Booz Allen Hamilton awarded $72.7M for DoD IT services, facing scrutiny over value and competition

Contract Overview

Contract Amount: $72,703,397 ($72.7M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Defense

Start Date: 2007-10-22

End Date: 2012-10-21

Contract Duration: 1,826 days

Daily Burn Rate: $39.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: GBS/JTEO SE&I SERVICES

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $72.7 million to BOOZ ALLEN HAMILTON INC for work described as: GBS/JTEO SE&I SERVICES Key points: 1. Contract value appears reasonable given the duration and scope of IT support services. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. Potential risks include contractor performance and the complexity of IT systems integration. 4. This contract supports critical defense IT infrastructure, aligning with agency priorities. 5. The IT services sector is highly competitive, with many large and small players. 6. The cost-plus-fixed-fee structure requires careful oversight to manage expenses.

Value Assessment

Rating: fair

The contract's total value of $72.7 million over five years averages to approximately $14.5 million annually. This figure seems within a reasonable range for complex IT systems engineering and support services provided to a major federal agency like the Department of Defense. Benchmarking against similar large-scale IT support contracts would provide a more precise value-for-money assessment, but initial indications suggest a fair price point for the services rendered. The cost-plus-fixed-fee (CPFF) pricing structure necessitates diligent monitoring to ensure costs remain controlled and the fixed fee is justified by performance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The data shows two bids were received. While two bidders suggest some level of competition, it is on the lower end for a contract of this magnitude and scope. A higher number of bidders typically leads to more robust price discovery and potentially lower costs for the government. The limited number of bids may warrant further investigation into potential barriers to entry or market concentration within this specific IT services niche.

Taxpayer Impact: The use of full and open competition is generally favorable for taxpayers, as it aims to secure the best value through a wide range of offers. However, with only two bids, taxpayers may not have benefited from the full potential cost savings that a more robustly competitive environment could provide.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, receiving essential IT systems engineering and support. Services delivered include computer systems design and related services, crucial for maintaining operational readiness. The geographic impact is likely nationwide, supporting distributed defense networks and personnel. Workforce implications include the direct employment of IT professionals by Booz Allen Hamilton and potential indirect employment through subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may indicate potential market concentration or barriers to entry, impacting price discovery.
Cost-plus-fixed-fee contracts require rigorous oversight to prevent cost overruns and ensure value.
The long duration (5 years) increases the risk of technological obsolescence or changing requirements.
Dependence on a single contractor for critical IT services poses a risk if performance falters.

Positive Signals

Awarded under full and open competition, maximizing the pool of potential offerors.
Booz Allen Hamilton is a well-established contractor with significant experience in government IT services.
The contract supports critical defense IT infrastructure, aligning with national security objectives.
The fixed fee component provides some cost certainty for the government, provided performance is met.

Sector Analysis

The IT services sector is a vast and dynamic market within the federal government, encompassing a wide array of services from software development to cybersecurity and systems integration. Federal spending in this area consistently ranks among the largest categories. This contract for Computer Systems Design Services falls within the broader IT services umbrella, supporting the complex and evolving technological needs of the Department of Defense. Comparable spending benchmarks for large-scale IT support contracts within defense agencies often run into the tens or hundreds of millions of dollars annually, making the $14.5 million annual average for this contract appear proportionate.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no specific small business subcontracting goals were mandated or reported. The prime contractor, Booz Allen Hamilton, is a large business. While large contracts often involve subcontracting opportunities, the absence of a specific set-aside or reporting requirement means the direct impact on the small business ecosystem is not explicitly detailed in this data. It is possible that small businesses could be involved as subcontractors, but this contract does not appear to prioritize their direct participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, a component of the Department of Defense. Mechanisms likely include contract officer representatives (CORs) monitoring performance, regular progress reports from the contractor, and financial audits. The cost-plus-fixed-fee structure necessitates close financial oversight to ensure costs are reasonable and allocable. Transparency is generally maintained through contract award databases, but detailed performance metrics and financial breakdowns may be less publicly accessible due to security and proprietary concerns.

Related Government Programs

Department of Defense IT Modernization Programs
Air Force Command and Control Systems
Defense Information Systems Agency (DISA) Contracts
Federal Civilian IT Services Spending
IT Services for National Security Agencies

Risk Flags

Limited Competition
Cost-Plus Contract Type
Potential for Cost Overruns
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.7 million to BOOZ ALLEN HAMILTON INC. GBS/JTEO SE&I SERVICES

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $72.7 million.

What is the period of performance?

Start: 2007-10-22. End: 2012-10-21.

What is Booz Allen Hamilton's track record with similar IT services contracts for the Department of Defense?

Booz Allen Hamilton has a long and extensive history of providing IT services, systems engineering, and consulting to the Department of Defense (DoD) and other federal agencies. They are a major incumbent contractor across numerous defense IT programs. Their track record includes managing large, complex systems integration projects, cybersecurity solutions, and strategic IT planning. While generally considered experienced, like any large contractor, they have faced scrutiny and reviews on specific contracts regarding performance, cost management, and adherence to requirements. Analyzing past performance evaluations, contract award histories, and any documented disputes or corrective actions related to similar DoD IT contracts would provide a more granular understanding of their specific strengths and weaknesses in this domain.

How does the $72.7 million total contract value compare to similar IT systems engineering and support contracts within the DoD?

The total contract value of $72.7 million over a five-year period equates to an average annual value of approximately $14.5 million. This figure is moderate for large-scale IT systems engineering and support services within the Department of Defense, which often awards contracts in the hundreds of millions or even billions of dollars for enterprise-wide solutions. However, the specific scope, complexity, and criticality of the services provided under this particular contract are key determinants of its value. Compared to contracts focused on broad enterprise IT infrastructure or major weapon system IT integration, this contract might represent a more specialized or focused support effort. Benchmarking requires detailed comparison of service descriptions, deliverables, and contract types (e.g., CPFF vs. FFP) for similar procurements.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract structure?

The Cost Plus Fixed Fee (CPFF) structure presents inherent risks for the government. While the fixed fee provides some cost certainty for the contractor's profit, the 'cost' portion is variable and subject to reimbursement. The primary risk is that the contractor may have less incentive to control costs rigorously compared to a firm-fixed-price contract, as costs incurred are generally reimbursed. This can lead to potential cost overruns if not managed diligently. Effective oversight by the government, including detailed cost monitoring, audits, and robust performance management, is crucial to mitigate these risks. Ensuring that all costs claimed are reasonable, allocable, and allowable according to the contract terms is paramount to achieving value for taxpayer money.

Given the 'full and open competition' award type, what does the low number of bidders (2) imply?

Awarding a contract under 'full and open competition' signifies that the solicitation was broadly advertised, allowing any qualified source to bid. However, receiving only two bids suggests potential issues within the market or the specific solicitation. This could indicate a highly concentrated market where only a few firms possess the necessary expertise, security clearances, or capacity to perform the work. Alternatively, the solicitation's requirements, technical specifications, or evaluation criteria might have inadvertently limited the pool of potential bidders. From a taxpayer perspective, limited competition can lead to higher prices than might be achieved in a more crowded field, as the bidding firms face less pressure to offer the most competitive rates. It also raises questions about whether the government truly received the best possible value.

What are the potential performance challenges or indicators of success for IT systems engineering and support services?

Potential performance challenges for IT systems engineering and support services include meeting stringent uptime requirements, ensuring cybersecurity resilience, successful integration of new technologies, timely resolution of technical issues, and effective project management. Indicators of success would involve consistent achievement of Service Level Agreements (SLAs), positive feedback from end-users, successful deployment of system upgrades or new functionalities, minimal security incidents, and adherence to project timelines and budgets. For this specific contract, monitoring metrics related to system availability, incident response times, successful change management processes, and user satisfaction surveys would be key to assessing contractor performance and overall program effectiveness.

How does this contract fit into the broader landscape of federal IT spending, particularly within the Department of Defense?

This contract represents a component of the vast federal IT spending, which consistently ranks as one of the largest categories of government expenditure. Within the Department of Defense, IT spending is critical for maintaining command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) capabilities, as well as supporting administrative and operational functions. Contracts like this one, focused on systems engineering and support, are essential for ensuring the reliability, security, and modernization of these complex IT systems. The DoD's IT budget is substantial, driven by the need to stay ahead of adversaries and manage intricate global operations. This contract, while significant, is one piece of a much larger technological infrastructure investment.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Booz Allen Hamilton Holding Corporation (UEI: 964725688)

Address: 8283 GREENSBORO DR, MCLEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $122,191,290

Exercised Options: $80,890,640

Current Obligation: $72,703,397

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00T99ALD0202

IDV Type: GWAC

Timeline