Booz Allen Hamilton contract for prescription drug benefit audits valued at $23.2M shows mixed value and competition

Contract Overview

Contract Amount: $23,244,765 ($23.2M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2009-09-30

End Date: 2013-03-29

Contract Duration: 1,276 days

Daily Burn Rate: $18.2K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: Healthcare

Official Description: AUDITS OF PRESCRIPTION DRUG BENEFIT/AUDIT INFRASTRUCTURE

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $23.2 million to BOOZ ALLEN HAMILTON INC for work described as: AUDITS OF PRESCRIPTION DRUG BENEFIT/AUDIT INFRASTRUCTURE Key points: 1. The contract's value for money is fair, given the duration and type of service, but specific performance metrics are not detailed. 2. Competition was limited, with only three bidders, potentially impacting price discovery and value. 3. Risk indicators are moderate, with a long performance period and time-and-materials pricing structure. 4. The contract falls within administrative management consulting services, supporting critical healthcare program oversight. 5. This contract represents a small portion of overall federal spending on healthcare consulting. 6. The contractor, Booz Allen Hamilton, has a significant federal contracting history.

Value Assessment

Rating: fair

The contract's total value of $23.2 million over approximately 3.5 years suggests a moderate annual spend. However, without detailed performance metrics or comparison to similar audit infrastructure contracts, a precise value-for-money assessment is challenging. The time-and-materials pricing structure can sometimes lead to cost overruns if not managed tightly. Benchmarking against other contracts for similar audit support services would be necessary for a more definitive evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a competitive delivery order with three bidders. While competitive, a limited number of bidders can sometimes indicate barriers to entry or a specialized market. The level of competition here suggests that while some price negotiation likely occurred, it may not have reached the optimal price discovery seen in broader, more open competitions.

Taxpayer Impact: With only three bidders, taxpayers may not have benefited from the most aggressive pricing that a larger pool of competitors could have offered. This limited competition could translate to higher costs than might be achievable in a more open market.

Public Impact

Beneficiaries include Medicare and Medicaid program administrators and potentially taxpayers through improved oversight of prescription drug benefits. Services delivered involve administrative management and general management consulting, likely focused on audit infrastructure and processes for prescription drug benefits. The geographic impact is national, given the scope of Medicare and Medicaid programs. Workforce implications are primarily within the consulting sector, with Booz Allen Hamilton's staff engaged on this project.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time-and-materials pricing can lead to cost uncertainty if not closely monitored.
Limited competition (3 bidders) may have resulted in less favorable pricing for the government.
The contract duration of over 3 years requires sustained oversight to ensure continued value.
Lack of specific performance metrics makes it difficult to gauge effectiveness beyond audit infrastructure support.

Positive Signals

Awarded through a competitive process, indicating some level of market vetting.
Booz Allen Hamilton is a large, established contractor with significant experience in federal contracts.
The contract supports critical oversight functions for prescription drug benefits, a key area of federal spending.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically management consulting. The federal government is a major consumer of these services, particularly for program oversight, analysis, and administrative support. Spending in this category often supports complex federal initiatives like healthcare programs. Comparable spending benchmarks would typically be found within the broader category of 'Administrative Management and General Management Consulting Services' (NAICS 541611).

Small Business Impact

This contract was not specifically set aside for small businesses, and Booz Allen Hamilton is a large business. There is no explicit information provided regarding subcontracting plans or their impact on the small business ecosystem. Without this data, it's difficult to assess the direct benefit or implications for small businesses.

Oversight & Accountability

Oversight would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures would be tied to the contract's performance clauses and deliverables. Transparency is generally facilitated through contract databases like FPDS, where basic award information is available. Inspector General jurisdiction would likely extend to audits and investigations related to the funds expended under this contract.

Related Government Programs

Medicare Prescription Drug Benefit Program
Medicaid Drug Rebate Program
Federal Health IT Spending
Healthcare Fraud and Abuse Control Program

Risk Flags

Potential for cost overruns due to T&M pricing
Limited competition may impact price
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $23.2 million to BOOZ ALLEN HAMILTON INC. AUDITS OF PRESCRIPTION DRUG BENEFIT/AUDIT INFRASTRUCTURE

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $23.2 million.

What is the period of performance?

Start: 2009-09-30. End: 2013-03-29.

What is Booz Allen Hamilton's track record with federal healthcare contracts, particularly those involving audit or program integrity?

Booz Allen Hamilton has a substantial history of contracting with federal agencies, including the Department of Health and Human Services (HHS) and its sub-agencies like CMS. Their portfolio often includes work related to healthcare policy, IT modernization, program management, and data analytics. For contracts specifically involving audit infrastructure or program integrity within healthcare, Booz Allen Hamilton has demonstrated capabilities through numerous awards. A deeper dive into their specific past performance on similar CMS contracts would reveal their success rates, any past performance issues, and their overall reputation in supporting critical healthcare oversight functions. Their extensive experience suggests a strong understanding of the regulatory environment and operational complexities within federal healthcare programs.

How does the $23.2 million value compare to similar contracts for audit infrastructure support within federal healthcare programs?

The $23.2 million contract value over approximately 3.5 years represents an average annual spend of roughly $6.6 million. This figure needs to be benchmarked against similar contracts for audit infrastructure and management consulting services within HHS and other agencies like the Department of Veterans Affairs (VA) or the Defense Health Agency (DHA). Contracts for specialized audit support, IT system development for compliance, or program integrity consulting can vary widely in cost depending on scope, duration, and complexity. Without access to a detailed comparative analysis of contracts with similar objectives and service types, it's difficult to definitively state whether this contract represents high, low, or average spending. However, for a large, established firm like Booz Allen Hamilton supporting a critical function like prescription drug benefit audits, this value appears within a plausible range for a multi-year engagement.

What are the primary risks associated with a time-and-materials contract for audit infrastructure services?

Time-and-materials (T&M) contracts, like the one awarded to Booz Allen Hamilton, carry inherent risks primarily related to cost control. The government pays for the actual labor hours and material costs incurred by the contractor, plus a fixed fee or நிர்धारित profit. The main risk is that costs can escalate beyond initial estimates if the scope of work is not well-defined or if project management is weak. For audit infrastructure services, this could mean extended timelines for development or analysis, leading to increased labor costs. To mitigate these risks, robust oversight, clear task orders, and regular reviews of contractor effort are crucial. The government must ensure that the contractor is efficient and that the work performed directly aligns with the contract's objectives to prevent cost overruns and ensure value for taxpayer money.

How effective has Booz Allen Hamilton been in delivering administrative management and general management consulting services to the federal government historically?

Booz Allen Hamilton has a long and extensive history of providing administrative management and general management consulting services across numerous federal agencies. They are consistently among the top contractors in this category. Historically, their performance has been characterized by large-scale, complex engagements. While specific performance ratings for individual contracts are often proprietary or require deeper database access, their continued success in winning significant federal contracts suggests a generally positive track record and client satisfaction. However, like any large contractor, they may have faced performance challenges or disputes on specific projects. A comprehensive assessment would involve reviewing past performance evaluations, contract close-out reports, and any documented disputes or corrective actions related to their consulting services.

What are the historical spending patterns for administrative management and general management consulting services by the Centers for Medicare and Medicaid Services (CMS)?

CMS, as a major agency within HHS responsible for administering the Medicare and Medicaid programs, consistently spends significant amounts on administrative management and general management consulting services. These services are crucial for program oversight, policy analysis, regulatory compliance, IT system development and maintenance, and operational efficiency. Historical spending patterns show a trend of increasing reliance on external consultants to manage the complexity of these massive healthcare programs. Factors influencing this spending include legislative changes (e.g., the Affordable Care Act), evolving healthcare needs, and the need for specialized expertise in areas like data analytics, cybersecurity, and program integrity. Analyzing CMS's historical obligations in NAICS code 541611 (Administrative Management and General Management Consulting Services) would reveal the scale and growth of this spending category over time.

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) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,244,765

Exercised Options: $23,244,765

Current Obligation: $23,244,765

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F9755H

IDV Type: FSS

Timeline