DoD's $49M Engineering Services Contract with Booz Allen Hamilton Faces Scrutiny for Value and Oversight

Contract Overview

Contract Amount: $49,154,110 ($49.2M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Defense

Start Date: 2006-08-30

End Date: 2009-08-07

Contract Duration: 1,073 days

Daily Burn Rate: $45.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: ANALYTICAL AND PROGRAMMATIC SUPPORT SERVICES

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $49.2 million to BOOZ ALLEN HAMILTON INC for work described as: ANALYTICAL AND PROGRAMMATIC SUPPORT SERVICES Key points: 1. Contract awarded to Booz Allen Hamilton for $49.15M for analytical and programmatic support. 2. Full and open competition was used, but the contract type (Cost Plus Award Fee) warrants close examination. 3. Potential risks include cost overruns and a lack of clear performance metrics impacting taxpayer value. 4. The IT and professional services sector is highly competitive, suggesting potential for better pricing. 5. Small business participation is not indicated, missing opportunities for economic inclusion.

Value Assessment

Rating: questionable

The Cost Plus Award Fee structure can incentivize cost escalation if not tightly managed. Benchmarking against similar engineering services contracts is crucial to determine if the $49.15M award represents fair value, especially given the duration and potential for scope creep.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract utilized full and open competition, which is a positive indicator for price discovery. However, the Cost Plus Award Fee (CPA) pricing arrangement may limit the effectiveness of competition in controlling final costs, as contractor incentives are tied to award fees rather than strict cost adherence.

Taxpayer Impact: The CPA structure, if poorly managed, could lead to higher than necessary costs for taxpayers. Effective oversight is critical to ensure the award fee is earned through exceptional performance, not just cost accumulation.

Public Impact

Taxpayers may be overpaying if the award fee structure is not rigorously tied to demonstrable value and cost efficiency. The Department of Defense's reliance on large contractors for critical support services raises questions about long-term cost-effectiveness. Lack of small business set-asides limits opportunities for smaller, potentially more innovative firms in the engineering services sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee structure
Long contract duration (3 years)
Lack of specific performance metrics mentioned
No indication of small business participation

Positive Signals

Full and open competition utilized
Award fee tied to performance

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the Department of Defense's operational capabilities. Spending in this area is substantial, and benchmarks for similar support services contracts are essential for evaluating cost-effectiveness and contractor performance.

Small Business Impact

The data indicates that this contract did not involve small business participation. This represents a missed opportunity to leverage the capabilities of small businesses in the engineering services domain and potentially achieve greater cost efficiencies or innovative solutions.

Oversight & Accountability

Oversight of Cost Plus Award Fee contracts is paramount. The Department of the Navy must ensure robust monitoring of contractor performance and rigorous justification for any award fees granted to ensure accountability and prevent cost overruns.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for cost overruns due to CPA structure
Lack of clear, objective performance metrics for award fee
Long contract duration may lead to scope creep
No small business participation noted
Limited transparency on value for money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.2 million to BOOZ ALLEN HAMILTON INC. ANALYTICAL AND PROGRAMMATIC SUPPORT 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 Navy).

What is the total obligated amount?

The obligated amount is $49.2 million.

What is the period of performance?

Start: 2006-08-30. End: 2009-08-07.

What specific performance metrics were used to determine the award fee, and how were they objectively measured to ensure fair value for the $49.15M spent?

The effectiveness of the award fee hinges on clearly defined, measurable, and objective performance metrics. Without transparency into these metrics and their assessment, it's difficult to ascertain if Booz Allen Hamilton truly delivered exceptional value justifying the full contract amount. Robust oversight would involve independent verification of performance against these criteria.

Given the Cost Plus Award Fee structure and the contract's duration, what mechanisms were in place to mitigate the risk of cost escalation and ensure taxpayer funds were used efficiently?

The CPA structure inherently carries a risk of cost escalation. Mitigation strategies would typically include stringent baseline cost controls, regular audits, and a well-defined process for justifying any deviations. The effectiveness of these mechanisms is crucial for ensuring that the 'award' portion of the fee is truly earned through superior performance, not simply cost accumulation.

How does the performance and cost of this contract compare to similar engineering and programmatic support services procured by the Department of Defense through different contract types?

Benchmarking against contracts using fixed-price or other more cost-conscious structures is vital. If this CPA contract yielded significantly higher costs or comparable performance to fixed-price alternatives, it suggests potential inefficiencies. A comparative analysis would highlight whether the chosen contract type provided a demonstrable advantage in achieving DoD's objectives.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering 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

Solicitation ID: N0002406R3373

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

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

Address: BOOZ ALLEN HAMILTON INC, MC LEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $91,409,083

Exercised Options: $91,409,083

Current Obligation: $49,154,110

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4024

IDV Type: IDC

Timeline