Booz Allen Hamilton awarded $47.2M for IT support, raising questions on value and competition

Contract Overview

Contract Amount: $47,183,070 ($47.2M)

Contractor: Booz Allen Hamilton Inc.

Awarding Agency: Department of the Treasury

Start Date: 2007-09-27

End Date: 2013-04-26

Contract Duration: 2,038 days

Daily Burn Rate: $23.2K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: TOTAL INFORMATION PROCESSING SUPPORT SER

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20220, UNITED STATES OF AMERICA

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $47.2 million to BOOZ ALLEN HAMILTON INC. for work described as: TOTAL INFORMATION PROCESSING SUPPORT SER Key points: 1. Analysis indicates potential overpayment given the contract's duration and service type. 2. Limited competition may have inflated costs for essential IT services. 3. Contract duration and cost-plus structure present moderate financial risk. 4. Performance context is limited, making objective assessment of value difficult. 5. This contract falls within the IT services sector, a common area for federal spending. 6. The contract's value is moderate within the broader IT services landscape.

Value Assessment

Rating: fair

The total award of $47.2 million over approximately six years for computer systems design services appears to be on the higher end when compared to similar contracts for IT support. The cost-plus fixed fee pricing structure, while common, can sometimes lead to less cost efficiency than fixed-price contracts if not managed tightly. Benchmarking against industry standards for IT support services suggests that the per-diem or hourly rates may not be as competitive as they could be under different contract types or with more robust competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a competitive delivery order, but the specific details on the number of bidders and the extent of the competition are not fully detailed in the provided data. A 'limited' competition suggests that not all potential offerors were able to participate or were solicited, which can reduce price discovery and potentially lead to higher costs for the government. The nature of delivery orders, even when competed, can sometimes be less competitive than broad agency-wide solicitations.

Taxpayer Impact: Limited competition means taxpayers may not have received the most cost-effective solution, as the government's negotiating power could have been diminished.

Public Impact

Federal employees within the IRS benefit from enhanced IT infrastructure and support. The services delivered include computer systems design and support, crucial for agency operations. The geographic impact is primarily within the District of Columbia, where the IRS is headquartered. Workforce implications include the potential for contractor personnel to augment federal IT staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus fixed fee structure can incentivize spending over efficiency.
Long contract duration may reduce flexibility to adopt newer technologies.
Limited competition could result in suboptimal pricing.
Lack of detailed performance metrics makes value assessment challenging.

Positive Signals

Awarded to a well-established contractor with significant federal experience.
Contract addresses essential IT support needs for a major federal agency.
Competitive award, even if limited, suggests some level of market vetting.

Sector Analysis

The Information Technology (IT) services sector is a significant area of federal procurement, encompassing a wide range of services from software development to systems integration and support. Spending in this sector is consistently high across various agencies. This contract for computer systems design services fits within the broader IT support and professional services market, which is characterized by numerous large and small businesses vying for government contracts. Comparable spending benchmarks for IT support services vary widely based on scope and duration, but contracts in the tens of millions are common for large agencies like the IRS.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides. This suggests that the contract was not specifically targeted towards small businesses, and opportunities for small business subcontracting may be limited or not mandated. The absence of small business involvement could mean fewer opportunities for smaller, innovative firms to contribute to this specific IT support requirement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's Inspector General, with specific program managers within the IRS responsible for monitoring performance and expenditures. Accountability measures would be tied to the contract's terms, including deliverables and reporting requirements. Transparency is generally facilitated through contract databases like FPDS, although detailed performance reports are often internal.

Related Government Programs

IT Professional Services
Computer Systems Design Services
Information Technology Support
Federal IT Procurement
Cost-Plus Contracts

Risk Flags

Cost-Plus Contract Type
Limited Competition
Long Contract Duration
Lack of Detailed Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $47.2 million to BOOZ ALLEN HAMILTON INC.. TOTAL INFORMATION PROCESSING SUPPORT SER

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 $47.2 million.

What is the period of performance?

Start: 2007-09-27. End: 2013-04-26.

What is Booz Allen Hamilton's track record with similar IT support contracts for the IRS or other federal agencies?

Booz Allen Hamilton Inc. has a substantial history of securing and performing on federal IT support contracts across numerous agencies, including the Department of the Treasury and the Internal Revenue Service. Their track record generally includes large-scale system design, integration, and operational support. While extensive, the specific performance quality and value-for-money on past contracts can vary. Analysis of past performance reviews, contract modifications, and any associated audits or investigations would be necessary to fully assess their reliability and efficiency in delivering services comparable to this $47.2 million award. Their experience suggests a capacity to handle complex IT requirements, but also necessitates scrutiny regarding cost control and adherence to scope.

How does the $47.2 million total award compare to other federal IT support contracts of similar scope and duration?

The $47.2 million total award for computer systems design services over approximately six years is a significant sum, placing it in the mid-to-large tier for IT support contracts. When compared to similar contracts, its value is substantial but not necessarily an outlier, given the complexity and duration. However, the 'limited' competition aspect raises concerns about whether this represents the best possible value. Contracts with broader competition or those utilizing fixed-price structures often achieve lower overall costs. A detailed benchmark analysis would require comparing specific service deliverables, labor categories, and geographic locations against a wider pool of recent federal IT support awards to determine if this contract's pricing is competitive.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type used here?

The Cost Plus Fixed Fee (CPFF) contract type, used for this $47.2 million award, presents inherent risks primarily related to cost control and contractor incentive. While the 'fixed fee' provides the contractor with a predetermined profit margin, the government bears the risk of covering all allowable costs. This structure can potentially incentivize the contractor to incur higher costs, as their fee remains constant regardless of the total cost incurred. Effective oversight, stringent cost monitoring, and clear definition of allowable costs are crucial to mitigate these risks and ensure the government receives good value. Without robust management, CPFF contracts can lead to cost overruns compared to fixed-price alternatives.

How effective are the oversight mechanisms for ensuring performance and preventing cost overruns on this contract?

The effectiveness of oversight mechanisms for this contract depends heavily on the diligence of the contracting officer's representatives (CORs) and program managers within the IRS. Standard oversight involves regular progress reports, site visits, and performance reviews against contract milestones. For a CPFF contract, detailed auditing of incurred costs is paramount. The Inspector General's office for the Department of the Treasury provides an additional layer of oversight, investigating fraud, waste, and abuse. However, the success of these mechanisms is contingent on adequate staffing, clear communication channels, and the proactive identification and resolution of issues throughout the contract's lifecycle.

What is the historical spending trend for computer systems design services at the IRS or Treasury?

Historical spending on computer systems design services by the IRS and the broader Department of the Treasury has been substantial and generally increasing over the past decade, reflecting the growing reliance on complex IT systems for tax administration and financial management. Agencies like the IRS continuously require upgrades, maintenance, and new system development to handle vast amounts of data, evolving regulations, and cybersecurity threats. While specific year-over-year figures for this particular contract type are not provided, the overall trend indicates a consistent and significant investment in IT support services. This suggests that contracts like the one awarded to Booz Allen Hamilton are part of a larger, ongoing strategic commitment to maintaining and modernizing the agency's technological infrastructure.

Does the 'limited' competition designation suggest potential issues with market availability or contractor collusion?

A 'limited' competition designation typically means that the solicitation was not fully and openly competed, perhaps due to specific requirements, a restricted number of capable sources, or a justification for other than full and open competition. This does not automatically imply contractor collusion, but it does reduce the pressure on pricing that a wider field of bidders would create. It suggests that the government may not have received the benefit of the most competitive pricing available in the market. Potential issues could arise if the limitations were artificial or if the justification for limited competition was weak, leading to less value for taxpayer dollars.

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: 4

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, 22182

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $52,341,041

Exercised Options: $52,341,041

Current Obligation: $47,183,070

Parent Contract

Parent Award PIID: TIRNO06D00026

IDV Type: IDC

Timeline