Our objective was to assess contractual compliance and oversight of the Postal Service’s Accenture information technology (IT) contracts for fiscal years (FY) 2018-2019.
The Postal Service contracts with a variety of suppliers for goods and services such as technical and consulting services. Accenture Federal Services (Accenture) accounted for the highest amount of funds the Postal Service spent for IT contracts during FYs 2018 and 2019 – about $332 million.
In 2009, the Accenture Enterprise Technology Services (ETS) contract was established to increase the number of staff to support IT operations nationwide and develop and maintain applications. This Indefinite Delivery Indefinite Quantity (IDIQ) contract continues to this day and allows the Postal Service to request services and supplies when needed but when the timing or amount required is not certain. The Postal Service is currently recompeting this contract and the future contract is estimated to be awarded in January 2021. The Supply Management group is responsible for oversight and administration of the current and future IDIQ contracts. With the Postal Service operating with significant net losses, effective management and oversight of contracts is critical.
We reviewed the Accenture ETS base contract and seven of 58 task orders that totaled $165 million (or 50 percent) of contract costs for FYs 2018 and 2019. We judgmentally selected ten of 42 Accenture applications that were developed and maintained under these seven task orders.
The Postal Service did not effectively manage the Accenture ETS contract or adhere to its internal controls for contractual compliance and oversight. Specifically, we found issues related to managing the cost of the contract, missing contract clauses, and an incomplete Quality Assurance Plan.
We found the Supply Management group did not develop and maintain a cost management plan and evaluate cost variances to ensure the contract remained within budget. In addition, the competition advocate advised Supply Management to recompete the contract to create an opportunity for increased competition. However, the Postal Service continued to rely heavily on Accenture’s services and raised the contract ceiling price from $750 million to $1.95 billion without evaluating competitive pricing for these services.
These issues occurred because the Supply Management group did not enforce the internal controls outlined in the policy to develop a cost management plan and evaluate cost variances. Also, management made a business decision to continue with Accenture services to avoid program delays and transition time to recompete the contract. The Cost Management Plan supports the effective management of contract costs and evaluation of competitive pricing ensures the Postal Service receives the best value for services procured under the contract. Further, the Postal Service is at risk of becoming overly dependent on a specific vendor for its IT services.
We also found that the Supply Management group did not include the appropriate contract clauses in the Accenture ETS contract. Specifically, they did not include the required clauses for Reimbursement for Testing and Warranty Exclusion and Limitation of Damages. Additionally, management included clauses for Inspection and Acceptance and Quality Management System in the contract; however, policy states that these two clauses cannot be added to the same contract.
This occurred because management did not provide appropriate oversight to ensure the required clauses were included in the contract. According to the contracting officer (CO), the clauses were not reviewed because it was assumed the prior CO and legal team vetted the clauses before awarding the contract. On average, the Postal Service spent $82.9 million annually in FYs 2018 and 2019 for the seven Accenture ETS task orders reviewed. Without these clauses, the Postal Service could potentially face financial impact from loss of reimbursement from testing, warranty claims, or damages not explicitly stated in the contract.
Finally, the CO and IT organization did not establish the Quality Assurance team for this contract and did not fully complete and execute the Quality Assurance Plan. For example, the plan did not include milestone dates for the quality assurance reviews, but instead listed the dates as “to be determined.” This occurred because the CO and IT organization did not provide appropriate oversight of the quality assurance requirements. The Quality Assurance Plan supports the monitoring of quality controls throughout the project lifecycle and provides visibility into the health of the contract.
We recommended management:
- Develop and implement a cost management plan during purchase planning for the future contract to effectively manage and monitor contract costs.
- Update the Supplying Principles and Practices to require an evaluation of the cost management plan as part of the noncompetitive purchase request process before approving contract ceiling price increases and to require contracting officers complete training on the policy requirements for the cost management plan.
- Modify the contract to include the required clauses in the Accenture Enterprise Technology Services contract and ensure the future contract terms conform to the guidelines in the Supplying Principles and Practices.
- Implement an oversight process to periodically verify the inclusion of required contract clauses throughout the life of the contract.
- Complete and implement a Quality Assurance Plan to effectively monitor quality objectives for the future contract.