Accenture plc (ACN) recently won a five-year contract from the U.S. National Science Foundation ('NSF') worth $24.4 million. The government department has chosen Accenture Federal Services to support the agency’s financial accounting system.
The NSF was formed to provide funds to support fundamental research and education in the fields of science, health and defense. The agency provides financial support to national universities and colleges for conducting researches for the U.S. government, which are used in formulating federal decisions.
Per the terms, Accenture will deploy its cloud-based ‘Federal Financials as a Service’ suite to help transform the agency’s 25-year old legacy system to a more user-friendly shared services platform. This will boost the NSF’s ability to streamline operations across various departments efficiently, better manage funds and promote scientific research nationwide.
Accenture has become a popular choice for the federal agencies. Last month, Accenture plc won 2 three-year contracts from the U.S. Department of Navy at an aggregate value of $30.0 million.
Under the first contract, Accenture would review the business processes and internal controls at Naval Air Systems Command, Naval Sea Systems Command, the Navy’s Assistant for Administration, Field Support Activity, Office of Naval Research, Naval Research Laboratory and the Marine Corps. The review will help the naval agency to accelerate audit functions, which will ultimately lead to improved operations across the department.
Per the second contract, Accenture will support the department in the smooth running of its Navy Enterprise Resource Planning ('ERP') system. For this, Accenture will monitor the computer systems and automated business processes required for the ERP system to be effective.
Back-to-back government contracts at the beginning of 2013 have certainly ensured a good start for Accenture. The company has won a series of government deals in the past. However, the lower margin of the government contracts is something to worry about.
The federal budget is also a cause of concern. IT research firms, Gartner Inc. (IT) and IDC anticipate government spending on IT to decline in 2013. This could reduce the amount of deals and eventually put pressure on Accenture.
However, we are positive on Accenture’s wide industry exposure as this could mitigate weakness from the fed sector.
Currently, Accenture has a Zacks Rank #3 (Hold). Investors may also look into other technology stocks, which are better positioned such as Corelogic Inc. (CLGX) with a Zacks Rank #1 (Strong Buy) and Computer Sciences Corp. (CSC) with a Zacks Rank #2 (Buy).
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