Treasury's $174M IT Support Contract with Accenture Faces Scrutiny Over Long Duration and Cost-Plus Structure
Contract Overview
Contract Amount: $174,228,059 ($174.2M)
Contractor: Accenture LLP
Awarding Agency: Department of the Treasury
Start Date: 2006-09-14
End Date: 2013-09-29
Contract Duration: 2,572 days
Daily Burn Rate: $67.7K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: TOTAL INFORMATION PROCESSING SUPPORT SER
Place of Performance
Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706, UNITED STATES OF AMERICA
State: Maryland Government Spending
Plain-Language Summary
Department of the Treasury obligated $174.2 million to ACCENTURE LLP for work described as: TOTAL INFORMATION PROCESSING SUPPORT SER Key points: 1. Significant contract value of $174.2M over 7 years. 2. Sole provider Accenture LLP highlights potential lack of competition. 3. Cost-Plus Fixed Fee structure raises concerns about cost control. 4. IT sector spending benchmark analysis needed for fair comparison.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure, spanning nearly seven years, makes direct pricing comparisons difficult. Without clear performance metrics and competitive bidding history, assessing value for money is challenging.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
Awarded as a competitive delivery order, the limited competition details are unclear. The long duration and specific service needs may have restricted broader market participation, potentially impacting price discovery.
Taxpayer Impact: The extended duration and cost-plus model suggest potential for inflated costs, impacting taxpayer funds over the contract's life.
Public Impact
Taxpayers funded a long-term IT support service contract. The contract's structure may not incentivize cost efficiency. Potential for vendor lock-in due to extended service period.
Waste & Efficiency Indicators
Waste Risk Score: 70 / 10
Warning Flags
- Long contract duration (7 years)
- Cost-Plus Fixed Fee pricing
- Limited competition details
Positive Signals
- Provided essential IT support services
- Completed delivery order
Sector Analysis
This contract falls within the IT sector, specifically Computer Systems Design Services. IT contracts can range widely in value and structure; long-term, cost-plus agreements often warrant closer examination for efficiency.
Small Business Impact
The data indicates this contract was not awarded to small businesses (ss: false, sb: false). Further analysis would be needed to determine if small businesses had opportunities to participate in subcontracting.
Oversight & Accountability
The contract's length and pricing structure suggest a need for robust oversight to ensure cost control and performance. Tracking expenditures against fixed fees and performance milestones is crucial.
Related Government Programs
- Computer Systems Design Services
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- Long contract duration (7 years)
- Cost Plus Fixed Fee pricing model
- Potential for limited competition
- Lack of clear performance metrics in provided data
- High total contract value
Tags
computer-systems-design-services, department-of-the-treasury, md, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $174.2 million to ACCENTURE LLP. TOTAL INFORMATION PROCESSING SUPPORT SER
Who is the contractor on this award?
The obligated recipient is ACCENTURE LLP.
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Internal Revenue Service).
What is the total obligated amount?
The obligated amount is $174.2 million.
What is the period of performance?
Start: 2006-09-14. End: 2013-09-29.
What was the justification for the Cost Plus Fixed Fee structure and the long contract duration, and how was value for money ensured?
The justification for a Cost Plus Fixed Fee (CPFF) structure often relates to uncertainty in project scope or costs, where the contractor is reimbursed for actual costs plus a fixed fee representing profit. A long duration might be chosen for continuity of essential services. However, CPFF contracts can incentivize cost overruns, and long durations may reduce competitive pressure. Ensuring value requires rigorous oversight, clear performance metrics, and regular reviews to prevent inefficiencies and ensure the fixed fee remains reasonable.
What specific risks were identified or mitigated regarding the limited competition and the potential for cost escalation under the CPFF model?
Risks associated with limited competition include potentially higher prices and reduced innovation. For CPFF, the primary risk is cost escalation, as the contractor is reimbursed for all allowable costs, potentially leading to less incentive for efficiency. Mitigations could involve strict cost accounting standards, detailed audits, robust performance monitoring, and clear definitions of 'allowable costs' and the 'fixed fee' to ensure it reflects reasonable profit for the effort.
How effective was Accenture LLP in delivering 'TOTAL INFORMATION PROCESSING SUPPORT SER' over the contract's seven-year period, and did the pricing align with market rates for similar services?
Effectiveness is difficult to assess solely from this data. While the contract was completed, the CPFF structure and long duration raise questions about optimal pricing. Without benchmarks for comparable IT support services over similar periods, it's challenging to definitively state if the pricing was aligned with market rates. Further analysis of performance metrics and post-award reviews would be necessary to gauge effectiveness and cost efficiency.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
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
Financial Breakdown
Contract Ceiling: $313,296,027
Exercised Options: $180,231,797
Current Obligation: $174,228,059
Parent Contract
Parent Award PIID: TIRNO06D00006
IDV Type: IDC
Timeline
Start Date: 2006-09-14
Current End Date: 2013-09-29
Potential End Date: 2013-09-29 00:00:00
Last Modified: 2015-04-07
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