McKinsey & Company receives $27.3M for administrative management consulting from DoD

Contract Overview

Contract Amount: $27,329,076 ($27.3M)

Contractor: Mckinsey & Company, Inc. Washington D.C.

Awarding Agency: Department of Defense

Start Date: 2018-07-11

End Date: 2020-04-13

Contract Duration: 642 days

Daily Burn Rate: $42.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CATEGORY MANAGEMENT

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20814

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $27.3 million to MCKINSEY & COMPANY, INC. WASHINGTON D.C. for work described as: CATEGORY MANAGEMENT Key points: 1. Contract awarded via a Best Practices Agreement (BPA) Call, indicating a pre-negotiated framework. 2. The contract's duration of 642 days suggests a substantial, ongoing need for consulting services. 3. Fixed-price contract type aims to control costs, but requires careful scope management. 4. The North American Industry Classification System (NAICS) code 541611 points to general management consulting. 5. Awarded to a single contractor, McKinsey & Company, for services to the Department of Defense. 6. The contract was awarded under full and open competition, suggesting a broad search for qualified bidders.

Value Assessment

Rating: fair

The total award amount of $27.3 million for administrative management and general management consulting services over approximately two years appears substantial. Benchmarking this against similar large-scale consulting engagements for federal agencies is crucial. Without specific deliverables and performance metrics, it's difficult to definitively assess value for money. However, the fixed-price nature suggests an attempt to cap costs, which is a positive indicator if the scope was well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, implying that multiple qualified vendors had the opportunity to bid. The presence of 3 bids suggests a moderate level of competition for this specific BPA call. While full and open competition is generally preferred for price discovery, the actual competitiveness can vary based on the specific requirements and the number of responsive bids received.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it theoretically drives down prices through market forces. A moderate number of bidders suggests that while there was some competition, it may not have reached the most aggressive pricing levels achievable with a larger pool of interested parties.

Public Impact

The Department of Defense is the primary beneficiary, receiving management consulting expertise. Services likely focus on improving administrative processes and general management within the agency. The geographic impact is centered in Maryland, where the Washington Headquarters Services are located. Workforce implications could include process improvements affecting DoD personnel and potentially the engagement of external consultants.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in fixed-price contracts if not meticulously managed.
Reliance on a single, high-profile contractor may limit exposure to alternative consulting approaches.
The substantial award amount warrants close scrutiny of deliverables and outcomes to ensure value.

Positive Signals

Awarded through full and open competition, indicating a structured procurement process.
Fixed-price contract type provides cost certainty for the government.
The contractor, McKinsey & Company, is a well-established firm with extensive experience in management consulting.

Sector Analysis

Administrative management and general management consulting services represent a significant segment of the professional services market within the federal government. This contract falls under the broader category of professional services, which includes a wide array of expertise sought by agencies to improve operations, strategy, and efficiency. Comparable spending benchmarks would involve analyzing other large consulting contracts awarded to major firms by various federal departments for similar management support.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless McKinsey & Company voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contracting officers and program managers. Accountability measures would be tied to the contract's performance metrics and deliverables. Transparency is generally facilitated through contract award databases, though detailed performance reports may not always be publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Management and Financial Consulting, Acquisition and Technology Services
Professional Services Contracts
Department of Defense Consulting Services
Administrative Support Services

Risk Flags

Potential for cost overruns if scope is not tightly managed.
Value for money assessment requires detailed performance data.
Limited number of bidders for the BPA Call could impact price competitiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.3 million to MCKINSEY & COMPANY, INC. WASHINGTON D.C.. CATEGORY MANAGEMENT

Who is the contractor on this award?

The obligated recipient is MCKINSEY & COMPANY, INC. WASHINGTON D.C..

Which agency awarded this contract?

Awarding agency: Department of Defense (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $27.3 million.

What is the period of performance?

Start: 2018-07-11. End: 2020-04-13.

What specific management challenges or projects did McKinsey & Company address for the Department of Defense under this contract?

The provided data indicates the contract was for 'Administrative Management and General Management Consulting Services' under NAICS code 541611. This broad classification suggests McKinsey was likely engaged to provide expertise in areas such as organizational efficiency, process improvement, strategic planning, operational analysis, or management support for administrative functions within the Department of Defense. Specific project details, deliverables, and the precise nature of the challenges addressed are not available in the summary data. Typically, such contracts aim to enhance the effectiveness and efficiency of government operations, potentially involving analysis of existing structures, recommendation of new approaches, and support in implementing changes. The substantial award amount suggests the scope was significant, likely involving complex organizational issues or large-scale process reviews.

How does the $27.3 million award compare to typical spending on management consulting by the Department of Defense?

The $27.3 million award to McKinsey & Company is a significant sum, placing it among larger consulting contracts. The Department of Defense is a major consumer of professional services, including management consulting, due to its vast and complex operations. Annual spending on consulting services by the DoD can run into billions of dollars across various categories. To benchmark this specific contract, one would need to compare it against the average award size for similar 'Administrative Management and General Management Consulting Services' (NAICS 541611) over the contract period (2018-2020) and against other large, strategic consulting engagements within the DoD. Without access to broader spending data and specific task orders under this BPA Call, a precise comparison is difficult, but it represents a substantial investment in external expertise for management functions.

What are the key risks associated with a fixed-price contract of this magnitude awarded to a single, high-profile firm?

A primary risk with large fixed-price contracts is scope creep. If the requirements are not meticulously defined and managed, the contractor may incur costs beyond the agreed price, potentially leading to change orders or disputes. Another risk is the potential for the contractor to deliver the minimum acceptable standard to maximize profit, rather than striving for optimal value, especially if competition was limited in practice despite being 'full and open'. For a high-profile firm like McKinsey, there's also the reputational risk; any perceived failure or inefficiency in delivering the contracted services could attract significant scrutiny. Furthermore, over-reliance on a single firm might stifle innovation or prevent the government from benefiting from diverse perspectives that could come from multiple, smaller, or more specialized consulting firms.

What performance metrics or deliverables would typically be expected for a contract of this nature?

For a contract focused on administrative management and general management consulting, expected deliverables would likely include detailed analytical reports, strategic recommendations, process maps, implementation plans, and potentially training materials. Performance metrics would focus on the quality and timeliness of these deliverables, the achievement of agreed-upon objectives (e.g., efficiency gains, cost savings identified, improved organizational structures), and the overall satisfaction of the contracting officer's representative. Key performance indicators (KPIs) might be established to measure the impact of the consulting services on specific administrative functions or management processes within the DoD. Adherence to budget and schedule for the consulting project itself would also be critical performance indicators.

How does the BPA Call mechanism influence the competition and pricing dynamics for this contract?

A Best Practices Agreement (BPA) Call is a task order issued against an existing BPA. BPAs are established with vendors to streamline the procurement of commonly purchased supplies or services. Using a BPA Call means that the initial competition and vetting of vendors (like McKinsey) occurred when the overarching BPA was established. When a specific need arises, a 'call' or 'order' is placed against that BPA. If the BPA itself was established through full and open competition, then this call benefits from that broader vetting. However, the competition for the specific call might be limited to the vendors holding that BPA. In this case, with 3 bids received for the call, it suggests some level of competition among BPA holders, but potentially less than a standalone full and open competition for a new requirement. Pricing is often pre-negotiated or based on established rates within the BPA, which can offer efficiencies but might not always yield the absolute lowest price compared to a fresh, highly competitive procurement.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Mckinsey & Company, Inc.

Address: 1200 19TH ST NW STE 1100, WASHINGTON, DC, 20036

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $31,322,148

Exercised Options: $27,417,965

Current Obligation: $27,329,076

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ003417A0011

IDV Type: BPA

Timeline