Treasury's $16.8M IT contract for business process reengineering awarded to Booz Allen Hamilton

Contract Overview

Contract Amount: $16,780,544 ($16.8M)

Contractor: Booz Allen Hamilton Inc.

Awarding Agency: Department of the Treasury

Start Date: 2007-09-26

End Date: 2013-04-21

Contract Duration: 2,034 days

Daily Burn Rate: $8.3K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: PRE-REFUND BUSINESS PROCESS REENGINEER

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20224

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $16.8 million to BOOZ ALLEN HAMILTON INC. for work described as: PRE-REFUND BUSINESS PROCESS REENGINEER Key points: 1. Contract awarded for IT services related to business process reengineering. 2. Booz Allen Hamilton, a large IT contractor, secured this award. 3. The contract duration was substantial, spanning over 6 years. 4. The contract type was Cost Plus Fixed Fee, which can carry cost overrun risks. 5. The agency is the Department of the Treasury, specifically the Internal Revenue Service. 6. The North American Industry Classification System (NAICS) code is 541512 for Computer Systems Design Services. 7. The contract was a competitive delivery order, indicating some level of competition. 8. The place of performance was Washington D.C.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without more granular data on the scope of 'business process reengineering' and the specific deliverables. However, the Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed tightly. The duration of over six years suggests a significant undertaking, and the total value of approximately $16.8 million needs to be assessed against the complexity and outcomes achieved. Without comparable contract data for similar reengineering efforts at the IRS or other agencies, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

This contract was awarded as a competitive delivery order. This implies that it was likely competed under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle that allowed for multiple bidders to submit proposals. The presence of 'competitive' in the award type suggests that more than one offer was received and evaluated, which is generally a positive sign for price discovery. However, the specifics of the competition, such as the number of bidders and the evaluation criteria, are not detailed here.

Taxpayer Impact: A competitive award process, even for a delivery order, generally provides taxpayers with a better opportunity for cost savings compared to sole-source awards. It encourages contractors to offer competitive pricing to win the business.

Public Impact

The primary beneficiary of this contract is the Internal Revenue Service (IRS), aiming to improve its internal business processes. The services delivered are expected to enhance the efficiency and effectiveness of IRS operations through reengineering. The geographic impact is primarily within Washington D.C., where the IRS headquarters and likely the performance location are situated. The contract supports IT and management consulting roles, potentially impacting the workforce within the IRS and the contracting firm.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type can incentivize contractors to incur more costs, potentially leading to budget overruns if not closely monitored.
The long duration of the contract (over 6 years) increases the risk of scope creep and potential misalignment with evolving agency needs.
Lack of specific performance metrics makes it difficult to assess the true impact and success of the business process reengineering.
The competitive nature is noted, but the intensity and fairness of the competition are not detailed, leaving room for potential inefficiencies.

Positive Signals

The award was made through a competitive process, suggesting that multiple vendors had the opportunity to bid.
The contract was awarded to a well-established contractor, Booz Allen Hamilton, known for its extensive experience in government contracting.
The contract addresses a critical area for the IRS: business process reengineering, which can lead to significant operational improvements.
The delivery order mechanism under a potentially larger IDIQ contract can streamline procurement for specific needs.

Sector Analysis

This contract falls within the Information Technology (IT) and professional services sector, specifically focusing on computer systems design and related services. The market for government IT services is substantial, with agencies increasingly relying on contractors for system modernization, cybersecurity, and business process improvements. Comparable spending benchmarks would involve looking at other large-scale IT modernization or business process reengineering contracts within federal agencies, particularly those focused on financial management or tax administration. The NAICS code 541512 covers a broad range of IT services, and Booz Allen Hamilton is a major player in this space.

Small Business Impact

The data indicates that small business participation (sb) was false, and there was no indication of a small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses. As a large prime contractor, Booz Allen Hamilton may have subcontracting opportunities, but the extent to which small businesses would be involved is not specified. Without a small business set-aside, the primary focus of competition was likely on larger, established firms capable of handling the scope and complexity of the project.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Treasury and the Internal Revenue Service contracting officers and program managers. Given the duration and nature of the work, regular performance reviews and financial audits would be expected. Transparency would depend on the agency's policies regarding the release of contract details and performance reports. Inspector General jurisdiction would likely fall under the Treasury Inspector General for Tax Administration (TIGTA), who oversees IRS programs and operations for waste, fraud, and abuse.

Related Government Programs

IRS Modernization Programs
Federal IT Services Procurement
Government Business Process Improvement Contracts
Cost Plus Fixed Fee Contracts
IT Consulting Services

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Long contract duration increases potential for scope creep and misalignment.
Lack of specific performance metrics makes outcome assessment difficult.
Limited detail on the competitive process beyond 'competitive delivery order'.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $16.8 million to BOOZ ALLEN HAMILTON INC.. PRE-REFUND BUSINESS PROCESS REENGINEER

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 $16.8 million.

What is the period of performance?

Start: 2007-09-26. End: 2013-04-21.

What specific business processes were targeted for reengineering under this contract, and what were the key performance indicators (KPIs) for success?

The provided data does not specify the exact business processes targeted for reengineering. Typically, such contracts aim to improve areas like taxpayer services, internal workflow efficiency, data management, or compliance processes. Key performance indicators (KPIs) would have been defined in the contract's statement of work (SOW) and could include metrics such as reduced processing times, improved accuracy rates, cost savings achieved, enhanced user satisfaction, or successful integration of new technologies. Without access to the SOW or performance reports, a detailed assessment of the KPIs and their achievement is not possible.

How did Booz Allen Hamilton's past performance and experience influence their selection for this significant IT contract?

Booz Allen Hamilton is a large, well-established government contractor with extensive experience in IT services, systems design, and management consulting, including work with the IRS and other federal agencies. Their selection for this contract likely stemmed from a combination of factors: a strong track record of delivering complex IT projects, demonstrated expertise in business process reengineering, competitive pricing, and a thorough understanding of the IRS's operational environment. Agencies typically evaluate past performance as a critical factor in award decisions, looking for evidence of successful project completion, adherence to schedule and budget, and effective client communication.

What were the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this project, and how were they mitigated?

The primary risk with a CPFF contract is that the contractor is reimbursed for all allowable costs plus a fixed fee representing their profit. This can incentivize cost overruns, as the contractor's profit margin is fixed regardless of the total cost incurred. To mitigate this, agencies typically implement robust oversight, including detailed cost monitoring, regular audits, and strict adherence to the contract's ceiling. Negotiation of a fair fixed fee based on the perceived risk and complexity of the work is also crucial. For this specific contract, the IRS would have needed strong program management to ensure costs remained reasonable and aligned with the project's objectives.

Can the $16.8 million expenditure be benchmarked against similar IT reengineering projects at other federal agencies to assess value for money?

Benchmarking this $16.8 million expenditure against similar IT reengineering projects requires access to detailed data on the scope, complexity, duration, and specific outcomes of comparable contracts across other federal agencies. Without such granular comparative data, it is difficult to definitively assess whether this amount represents good value for money. Factors like the size of the agency, the specific systems being reengineered, the level of customization required, and the prevailing market rates for IT consulting services at the time of award all influence costs. A comprehensive value assessment would necessitate a detailed analysis of the contract's deliverables and achievements relative to its cost.

What was the competitive landscape for this delivery order, and how many bids were received?

The contract was awarded as a 'COMPETITIVE DELIVERY ORDER,' indicating that it was not a sole-source procurement. This implies that multiple vendors were invited to bid, and proposals were evaluated. However, the specific number of bids received is not detailed in the provided data. Generally, a competitive process, even for a delivery order under a larger IDIQ contract, suggests that the agency sought to leverage market competition to obtain favorable pricing and technical solutions. The level of competition (e.g., number of bidders, intensity of the bidding) can significantly impact price discovery and the ultimate value obtained by the government.

Industry Classification

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

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

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: $20,652,739

Exercised Options: $18,719,609

Current Obligation: $16,780,544

Parent Contract

Parent Award PIID: TIRNO06D00026

IDV Type: IDC

Timeline