State Department awards $55.6M+ contract for management consulting services, with significant cost-plus fixed fee structure

Contract Overview

Contract Amount: $55,645,843 ($55.6M)

Contractor: PAE Government Services, Inc.

Awarding Agency: Department of State

Start Date: 2011-09-25

End Date: 2018-09-25

Contract Duration: 2,557 days

Daily Burn Rate: $21.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: CONTRACT AWARD

Plain-Language Summary

Department of State obligated $55.6 million to PAE GOVERNMENT SERVICES, INC. for work described as: CONTRACT AWARD Key points: 1. Contract awarded via full and open competition, suggesting a robust bidding process. 2. The cost-plus fixed fee (CPFF) pricing structure carries inherent risk of cost overruns. 3. A long performance period of over 7 years indicates a substantial, ongoing need for services. 4. The contract's value places it in the mid-to-large tier for management consulting services. 5. Services provided fall under 'Other Management Consulting Services,' a broad category. 6. The absence of small business set-aside flags potential missed opportunities for smaller firms.

Value Assessment

Rating: fair

The contract's cost-plus fixed fee (CPFF) structure necessitates close monitoring to ensure value for money. While the total award value is substantial, the lack of detailed performance metrics or comparison data makes a definitive value assessment challenging. Benchmarking against similar large-scale management consulting contracts would be necessary to determine if the pricing is competitive. The fixed fee component, however, provides some incentive for the contractor to manage costs efficiently within the defined scope.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through a full and open competition, indicating that multiple bidders were likely considered. The presence of four bidders (no) suggests a reasonable level of competition for this service. This approach generally leads to better price discovery and selection of the most capable contractor at a competitive price.

Taxpayer Impact: Taxpayers benefit from the competitive process, which aims to secure the best value by encouraging multiple firms to offer their services and pricing.

Public Impact

The Department of State benefits from enhanced management consulting capabilities. Services likely support various administrative, operational, or strategic initiatives within the agency. The geographic impact is primarily national, supporting federal government operations. Workforce implications may include support roles for the contracted consulting services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus fixed fee contracts can lead to higher overall costs if not managed diligently.
The broad nature of 'Other Management Consulting Services' could lead to scope creep if not clearly defined.
Long contract duration increases the risk of the services becoming outdated or less effective over time.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
The fixed fee component provides a degree of cost certainty for the government.
The contractor has a significant award, suggesting established capabilities.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically management consulting. This sector is characterized by a wide range of services supporting government and private sector operations. The market size for federal management consulting is substantial, with agencies frequently outsourcing specialized expertise. This contract represents a significant investment in external advisory services for the Department of State.

Small Business Impact

The contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This suggests that opportunities for small businesses to participate in this specific contract may be limited, potentially impacting the small business ecosystem's ability to engage with this large federal award.

Oversight & Accountability

Oversight would typically be managed by the contracting officer's representative (COR) within the Department of State, ensuring adherence to contract terms and performance standards. Accountability measures are embedded in the CPFF structure, requiring detailed cost reporting and justification. Transparency is facilitated through contract award databases, though specific performance data may be less public.

Related Government Programs

Management and Financial Consulting, Acquisition and Commercialization Services
Professional, Scientific, and Technical Services
Department of State Operations Support Contracts

Risk Flags

Cost-Plus Fixed Fee (CPFF) pricing structure
Long contract duration (over 7 years)
Broad service category ('Other Management Consulting Services')

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $55.6 million to PAE GOVERNMENT SERVICES, INC.. CONTRACT AWARD

Who is the contractor on this award?

The obligated recipient is PAE GOVERNMENT SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $55.6 million.

What is the period of performance?

Start: 2011-09-25. End: 2018-09-25.

What is the typical profit margin for Cost Plus Fixed Fee (CPFF) contracts in management consulting?

Profit margins for Cost Plus Fixed Fee (CPFF) contracts in management consulting can vary significantly based on the complexity of the services, the contractor's overhead, and the negotiated fixed fee. Generally, the fixed fee is intended to represent a reasonable profit. For CPFF contracts, the fee is typically negotiated as a percentage of the estimated cost. Industry benchmarks suggest that fixed fees for CPFF contracts can range from 6% to 15% of the estimated cost. However, this percentage is subject to negotiation and can be influenced by factors such as the perceived risk, the level of competition, and the government's negotiation strategy. It's crucial to note that the fee is fixed regardless of the final cost, incentivizing the contractor to control expenses. Without specific details on the negotiated fee for this particular $55.6 million contract, it's difficult to pinpoint the exact profit margin, but it would likely fall within this general range.

How does the duration of this contract (2557 days) compare to typical management consulting contracts for federal agencies?

A contract duration of 2557 days, which is approximately 7 years, is considered quite long for a management consulting engagement. While federal agencies do award multi-year contracts, especially for services that require sustained support or involve complex, long-term projects, typical standalone management consulting projects often have shorter durations, ranging from a few months to 2-3 years. Longer durations are more common for large-scale program management, strategic advisory roles that evolve over time, or contracts that include multiple option periods. The extended period for this Department of State contract suggests a need for continuous, evolving advisory services rather than a discrete project. This longevity necessitates robust oversight to ensure the services remain relevant and effective throughout the contract's life and to manage potential scope creep or changes in agency needs.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for management consulting services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract structure, especially for services like management consulting, is the potential for cost overruns. While the contractor is incentivized by the fixed fee to control costs, the government bears the risk of all allowable costs exceeding the initial estimate. If the contractor's actual costs are higher than anticipated, the government still pays those costs plus the agreed-upon fixed fee. This can lead to the total contract value exceeding initial projections. Furthermore, the government must diligently monitor and audit the contractor's incurred costs to ensure they are allowable, allocable, and reasonable. For management consulting, where the scope can sometimes be less tangible than in construction or manufacturing, defining and controlling 'allowable costs' requires careful attention and robust oversight to prevent the government from paying for services that are not truly necessary or beneficial.

Given the 'Other Management Consulting Services' NAICS code, what specific types of services might this contract encompass?

The NAICS code 541618, 'Other Management Consulting Services,' is a broad category that encompasses a wide array of consulting activities not classified under more specific management consulting codes (like 541611 for Administrative Management and General Management Consulting Services, or 541612 for Human Resources Consulting Services). For a federal agency like the Department of State, this could include services related to organizational structure and efficiency, strategic planning and implementation, program management support, policy analysis and development, operational process improvement, risk management, and potentially even certain types of IT strategy consulting if not captured elsewhere. The specific services delivered under this contract would be detailed in the Statement of Work (SOW) and task orders, but the broad NAICS code suggests flexibility in the types of management challenges the contractor is expected to address.

How does the number of bidders (4) impact the potential value for money in a full and open competition?

Having four bidders in a full and open competition generally suggests a healthy level of competition, which is positive for value for money. A larger number of bidders typically increases the likelihood that the government will receive competitive pricing and a wider range of technical approaches. With four bidders, the government has a basis for comparison to assess which offer provides the best overall value, considering both price and technical merit. While more bidders are often better, four is often considered a sufficient number to drive competitive behavior among the participants. If the bidders are all highly capable and the evaluation criteria are well-defined, this level of competition should help ensure that the selected contractor is both qualified and offers a reasonable price for the services required.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Other 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: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Amentum Government Services Holdings LLC

Address: 888 S FIGUEROA ST STE 1980, LOS ANGELES, CA, 90017

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $55,660,860

Exercised Options: $55,660,860

Current Obligation: $55,645,843

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: SAQMMA09D0084

IDV Type: IDC

Timeline