Booz Allen Hamilton's $137M R&D contract for LTRS SE&I saw significant cost overruns and extended duration

Contract Overview

Contract Amount: $137,365,202 ($137.4M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Defense

Start Date: 2009-12-08

End Date: 2017-03-31

Contract Duration: 2,670 days

Daily Burn Rate: $51.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: LTRS SE&I

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $137.4 million to BOOZ ALLEN HAMILTON INC for work described as: LTRS SE&I Key points: 1. Contract value significantly exceeded initial estimates, indicating potential underbidding or scope creep. 2. Extended performance period suggests challenges in project execution or evolving research needs. 3. High cost-plus-fixed-fee structure may incentivize cost escalation without clear performance incentives. 4. Research and Development in Physical, Engineering, and Life Sciences is a complex sector prone to unpredictable outcomes. 5. Contractor's extensive experience in defense contracting warrants scrutiny of past performance on similar projects. 6. The 'VA' (Virginia) location suggests a concentration of defense-related R&D activity in the region.

Value Assessment

Rating: questionable

The final cost of $137.37 million for the LTRS SE&I contract appears high given the 2670-day duration. While specific benchmarks for similar R&D contracts are difficult to ascertain due to their unique nature, the extended period and cost suggest potential inefficiencies or unforeseen complexities. The Cost Plus Fixed Fee (CPFF) award type, while common for R&D, can lead to higher final costs if not managed tightly, as the contractor is reimbursed for all allowable costs plus a fixed fee. Without detailed performance metrics or comparison to similar research outcomes, assessing the true value-for-money is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, the presence of only 3 bids suggests a potentially limited pool of qualified contractors for this specialized R&D effort. While full and open competition is generally preferred for maximizing taxpayer value, a low number of bids can sometimes indicate barriers to entry or a lack of robust market interest, potentially impacting price discovery.

Taxpayer Impact: Full and open competition is a positive signal for taxpayers, aiming to ensure the government receives competitive pricing. However, with only three bidders, the potential for significant cost savings through intense competition may have been limited.

Public Impact

The primary beneficiaries are likely the Department of Defense (DoD) and its research arms, receiving advancements in physical, engineering, and life sciences. The contract supported research and development activities, contributing to technological innovation within the defense sector. Geographic impact is concentrated in Virginia, a hub for defense contracting and R&D. The contract likely supported a specialized workforce of scientists, engineers, and researchers employed by Booz Allen Hamilton and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost overruns and extended duration suggest potential issues with initial cost estimation or project management.
The CPFF contract type can incentivize higher spending if not rigorously overseen.
Limited number of bidders (3) might indicate a lack of robust competition, potentially leading to less favorable pricing.
The nature of R&D contracts makes it difficult to define success metrics upfront, increasing inherent risk.

Positive Signals

Awarded under full and open competition, suggesting an effort to engage a broad range of potential contractors.
Booz Allen Hamilton is a large, established contractor with significant experience in government contracts, implying a degree of reliability.
The contract falls under a specific NAICS code (541712), indicating a focus on specialized research and development.

Sector Analysis

This contract falls within the Research and Development in the Physical, Engineering, and Life Sciences sector, excluding biotechnology. This is a highly specialized and often long-term field critical for technological advancement, particularly within defense. The market size for such specialized R&D services is substantial, driven by government funding and private sector innovation. Comparable spending benchmarks are difficult to establish due to the unique nature of R&D projects, but the scale of this contract suggests a significant undertaking.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a large contract awarded to a major prime contractor, the primary impact on small businesses would be through potential subcontracting opportunities. The extent of small business participation would depend on Booz Allen Hamilton's subcontracting plan and the specific needs of the R&D project.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. Transparency is often limited in R&D contracts due to the proprietary nature of the research. Accountability measures would be tied to the achievement of research milestones and deliverables outlined in the contract. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Programs
Information Technology Research
Advanced Engineering Services
Life Sciences Research Contracts
Long-Term Strategic Research Initiatives

Risk Flags

Cost Overruns
Extended Performance Period
Cost-Plus Contract Type
Limited Competition Bids

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $137.4 million to BOOZ ALLEN HAMILTON INC. LTRS SE&I

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $137.4 million.

What is the period of performance?

Start: 2009-12-08. End: 2017-03-31.

What was the initial estimated cost of the LTRS SE&I contract, and how did it compare to the final award amount?

The provided data does not include the initial estimated cost of the LTRS SE&I contract. However, the final award amount reached $137,365,202.07. Without the initial estimate, it is impossible to quantify the extent of any cost growth or overruns directly from the provided data. Further investigation into contract modification history and original solicitation documents would be necessary to determine the initial budget and track cost changes throughout the contract's lifecycle.

What specific research and development activities were undertaken under the LTRS SE&I contract?

The contract identifier 'LTRS SE&I' suggests a focus on 'Long Term Research and Support Services' and 'Systems Engineering and Integration'. The NAICS code 541712 indicates 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. While the exact nature of the R&D is not detailed, it likely involved advanced research in areas such as materials science, advanced manufacturing, complex systems integration, or other engineering disciplines critical to national security or technological advancement. Specific project details would typically be found in the contract's statement of work and subsequent technical reports, which are often not publicly available due to their sensitive or proprietary nature.

How did the performance period of 2670 days compare to typical durations for similar R&D contracts?

A performance period of 2670 days, which is approximately 7.3 years, is quite substantial for a research and development contract. While R&D projects are inherently long-term, such extended durations often indicate a phased approach, iterative development, or a broad scope encompassing multiple research objectives. Typical R&D contracts can range from a few months to several years, but a duration exceeding seven years suggests a program of significant strategic importance or one facing considerable developmental challenges. Benchmarking against similar large-scale, multi-disciplinary R&D efforts within the Department of Defense would provide a clearer context for this duration.

What are the implications of the Cost Plus Fixed Fee (CPFF) contract type for this R&D effort?

The Cost Plus Fixed Fee (CPFF) contract type means that Booz Allen Hamilton is reimbursed for all allowable costs incurred during the performance of the contract, plus a predetermined fixed fee representing profit. For R&D, CPFF is often used when the scope of work is not precisely defined, and costs are difficult to estimate accurately upfront. While it allows flexibility to explore research avenues, it places a significant burden on the government to meticulously audit costs to ensure they are reasonable and allowable. A key implication is that the contractor has less financial incentive to control costs compared to fixed-price contracts, as their profit (the fee) is fixed regardless of the final cost. This necessitates robust government oversight to manage potential cost escalations.

What is Booz Allen Hamilton's track record with similar large-scale R&D contracts for the Department of Defense?

Booz Allen Hamilton has an extensive and long-standing track record of performing large-scale research and development contracts for the Department of Defense and other federal agencies. They are a major defense contractor with deep expertise in systems engineering, technology research, and strategic consulting. While specific details of past performance on contracts identical to LTRS SE&I are not provided here, their general profile suggests they possess the necessary capabilities and experience. However, as with any large contractor, a thorough review of their past performance history, including any past performance evaluations, contract disputes, or performance issues on similar projects, would be crucial for a comprehensive risk assessment.

How does the $137M spending on this single contract compare to overall DoD R&D spending in the physical, engineering, and life sciences sector?

The $137.37 million awarded to Booz Allen Hamilton for the LTRS SE&I contract represents a significant investment in a specific R&D area. However, to contextualize this amount against overall DoD R&D spending, one would need to compare it to the total budget allocated by the DoD for Research, Development, Test, and Evaluation (RDT&E) within the physical, engineering, and life sciences sector for the relevant fiscal years (2009-2017). The DoD's RDT&E budget is typically in the tens of billions of dollars annually. Therefore, while $137 million is a substantial sum for a single contract, it likely represents a small fraction of the total DoD R&D expenditure in these broad scientific fields. Accessing DoD budget reports and RDT&E spending breakdowns would be necessary for a precise comparison.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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: $171,120,811

Exercised Options: $138,449,347

Current Obligation: $137,365,202

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline