Treasury's $28.9M IT contract with Booz Allen Hamilton shows competitive pricing and long-term IT support

Contract Overview

Contract Amount: $28,903,292 ($28.9M)

Contractor: Booz Allen Hamilton Inc.

Awarding Agency: Department of the Treasury

Start Date: 2006-05-31

End Date: 2013-04-26

Contract Duration: 2,522 days

Daily Burn Rate: $11.5K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 103

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: CIMIS - TIPSS 3

Place of Performance

Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $28.9 million to BOOZ ALLEN HAMILTON INC. for work described as: CIMIS - TIPSS 3 Key points: 1. Contract awarded through a competitive delivery order, indicating a degree of market price discovery. 2. Duration of over 7 years suggests a need for sustained IT support services. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 4. Booz Allen Hamilton is a large, established contractor with a significant federal presence. 5. The IT services provided fall under general computer systems design, a common federal requirement. 6. The contract's value is moderate within the context of large federal IT procurements.

Value Assessment

Rating: good

The contract's value of $28.9 million over approximately 7 years appears reasonable for comprehensive IT systems design services. Benchmarking against similar large-scale IT support contracts for federal agencies suggests that the overall price point is within expected ranges. The Cost Plus Fixed Fee structure, while common, necessitates diligent oversight to ensure costs remain aligned with the fixed fee component and the value delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a 'COMPETITIVE DELIVERY ORDER,' indicating it was competed under a broader indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle that allowed for full and open competition. The presence of 103 bids suggests a robust competitive environment, which typically drives down prices and encourages innovation. This level of competition is a positive signal for achieving value for taxpayer money.

Taxpayer Impact: A high number of bidders (103) in a competitive award process generally leads to better pricing for the government and taxpayers by fostering a competitive market.

Public Impact

Federal employees within the Internal Revenue Service benefit from enhanced IT systems and support. The contract delivers essential computer systems design and integration services. Services are primarily delivered within Maryland, impacting the local IT workforce. The contract supports the operational efficiency of a critical federal agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep under Cost Plus Fixed Fee structure if not closely monitored.
Long contract duration could lead to vendor lock-in if not managed proactively.
Reliance on a single large contractor for critical IT functions.

Positive Signals

Awarded through a highly competitive process (103 bids).
Contractor (Booz Allen Hamilton) is a well-established entity with extensive federal experience.
Services support a core function of the IRS, indicating strategic importance.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The federal IT market is vast, with agencies consistently procuring services for system development, integration, and maintenance. This contract represents a typical procurement for ongoing IT support, fitting within the broader landscape of federal spending on technology modernization and operational sustainment. Comparable spending benchmarks for similar IT services contracts can range from millions to billions of dollars annually across various agencies.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). While this was a competitive award, there is no explicit information on subcontracting plans for small businesses. The absence of set-aside provisions means that large businesses like Booz Allen Hamilton were eligible to bid and win, and the direct impact on the small business ecosystem is not immediately apparent without further subcontracting data.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the IRS. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are allowable, allocable, and reasonable, and that the fixed fee is earned. Transparency is generally maintained through contract reporting mechanisms, and while specific Inspector General (IG) jurisdiction isn't detailed here, the Treasury IG would have oversight over potential fraud, waste, or abuse related to federal contracts.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian Agency IT Services
Computer Systems Design and Related Services
Department of the Treasury IT Support Contracts

Risk Flags

Potential for cost overruns due to CPFF structure
Long contract duration may limit flexibility with evolving technology
Lack of explicit small business subcontracting data

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $28.9 million to BOOZ ALLEN HAMILTON INC.. CIMIS - TIPSS 3

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 $28.9 million.

What is the period of performance?

Start: 2006-05-31. End: 2013-04-26.

What is Booz Allen Hamilton's track record with the IRS and Treasury?

Booz Allen Hamilton has a long-standing and extensive track record of providing a wide array of services to the Department of the Treasury and its various bureaus, including the Internal Revenue Service (IRS). Their engagements have spanned IT modernization, cybersecurity, strategic planning, financial management systems, and data analytics. The IRS, in particular, has relied on Booz Allen Hamilton for complex IT projects and consulting services, reflecting the firm's deep understanding of the agency's mission-critical operations and technological challenges. This specific contract, valued at approximately $28.9 million over its duration, is one of many engagements demonstrating a sustained relationship built on delivering technical expertise and support for the agency's vast IT infrastructure and systems.

How does the $28.9 million value compare to similar IT contracts for IRS systems design?

The $28.9 million total value for this contract, spread over roughly seven years, positions it as a moderately sized procurement for IT systems design services within the IRS. Larger federal agencies, including the IRS, often award IT contracts ranging from tens of millions to hundreds of millions of dollars, particularly for major system overhauls or sustained support of complex enterprise systems. For instance, contracts for cloud migration, enterprise resource planning (ERP) implementation, or large-scale cybersecurity enhancements can easily exceed this amount. However, for ongoing computer systems design and support, $28.9 million represents a significant, but not exceptionally large, investment, suggesting it likely covered a defined scope of work or a specific set of IT functions rather than an agency-wide transformation.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this nature?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Booz Allen Hamilton for IRS IT services, is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost can escalate if the contractor's expenses exceed initial estimates. This can occur due to scope creep, unforeseen technical challenges, inefficient performance, or inadequate cost controls by the contractor. For the government, this means the total expenditure could be higher than initially projected. Effective risk mitigation requires robust government oversight, clear definition of scope, stringent cost monitoring, and well-defined performance metrics to ensure the contractor maintains cost discipline.

How effective is full and open competition in ensuring value for money on IT contracts?

Full and open competition is widely recognized as the most effective method for ensuring value for money in government IT contracting. By allowing all responsible sources to submit bids, it fosters a competitive environment where contractors are incentivized to offer their best prices and most innovative solutions to win the contract. The high number of bidders (103) on this specific contract underscores the effectiveness of competition in attracting a wide range of potential providers. This broad participation typically leads to lower prices, higher quality services, and greater efficiency, as contractors strive to differentiate themselves based on merit and cost-effectiveness. While contract administration and oversight remain crucial, the initial competitive process lays a strong foundation for achieving favorable outcomes for taxpayers.

What are the implications of the contract's long duration (over 7 years) for IT service delivery?

A contract duration exceeding seven years, as seen with this IRS IT services contract, has several implications. Positively, it provides stability and continuity for critical IT services, allowing the contractor to develop deep institutional knowledge and a vested interest in the long-term success of the systems they support. This can lead to more efficient operations and better-informed decision-making. However, a long duration also presents risks. It can potentially lead to vendor lock-in, making it difficult and costly to switch providers if performance degrades or needs change significantly. Furthermore, technology evolves rapidly, and a long-term contract might not always align with the latest technological advancements or agency requirements unless robust mechanisms for adaptation and modification are included. Careful contract management, including regular performance reviews and options for re-competition or modification, is essential to harness the benefits while mitigating the risks.

How does the NAICS code 541512 (Computer Systems Design Services) define the scope of work?

The North American Industry Classification System (NAICS) code 541512, 'Computer Systems Design Services,' defines the scope of work for this contract as encompassing establishments primarily engaged in planning and designing computer systems that integrate hardware, software, and communication technologies. This includes activities such as analyzing and designing business and computer systems, and integrating hardware and software into a functioning solution. It can also involve providing expertise in areas like network design, IT infrastructure planning, and the development of custom software solutions. The services provided under this code are crucial for agencies like the IRS to maintain, upgrade, and modernize their complex IT environments, ensuring operational efficiency and the ability to meet evolving mission requirements.

Industry Classification

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

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 103

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Address: 1953 GALLOWS RD STE 600, VIENNA, VA, 11

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $31,947,780

Exercised Options: $29,719,581

Current Obligation: $28,903,292

Parent Contract

Parent Award PIID: TIRNO06D00026

IDV Type: IDC

Timeline