VA awards $158M for IT transformation support, with Booz Allen Hamilton Inc. as prime contractor

Contract Overview

Contract Amount: $158,117,877 ($158.1M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-01-23

End Date: 2027-01-22

Contract Duration: 729 days

Daily Burn Rate: $216.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TRANSFORMATION SUPPORT SERVICES 2.0 - BASE PERIOD FFP AND ONE MONTH T&M

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $158.1 million to BOOZ ALLEN HAMILTON INC for work described as: TRANSFORMATION SUPPORT SERVICES 2.0 - BASE PERIOD FFP AND ONE MONTH T&M Key points: 1. Contract value of $158.1 million over its base period suggests a significant investment in IT modernization. 2. The contract was awarded under full and open competition, indicating a broad market search. 3. The use of Time and Materials (T&M) pricing for a portion of the contract introduces potential cost escalation risks. 4. The prime contractor, Booz Allen Hamilton Inc., has a substantial presence in federal IT services. 5. This contract aligns with the VA's ongoing efforts to transform its IT infrastructure and services. 6. The duration of 729 days (base period) allows for substantial project execution and integration. 7. The contract's focus on custom computer programming services points to bespoke solutions for VA needs.

Value Assessment

Rating: good

The contract value of $158.1 million for transformation support services appears to be within a reasonable range for large-scale IT modernization projects within the federal government. Benchmarking against similar large IT transformation contracts awarded by agencies like the Department of Defense or HHS would provide a more precise value-for-money assessment. The inclusion of both Fixed-Price (FFP) and Time and Materials (T&M) components necessitates careful monitoring of T&M hours to ensure cost control and prevent overruns, as T&M can be less predictable than FFP.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of 8 bidders indicates a competitive landscape for this type of IT transformation support. A higher number of bidders generally suggests a healthier market and can lead to better pricing and innovative solutions for the government. The agency's decision to pursue full and open competition is a positive indicator for price discovery and achieving best value.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it maximizes the potential for competitive pricing and ensures that the government receives a wide array of technical solutions, potentially leading to more cost-effective outcomes.

Public Impact

Veterans will benefit from improved IT services and modernized systems, leading to a better user experience. The contract will deliver custom computer programming services to support the VA's digital transformation initiatives. The primary geographic impact is expected to be within the United States, supporting VA operations nationwide. The contract is likely to support a workforce of IT professionals, including programmers, analysts, and project managers, both within the contractor's organization and potentially through subcontracting.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the Time and Materials (T&M) pricing model for a portion of the work.
Scope creep could increase costs and extend timelines if not managed rigorously.
Dependence on a single prime contractor for critical transformation efforts.
Integration challenges with existing legacy VA systems.
Ensuring data security and privacy throughout the transformation process.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process and potential for competitive pricing.
The prime contractor, Booz Allen Hamilton Inc., has extensive experience with federal IT contracts.
The contract aims to modernize critical VA IT systems, which is a high-priority objective.
Clear performance periods and delivery orders provide structure for execution.
The contract value indicates a significant commitment to improving VA's technological capabilities.

Sector Analysis

The IT services sector within the federal government is a substantial market, with agencies continually investing in modernization and digital transformation. This contract falls under custom computer programming services, a key segment focused on developing tailored software and IT solutions. The total addressable market for federal IT services is in the tens of billions of dollars annually. This specific contract, valued at $158.1 million, represents a significant award within this sector, likely contributing to the VA's strategic IT goals and aligning with broader government-wide digital transformation initiatives.

Small Business Impact

This contract does not indicate any specific small business set-aside provisions. However, the prime contractor, Booz Allen Hamilton Inc., may be required to subcontract a portion of the work to small businesses as part of their overall subcontracting plan. The extent of small business participation will depend on the specific requirements outlined in the contract and the prime contractor's strategy for fulfilling those requirements. Without explicit set-aside goals, the direct impact on small businesses is uncertain, but opportunities may arise through subcontracting.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs' contracting officers and program managers. Performance will be monitored through regular reporting, delivery orders, and adherence to contract milestones. The contract's structure, including specific performance work statements and payment terms, provides a framework for accountability. Transparency is generally maintained through contract award databases and public reporting mechanisms, though detailed operational oversight remains within the agency.

Related Government Programs

VA IT Modernization Programs
Federal Civilian IT Services
Custom Software Development Contracts
Digital Transformation Initiatives
IT Consulting Services

Risk Flags

Potential for cost escalation due to Time and Materials pricing.
Complexity of integrating new systems with legacy infrastructure.
Ensuring data security and privacy compliance.
Contractor performance risk on large-scale transformation projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $158.1 million to BOOZ ALLEN HAMILTON INC. TRANSFORMATION SUPPORT SERVICES 2.0 - BASE PERIOD FFP AND ONE MONTH T&M

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $158.1 million.

What is the period of performance?

Start: 2025-01-23. End: 2027-01-22.

What is the track record of Booz Allen Hamilton Inc. in delivering similar IT transformation services to federal agencies?

Booz Allen Hamilton Inc. has a long and extensive history of providing IT and management consulting services to the federal government, including the Department of Veterans Affairs. They have been involved in numerous large-scale IT modernization, digital transformation, and cybersecurity projects across various agencies. Their track record includes managing complex programs, developing custom software solutions, and implementing new technologies. While specific performance metrics for past projects are not detailed here, their consistent presence and significant contract awards suggest a generally positive performance history. However, as with any large contractor, there may be instances of challenges or critiques in specific project deliveries that would require deeper investigation into individual contract performance reports and agency evaluations.

How does the $158.1 million contract value compare to other large federal IT transformation contracts?

The $158.1 million contract value for this IT transformation support services contract is substantial, placing it in the mid-to-large tier for federal IT procurements. Many federal IT transformation efforts, especially those involving agency-wide system overhauls or cloud migrations, can range from tens of millions to several billion dollars. For instance, major cloud adoption initiatives or enterprise resource planning (ERP) system implementations often exceed this figure significantly. However, compared to contracts focused on specific software development or niche IT support, $158.1 million represents a considerable investment. It suggests a comprehensive scope of work aimed at significant modernization rather than a narrowly defined task.

What are the primary risks associated with the Time and Materials (T&M) pricing component of this contract?

The primary risk associated with the Time and Materials (T&M) pricing component is the potential for cost overruns and a lack of definitive cost control. Unlike Fixed-Price (FFP) contracts, where the contractor assumes more risk for cost overruns, T&M contracts pay the contractor for the actual labor hours and materials used. This can lead to increased costs if the project scope expands, if the contractor's efficiency is low, or if the duration extends beyond initial estimates. For the government, this necessitates rigorous oversight of labor hours, rates, and material costs to ensure that taxpayer funds are used efficiently and that the contractor is not incentivized to prolong the work unnecessarily. The VA must actively manage and monitor the T&M portion to mitigate these inherent risks.

How effective is full and open competition in ensuring value for money for this type of IT service contract?

Full and open competition is generally considered the most effective method for ensuring value for money in federal IT service contracts. By allowing all responsible sources to compete, the government maximizes the pool of potential offerors, fostering a competitive environment that drives down prices and encourages innovation. This process allows the agency to compare a wider range of technical approaches and pricing structures, increasing the likelihood of selecting the best overall value. The fact that 8 bidders participated in this procurement indicates a healthy level of competition, which should have helped the VA secure favorable terms and pricing for these transformation support services.

What are the historical spending patterns for IT transformation support services at the Department of Veterans Affairs?

The Department of Veterans Affairs has historically allocated significant funding towards IT modernization and transformation efforts. Over the past decade, the VA has faced scrutiny and made substantial investments to address challenges in its IT infrastructure, including electronic health records, claims processing systems, and overall network modernization. Spending in this area has often been in the hundreds of millions of dollars annually, reflecting the complexity and scale of its IT environment and the critical need to improve services for veterans. This $158.1 million contract is consistent with these historical patterns of substantial investment in IT transformation to meet evolving operational and user demands.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 8

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Booz Allen Hamilton Holding Corporation

Address: 8283 GREENSBORO DR, MCLEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $316,484,211

Exercised Options: $158,117,877

Current Obligation: $158,117,877

Actual Outlays: $59,896,719

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $98,307,165

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F386DA

IDV Type: FSS

Timeline