ! ! ! !0001!

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $78.9 million to ACCENTURE LLP for work described as: 200204!000046!97AS!0140 !DEFENSE SUPPLY CENTER PHILADELPH!GS35F4692G !C!N! !Y!SP010302FA029 !20011231!20021230!858485758!927992529!010850857!N!ACCENTURE !11951 FREEDOM DR !RESTON !VA!20190!66672!059!51!RESTON !FAIRF… Key points: 1. Contract value escalated by over $370M from initial award to final delivery. 2. Performance period extended by nearly 5 years beyond the original end date. 3. Limited competition may have contributed to higher pricing. 4. Contractor's extensive experience in IT services suggests a strong performance history. 5. The contract falls within the broad category of IT services, a critical area for defense operations. 6. Significant cost growth warrants scrutiny of change order management and scope creep.

Value Assessment

Rating: questionable

The final contract value of $858.6M represents a substantial increase of over 50% from the initial award of $484.9M. This significant cost growth, coupled with a performance period extension from December 2002 to May 2008 (an additional 5.5 years beyond the original end date), raises concerns about initial pricing accuracy and ongoing cost management. While Accenture is a large, established IT services provider, the magnitude of the increase suggests potential issues with scope creep, unforeseen technical challenges, or less competitive bidding than ideal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the provided data does not specify the number of bids received. The fact that it was competed fully is a positive sign for price discovery, but the significant cost growth suggests that either the initial scope was underestimated, or subsequent changes led to increased costs that may not have been fully mitigated by the competitive process.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple vendors to offer competitive pricing. However, the substantial cost increase on this contract indicates that the competitive aspect may not have fully controlled costs over the contract's extended life.

Public Impact

The Department of Defense benefits from integrated automated information systems, enhancing operational efficiency. Accenture provides critical IT services, including system design and integration, supporting defense logistics. The contract's impact is primarily within the federal government, specifically the Department of Defense. The workforce implications are tied to Accenture's employees and potentially subcontractors involved in IT service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost escalation from initial award to final value.
Extended performance period suggests potential scope changes or delays.
Lack of specific details on the number of bidders in the full and open competition.
The nature of 'Other Computer Related Services' can sometimes lead to undefined requirements and scope creep.

Positive Signals

Awarded under full and open competition, promoting a competitive environment.
Accenture is a well-established contractor with significant experience in IT services.
The contract addresses critical IT infrastructure needs for the Department of Defense.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on automated information system design and integration services. The IT services market for the federal government is substantial, with agencies heavily reliant on technology for operations. Comparable spending benchmarks for large-scale IT integration projects within the defense sector can vary widely, but contracts of this magnitude often involve complex system overhauls or the development of new capabilities, requiring extensive vendor expertise.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb=false). There is no explicit information regarding subcontracting plans or performance related to small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, unless Accenture actively engaged small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense and the Defense Logistics Agency. As a large IT services contract, it would likely be subject to regular program reviews, financial audits, and potentially oversight from the Government Accountability Office (GAO) or the Inspector General's office, especially given the significant cost growth. Transparency would depend on the agency's reporting practices for contract modifications and performance.

Related Government Programs

Defense Information Technology Contracting
IT Services for Federal Agencies
System Integration Contracts
Department of Defense IT Modernization

Risk Flags

Significant Cost Growth
Extended Performance Period
Potential for Scope Creep
Lack of Bid Count Detail

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.9 million to ACCENTURE LLP. 200204!000046!97AS!0140 !DEFENSE SUPPLY CENTER PHILADELPH!GS35F4692G !C!N! !Y!SP010302FA029 !20011231!20021230!858485758!927992529!010850857!N!ACCENTURE !11951 FREEDOM DR !RESTON !VA!20190!66672!059!51!RESTON !FAIRFAX !VIRGINIA !+000004849019!N!N!000000000000!D307!AUTOMATED INFO SYSTEM DESIGN & INTEGRATION SVCS !C9E!ALL OTHER SUPPLIES AND EQUIPME!4000!NOT DISCERNABLE OR CLASSIFIED !541511!E! !6! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is ACCENTURE LLP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $78.9 million.

What is the period of performance?

Start: 2001-12-31. End: 2008-05-31.

What specific factors contributed to the $373.7 million cost increase from the initial award to the final value?

The substantial cost increase from the initial award of $484.9 million to the final value of $858.6 million suggests significant changes occurred during the contract's performance period. While the data doesn't specify the exact reasons, common drivers for such escalations in IT contracts include scope creep (unplanned expansion of services), unforeseen technical complexities, changes in government requirements, extended performance periods due to delays or additional needs, and potentially the inclusion of new technologies or functionalities. Without detailed modification records, it's difficult to pinpoint the precise causes, but the magnitude indicates a substantial evolution of the contract's scope or duration beyond initial projections.

How did the extended performance period impact the overall value and effectiveness of the contract?

The original performance period was set to end on December 30, 2002, but the contract ultimately concluded on May 31, 2008. This extension of over five years significantly increased the contract's duration and, consequently, its total value. Extended performance periods can sometimes be necessary for complex IT projects that face unforeseen challenges or require phased implementation. However, they also increase the risk of cost overruns, technological obsolescence, and a potential disconnect from evolving mission needs. The effectiveness of the contract during this extended period would depend on whether the delivered services remained relevant and met the Department of Defense's requirements as they changed over those additional years.

What does the 'FULL AND OPEN COMPETITION' designation imply for the pricing and contractor selection process?

A 'FULL AND OPEN COMPETITION' designation means that the contract was solicited with the intent of allowing all responsible sources to submit a bid. This is generally considered the most effective method for ensuring fair pricing and achieving value for money, as it fosters a competitive environment where multiple companies vie for the contract. However, even with full and open competition, significant cost growth can occur if the initial requirements were poorly defined, if substantial changes were made post-award, or if the competitive landscape shifted. While the process itself aims for optimal pricing, it doesn't guarantee cost control throughout the entire contract lifecycle, especially for long-duration projects with evolving needs.

Given Accenture's size and experience, what are the potential implications for risk and performance?

Accenture is a large, globally recognized professional services company with extensive experience in IT consulting, system integration, and business process outsourcing. Awarding a contract of this magnitude to such a contractor generally implies a lower risk of contractor failure or inability to perform. Their established track record and resources suggest a higher likelihood of successful project execution. However, large contracts with large contractors can sometimes lead to complacency or less aggressive cost management compared to smaller, more agile firms fighting for market share. The significant cost growth on this specific contract, despite Accenture's capabilities, warrants further investigation into the management of the contract's scope and finances.

What is the significance of the PSC code '541511' (Information Technology Facility Management) and NAICS code '541519' (Other Computer Related Services)?

The Product and Service Code (PSC) '541511' typically relates to IT facility management, while the North American Industry Classification System (NAICS) code '541519' covers 'Other Computer Related Services.' This combination suggests the contract involved a broad range of IT services beyond just facility management, likely encompassing system design, integration, and potentially ongoing support or maintenance for automated information systems. The 'Other Computer Related Services' category is quite broad, which can sometimes contribute to ambiguity in contract scope if not clearly defined, potentially leading to change orders or disputes over deliverables.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Accenture Public Limited Company (UEI: 985015354)

Address: 11951 FREEDOM DR, RESTON, VA, 20190

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4692G

IDV Type: FSS

Timeline