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Summary

Accenture's $2bn agreement with the Department of Energy was the eye-catching deal for the IT services contracts analytics (ITSCA) database in our May update, but it may not cost the US taxpayer as much as the headline figure suggests. Federal service agreements dominate the IT contracts value listings when they are announced, but service providers looking to engage should be careful of the ceiling-busting numbers and be ready for the long haul.

Feds set IT deals alight again

According to the press release, Accenture Federal Services has been awarded a blanket purchase order agreement (BPA) by the US Department of Energy (DOE) for IT services, with a potential value of $2bn, and a five-year performance period.

This is Accenture's largest disclosed federal services agreement since the $10bn rated contract/task order from the Department of Homeland Security (DHS) in 2004 [ITSCA ID 24299]. But that program has not materialized to the extent of the headline numbers.

  • At the time, the DHS undersecretary said the contract would likely end up a "billion-dollar deal" by completion.

  • Accenture bid $72m in the first instance for the first year/first two phases of the US Visitor and Immigrant Status Indicator Technology (US-VISIT) contract, according to different sources.

  • Next, Accenture won a 13-month $71m contract, announced 4 Jan 2012, for the renamed Office of Biometric Identity Management (OBIM) program [ID 38454].

  • Subsequently, Accenture was awarded a nine-month contract (10 Sept 2013) from the DHS to expand the overall contract, in another award worth $30m [ID 41176].

In 2004, Accenture led a Smart Border Alliance consortium including AT&T, Dell, Raytheon, SRA International, and Titan Corp. Some of these partners have also signed deals of their own under the program, so are getting some share in the contract value. But the piecemeal progress shows that the federal IT project is no easy bonanza for service providers.

Public sector megadeals turned into million-dollar orders

Federal services IT contracts often arrive as multi-megadeal opportunities. Public sector IT projects in central government and defense have provided the biggest share of new deals' total contract value (TCV) in each of the last five years of ITSCA deal tracking, ahead of both financial services and manufacturing.

One of the biggest Fed programs in recent years has just completed its first 10-year performance period. Alliant is a so-called government-wide acquisition contract (GWAC) scheme for the provision of integrated IT solutions and services. When Alliant was announced in April 2009, the supervising agency, the General Services Administration (GSA), set a $50bn ceiling on spend. The GSA identified 59 prospective suppliers who therefore could have expected an average order book of $850m over the full term. When Alliant closed in April this year, orders worth $24.0bn had been placed, at an average sales value of $25m.

Accenture was among the leading suppliers for the overall Alliant program along with Raytheon, Leidos, Northrop Grumman, SAIC, and Booz Allen Hamilton. Accenture's 23 task orders had a total sales value of $265m. The top spending agencies are the Department of the Army (DA) (with a total estimated order value of about $5bn), the Department of the Air Force (DAF) ($4bn), and the DHS ($4bn).

Alliant 2 open to IT modernizers

IT service providers that want to get into the federal services sector can choose their time; these programs are not going away any time soon. The Alliant 2 contract vehicle, with another 10-year term, allows for orders extending through 2033, although any order should be awarded before the contract expires in 2028. Top agencies for the Alliant 2 program are the DA, the DAF, and the DHS, and the focus will be on IT modernization, so there is scope for new entrants with innovation skills. However, they should not expect quick wins; eight service providers accounted for more than 50% of the first Alliant program by awards value, and the usual suspects including Booz Allen, CACI, CGI, Leidos, and SAIC are making the early running in Alliant 2.

Appendix

Further reading

IT Services Contracts Analytics, www.ovumkc.com

ICT Enterprise Insights 2018/19 – Public Services

US public sector spend grows as Networx is slated to sunset, TE0005-000981 (July 2017)

"US government EIS contracts go to an interesting mix of old hands and new players," TE0005-000982 (August 2017)

Author

David Molony, Principal Analyst, Enterprise Services

david.molony@ovum.com

Anushree Agarwal, Analyst, Ovum Telecom

anushree.agarwal.SGA@ovum.com

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