Booz Allen Hamilton awarded $23.16M for IT services to IRS, spanning nearly a decade

Contract Overview

Contract Amount: $23,161,151 ($23.2M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of the Treasury

Start Date: 2002-06-15

End Date: 2011-05-17

Contract Duration: 3,258 days

Daily Burn Rate: $7.1K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 21

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Place of Performance

Location: NEW CARROLLTON, PRINCE GEORGE'S County, MARYLAND, 20784

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $23.2 million to BOOZ ALLEN HAMILTON INC for work described as: Key points: 1. Contract value of $23.16M over its lifespan suggests significant investment in IT support. 2. The competitive nature of the delivery order indicates potential for price negotiation. 3. A long contract duration of 3258 days may present risks related to evolving technology and service relevance. 4. The 'Other Computer Related Services' NAICS code is broad, requiring further detail on specific deliverables. 5. The contract's performance period extended significantly beyond its initial award date, indicating potential scope changes or extensions. 6. The use of a Cost Plus Fixed Fee (CPFF) contract type can incentivize cost control but requires robust oversight.

Value Assessment

Rating: fair

The total award of $23.16M over nearly 9 years averages to approximately $2.57M per year. Benchmarking this against similar IT service contracts for large federal agencies is challenging without specific service details. However, the duration suggests that the annual cost might be within a reasonable range for complex IT support. The CPFF structure necessitates careful monitoring to ensure costs remain justified by the services rendered and that the fixed fee is appropriate for the level of effort and risk involved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

This contract was awarded as a competitive delivery order, implying it was likely competed under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. The presence of 21 bids suggests a healthy level of competition for this specific order, which generally leads to better pricing and service options for the government. The competitive process helps ensure that the selected contractor offers the best value proposition among the bidders.

Taxpayer Impact: A competitive award process for this delivery order means taxpayers likely benefited from a more favorable price and potentially higher quality services due to the bidding environment.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, receiving IT services to support its operations. Services delivered likely include a range of computer-related support, potentially encompassing system maintenance, software development, or IT consulting. The geographic impact is centered around the IRS's operational locations, primarily Maryland where the contractor is based. Workforce implications may include employment opportunities for IT professionals within Booz Allen Hamilton and potentially for subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (3258 days) increases the risk of technological obsolescence and scope creep.
Cost Plus Fixed Fee (CPFF) contract type requires diligent oversight to prevent cost overruns and ensure value.
Broad NAICS code (541519) lacks specificity, making it difficult to assess the exact nature and value of services provided.
Contract performance period extended significantly beyond the initial award, suggesting potential issues with initial planning or execution.

Positive Signals

Awarded through a competitive delivery order process with 21 bids, indicating a robust bidding environment.
Contractor Booz Allen Hamilton is a large, established federal contractor with significant experience.
The contract was awarded to support the Internal Revenue Service, a critical government function.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically under 'Other Computer Related Services'. The IT services market for the federal government is substantial, with agencies like the IRS representing significant clients. Comparable spending benchmarks would typically involve analyzing IT support contracts for other large civilian agencies. The trend in this sector is towards cloud migration, cybersecurity, and data analytics, making the long duration of this contract a point of interest regarding its alignment with current technological needs.

Small Business Impact

There is no indication from the provided data that this contract involved small business set-asides or significant subcontracting opportunities for small businesses. The contract was awarded to Booz Allen Hamilton, a large prime contractor. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

The primary oversight mechanism for this contract would be through the contracting officer and the IRS's program management office. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to ensure costs are reasonable and allocable. Transparency would be enhanced through contract data reporting systems, and any specific Inspector General jurisdiction would depend on the IRS's internal audit functions and the nature of any potential issues.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian Agency IT Support Contracts
IT Professional Services Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Long contract duration
Potential for technological obsolescence
CPFF contract type requires robust oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $23.2 million to BOOZ ALLEN HAMILTON INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON INC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $23.2 million.

What is the period of performance?

Start: 2002-06-15. End: 2011-05-17.

What specific IT services were provided under this contract, and how did they align with the IRS's evolving technological needs over its nearly decade-long performance period?

The provided data indicates the NAICS code is 541519, 'Other Computer Related Services,' which is quite broad. Without access to the contract's statement of work (SOW), it's impossible to detail the specific services. However, given the IRS's mission, these services could range from maintaining legacy systems, developing new tax processing software, providing cybersecurity support, managing IT infrastructure, or offering IT consulting. The contract's extended performance period (awarded June 2002, ending May 2011) suggests it likely encompassed multiple phases of IT support, potentially including upgrades, migrations, or ongoing operational maintenance. The challenge with such long-duration contracts, especially in IT, is ensuring the services remain relevant and cost-effective as technology rapidly advances. It's probable that the scope was modified over time to address emerging needs or technological shifts within the IRS.

How did the Cost Plus Fixed Fee (CPFF) structure influence contractor behavior and cost management for this contract?

The Cost Plus Fixed Fee (CPFF) contract type aims to provide the contractor with reimbursement for allowable costs plus a predetermined fixed fee representing profit. For Booz Allen Hamilton, this structure incentivizes efficient cost management because any costs exceeding the estimated cost baseline (while still allowable) would reduce the overall profit margin, as the fee is fixed. Conversely, if costs are managed well below the estimate, the contractor's profit margin increases. This requires robust government oversight to ensure that all claimed costs are allowable, allocable, and reasonable, and that the fixed fee accurately reflects the risk and effort involved. For the IRS, the CPFF structure requires diligent monitoring of expenditures and performance to ensure they are receiving good value for the fixed fee paid, especially given the long duration of the contract.

What was the rationale behind the significant extension of the contract's performance period beyond its initial award date?

The data shows the contract was awarded on June 15, 2002, with an end date of May 17, 2011, indicating a performance period of approximately 3258 days (over 8 years and 10 months). Such extensions typically occur due to several factors. It could be that the initial contract was awarded with options for extension, or that the scope of work evolved, requiring additional time to complete. Agencies often extend contracts rather than recompeting them if the incumbent contractor is performing well and the required services are still needed, to avoid the time and cost of a new procurement. However, significant extensions can also raise concerns about potential scope creep, lack of adequate initial planning, or a missed opportunity for competitive re-evaluation of the market. Without specific modification details, it's presumed the extensions were justified by ongoing IRS needs and contractor performance.

How does the $23.16 million total award compare to typical IT service spending for agencies of the IRS's size and mission?

The total award of $23.16 million spread over nearly nine years averages to approximately $2.57 million per year. For a large, complex organization like the IRS, which manages vast amounts of sensitive taxpayer data and operates extensive IT systems, this annual spending level for IT services might be considered moderate. Large federal agencies often spend tens or hundreds of millions of dollars annually on IT support, encompassing everything from infrastructure maintenance and software development to cybersecurity and data analytics. The specific nature of the 'Other Computer Related Services' is key here; if it involved highly specialized or mission-critical support, the cost could be justified. However, without a detailed breakdown of services and comparison to similar contracts for agencies like the Social Security Administration or other Treasury bureaus, a definitive value-for-money assessment is difficult. It suggests a focused, albeit long-term, engagement rather than a massive IT overhaul.

What are the potential risks associated with a contract of this length (over 8 years) in the rapidly evolving IT sector?

Contracts spanning multiple years in the IT sector carry inherent risks. Firstly, technological obsolescence is a major concern; systems, software, and methodologies that are cutting-edge at the start of a contract may be outdated by its end. This necessitates continuous adaptation and potential reinvestment by the contractor, which needs to be managed within the contract's pricing structure. Secondly, the relevance of the original scope of work can diminish. The IRS's IT needs likely evolved significantly between 2002 and 2011, potentially requiring contract modifications or leading to situations where the contracted services no longer perfectly align with current requirements. Thirdly, long-term reliance on a single contractor can stifle innovation and reduce competitive pressure, potentially leading to complacency or less favorable pricing over time compared to periodic re-competition. Finally, managing such a long-term relationship requires sustained oversight and effective communication to navigate changes and ensure continued alignment.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Offers Received: 21

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

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

Address: 8283 GREENSBORO DR # 700, MC LEAN, VA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $63,974

Exercised Options: $23,763,997

Current Obligation: $23,161,151

Parent Contract

Parent Award PIID: TIRNO00D00014

IDV Type: IDC

Timeline