Accenture plc (ACN) recently won five task orders from the U.S. Department of the Navy with an aggregate value of $19.8 million. The government department has chosen Accenture Federal Services to support the Naval Supply Systems Command’s (NAVSUP) Business Systems Center (BSC). Per the contract, Accenture will provide a complete spectrum of human resource and information technology (IT) solutions, including maintenance, integration and development support for systems, under a prime indefinite-delivery, indefinite-quantity (IDIQ) contract.
Each task order has a one-year performance time frame. As per the terms of the contract, Accenture Federal Services will support the Navy’s information program and will improve overall enterprise performance. NAVSUP BSC is a provider of IT products and services for the design, development and maintenance of information systems, with special focus on logistics, supply chain management and finance-related services for the U.S. Department of Navy and other government agencies.
Accenture will work in sync with the Navy to assess and design standard financial business processes with all major commands. This will help the Navy’s Office of Financial Operations to plan, achieve and sustain audit readiness.
Also, Accenture will support the operation of the Navy Enterprise Resource Planning (ERP) system. For this, Accenture will monitor computer systems and automated business processes required for the ERP system to be effective. This will boost the U.S. Navy’s ability to streamline operations across various departments efficiently, improve enterprise performance and promote mission-critical IT solutions.
Accenture has been winning federal deals frequently. However, these contracts generally have lower margins, which could be something to worry about.
Also, competition from companies like International Business Machines (IBM), a strained spending environment as well as significant exposure to Europe may temper growth to some extent.
Nevertheless, Accenture has been able to improve its customer base, bookings and performance in the insurance, banking and health care sectors.
Currently, Accenture has a Zacks Rank #3 (Hold).
Investors interested in the sector can consider Avago Technologies Limited (AVGO) and Micron Technology Inc. (MU), both carrying a Zacks Rank #1 (Strong Buy).
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