DoD's $22.2M consulting contract with Booz Allen Hamilton shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $22,248,891 ($22.2M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Defense

Start Date: 2012-09-30

End Date: 2017-04-14

Contract Duration: 1,657 days

Daily Burn Rate: $13.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SUPPORT SERVICES

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA CITY County, VIRGINIA, 22350

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $22.2 million to BOOZ ALLEN HAMILTON INC for work described as: SUPPORT SERVICES Key points: 1. Contract value represents a significant investment in administrative management and general management consulting. 2. Booz Allen Hamilton, a large incumbent, secured this contract, suggesting potential for strong performance but also limited new market entrants. 3. The contract's duration and fixed-price nature suggest a predictable cost structure, though potential for scope creep exists. 4. Performance context is within the Defense Human Resources Activity, indicating support for critical personnel functions. 5. This contract falls within the professional services sector, a common area for large federal consulting engagements.

Value Assessment

Rating: good

The contract's total value of $22.2 million over its period of performance suggests a substantial investment in consulting services. Benchmarking against similar administrative and management consulting contracts within the Department of Defense is crucial for a precise value-for-money assessment. However, the firm-fixed-price contract type generally indicates a defined cost ceiling, which can be advantageous for the government. The absence of specific performance metrics makes a definitive value assessment challenging without further data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. With five bidders participating, there was a reasonable level of competition. This suggests that the government sought multiple proposals to ensure a competitive price and identify the best value solution. The presence of multiple bidders generally supports price discovery and can lead to more favorable terms for the government.

Taxpayer Impact: The full and open competition with five bidders likely resulted in a more competitive price for taxpayers compared to a sole-source or limited competition award. This process helps ensure that taxpayer funds are used efficiently by leveraging market forces.

Public Impact

The primary beneficiaries are the Department of Defense and its Defense Human Resources Activity, receiving essential management and administrative support. Services delivered likely include strategic planning, organizational efficiency improvements, and administrative process optimization. The geographic impact is primarily within the Department of Defense's operational sphere, potentially supporting personnel functions nationwide or globally. Workforce implications may involve the utilization of Booz Allen Hamilton's specialized consultants to augment government staff and expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (1657 days) could lead to complacency or reduced urgency if not actively managed.
Reliance on a single large contractor may limit opportunities for smaller, innovative firms in future procurements.
Firm-fixed-price contracts can sometimes disincentivize contractor innovation if not structured with performance incentives.

Positive Signals

Full and open competition with multiple bidders suggests a robust selection process.
The firm-fixed-price contract type provides cost certainty for the government.
Booz Allen Hamilton is a well-established contractor with a significant track record in federal support services.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically administrative management and general management consulting. This sector is a significant component of federal spending, with agencies frequently outsourcing specialized expertise. Comparable spending benchmarks would involve analyzing other large-scale consulting contracts awarded by the DoD and other federal agencies for similar management support services. The market size for federal IT and management consulting is substantial, with major players like Booz Allen Hamilton consistently securing large portions of this spending.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Booz Allen Hamilton, is a large business. There is no explicit information regarding subcontracting plans for small businesses within the provided data. Without this information, it's difficult to assess the direct impact on the small business ecosystem, though large prime contracts often include subcontracting goals.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Contracting Officer's Representative (COR) responsible for monitoring performance and ensuring compliance with contract terms. The Department of Defense has established Inspector General (IG) offices that conduct audits and investigations into contract spending and performance. Transparency is generally facilitated through contract databases like FPDS, which provide public access to contract awards, though detailed performance reports are often not publicly available.

Related Government Programs

Management and Financial Consulting, Acquisition and Technology Services
Professional Services
Defense Human Resources Activity Support Contracts
Management Consulting Services
Administrative Support Services

Risk Flags

Potential for scope creep in long-term fixed-price contracts.
Limited visibility into specific performance metrics.
Incumbency advantage may reduce future competition.
Reliance on a single large contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.2 million to BOOZ ALLEN HAMILTON INC. 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 (Defense Human Resources Activity).

What is the total obligated amount?

The obligated amount is $22.2 million.

What is the period of performance?

Start: 2012-09-30. End: 2017-04-14.

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

Booz Allen Hamilton has a long and extensive history of providing a wide array of services to the Department of Defense, including management consulting, IT support, and strategic planning. They are a major incumbent contractor across numerous DoD agencies and programs. Their track record with the DoD is generally characterized by large contract awards and a deep understanding of military and defense operations. While specific performance details for individual contracts are often not public, their continued success in winning significant DoD contracts suggests a perceived ability to meet the department's complex needs. However, like any large contractor, they have faced scrutiny and audits on specific contracts over the years, highlighting the importance of ongoing oversight.

How does the $22.2 million contract value compare to other administrative management consulting contracts within the DoD?

The $22.2 million contract value is substantial but falls within the typical range for large-scale administrative management and general management consulting services awarded by the Department of Defense. Major consulting firms frequently secure contracts in the tens or even hundreds of millions of dollars for comprehensive support over several years. To provide a precise comparison, one would need to analyze the average contract value for similar North American Industry Classification System (NAICS) codes (like 541611) awarded by the DoD within a comparable timeframe. Factors such as contract duration, scope of services, and specific agency needs heavily influence these values. This contract's value suggests a significant scope of work, likely involving strategic initiatives or extensive operational support.

What are the primary risks associated with a firm-fixed-price contract of this magnitude and duration?

The primary risks associated with a firm-fixed-price (FFP) contract of this magnitude ($22.2 million) and duration (1657 days) for the government include potential contractor underperformance and limited flexibility. If the contractor, Booz Allen Hamilton, underestimates the effort required or encounters unforeseen challenges, they may cut corners on quality or scope to maintain profitability, potentially impacting the effectiveness of the services. Conversely, if the scope of work expands significantly beyond what was anticipated during the bidding process, the contractor may seek change orders, which could increase the overall cost. For the contractor, the risk lies in accurately estimating all costs and potential challenges over the contract's long term. The government's risk is mitigated by careful statement of work definition and robust oversight, but the FFP structure inherently places more cost risk on the contractor.

What does the competition level (5 bidders) imply about the price discovery and potential for cost savings for the government?

A competition level of five bidders for this contract suggests a reasonably healthy market response, which generally aids in price discovery. With multiple firms vying for the contract, the government has a better opportunity to compare different proposed prices and technical approaches, potentially leading to a more competitive and cost-effective award. The presence of five distinct offers indicates that the opportunity was attractive enough for several companies to invest resources in preparing proposals. This level of competition typically drives prices down compared to sole-source or limited-source procurements. However, the ultimate price savings depend on the specific bids received and the government's evaluation criteria, particularly how technical merit and price were balanced.

How does the contract's focus on 'Administrative Management and General Management Consulting Services' align with typical federal spending patterns?

Federal agencies, including the Department of Defense, consistently spend significant amounts on administrative management and general management consulting services. This spending aligns with federal patterns because agencies often require external expertise to improve efficiency, modernize operations, implement new policies, and manage complex projects. Consulting firms like Booz Allen Hamilton are frequently engaged to provide strategic advice, organizational restructuring, process re-engineering, and program management support. The demand for these services is driven by evolving government mandates, technological advancements, and the need for specialized skills that may not be available in-house. Therefore, this contract's category is a common and expected area of federal expenditure.

What are the potential implications of awarding a large contract to a single, established firm like Booz Allen Hamilton for future market dynamics?

Awarding a large contract like this to an established firm such as Booz Allen Hamilton can have several implications for future market dynamics. On one hand, it signifies confidence in the contractor's ability to deliver complex services. On the other hand, it can create barriers to entry for smaller or newer firms seeking to gain a foothold in the federal contracting space. Incumbency provides a significant advantage in future competitions due to established relationships, institutional knowledge, and past performance. This can lead to a concentration of federal spending within a few large contractors. While full and open competition was used here, the long duration and substantial value might make it challenging for competitors to displace the incumbent in subsequent procurements without a significant differentiation in offering or price.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: H9821012R0017

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

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: $22,248,891

Exercised Options: $22,248,891

Current Obligation: $22,248,891

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline