DoD's $38M engineering support contract awarded to Booz Allen Hamilton shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $38,228,840 ($38.2M)

Contractor: Booz Allen Hamilton Engineering Services, LLC

Awarding Agency: Department of Defense

Start Date: 2012-03-01

End Date: 2017-08-31

Contract Duration: 2,009 days

Daily Burn Rate: $19.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING AND INTEGRATION SUPPORT FOR JPALS&N-UCAS.

Place of Performance

Location: SAINT INIGOES, SAINT MARYS County, MARYLAND, 20684

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $38.2 million to BOOZ ALLEN HAMILTON ENGINEERING SERVICES, LLC for work described as: ENGINEERING AND INTEGRATION SUPPORT FOR JPALS&N-UCAS. Key points: 1. Contract value appears reasonable given the specialized engineering and integration services provided. 2. The limited number of bidders suggests potential for reduced price competition. 3. Performance period spans over five years, indicating a long-term need for these services. 4. This contract supports critical Department of the Navy programs, highlighting its strategic importance. 5. The cost-plus-fixed-fee pricing structure allows for flexibility but requires careful oversight to manage costs. 6. Booz Allen Hamilton's extensive experience in defense contracting positions them well for this work.

Value Assessment

Rating: good

The contract's total value of approximately $38.2 million over five years for engineering and integration support appears to be within a reasonable range for specialized defense services. Benchmarking against similar contracts for complex system integration and engineering support for naval aviation programs suggests that the pricing is competitive. The cost-plus-fixed-fee structure, while common for R&D and complex services, necessitates diligent oversight to ensure costs remain controlled and that the fixed fee is appropriate for the scope of work. Without specific cost breakdowns, a definitive value-for-money assessment is challenging, but the overall expenditure seems aligned with the criticality and complexity of the services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. However, the data indicates only two bidders participated in this competition. While full and open competition is the preferred method, a low number of bidders can sometimes suggest barriers to entry or a highly specialized market. This limited competition may have influenced the final pricing, potentially leading to less aggressive bids than if a larger pool of competitors had been involved. Further analysis of the solicitation and award details would be needed to understand the specific reasons for the limited bidder pool.

Taxpayer Impact: While the competition was open, only two bidders participated, which may have limited the downward pressure on pricing. Taxpayers benefit from the open competition framework, but the limited number of offers could mean that a more competitive price might have been achievable with broader participation.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation programs, receiving essential engineering and integration support. Services delivered include technical expertise for systems like JPALS (Joint Precision Approach and Landing System) and N-UCAS (Unmanned Combat Air System). The contract's geographic impact is centered in Maryland, where the contractor is located and likely performs much of the work. This contract supports a highly skilled technical workforce, including engineers and integration specialists, within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bidders could lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts require robust oversight to prevent cost overruns.
The long performance period increases the risk of scope creep or evolving requirements not being adequately managed.

Positive Signals

Awarded through full and open competition, ensuring a fair process.
Booz Allen Hamilton is a well-established contractor with a strong track record in defense.
The contract supports critical naval aviation systems, indicating a high level of technical necessity.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader defense industry. The market for specialized engineering and integration support for complex defense systems is highly concentrated, with a few large, established firms dominating. Spending in this sector is driven by the need for advanced technological solutions and system modernization within the military. Comparable spending benchmarks would involve analyzing other contracts for similar system integration and engineering support for naval aviation or other complex defense platforms, which often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'sb' field being false. Furthermore, the contractor, Booz Allen Hamilton, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem through this specific contract is likely minimal, unless the prime contractor actively engages small businesses for specialized support not detailed in the award data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to monitor expenditures against the fixed fee and ensure that costs are reasonable and allocable. Transparency is facilitated through contract reporting mechanisms, but detailed public access to performance metrics and cost breakdowns may be limited due to the sensitive nature of defense contracts. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

JPALS (Joint Precision Approach and Landing System)
N-UCAS (Unmanned Combat Air System)
Naval Aviation Systems Engineering
Defense Engineering Services
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Limited competition
Cost-plus-fixed-fee pricing requires robust oversight
Potential for cost escalation over long duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.2 million to BOOZ ALLEN HAMILTON ENGINEERING SERVICES, LLC. ENGINEERING AND INTEGRATION SUPPORT FOR JPALS&N-UCAS.

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON ENGINEERING SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $38.2 million.

What is the period of performance?

Start: 2012-03-01. End: 2017-08-31.

What is Booz Allen Hamilton's track record with similar Department of Defense contracts?

Booz Allen Hamilton has an extensive and long-standing track record of performing complex engineering, integration, and technical support services for the Department of Defense (DoD) and various military branches, including the Department of the Navy. They are a major defense contractor frequently awarded large-value contracts for systems engineering, program management, cybersecurity, and IT modernization. Their history includes significant work on naval aviation programs, command and control systems, and intelligence support. While this specific contract is for JPALS and N-UCAS integration, Booz Allen's broad experience in these areas suggests a high level of familiarity with the technical requirements and operational context. Their performance on past contracts, while generally positive, has also faced scrutiny at times, as is common for large contractors, particularly regarding cost management and adherence to schedules on complex, long-term projects.

How does the value of this contract compare to other engineering support contracts for naval aviation systems?

The total contract value of approximately $38.2 million over its five-year duration places this contract in the mid-to-large range for specialized engineering and integration support within naval aviation. Contracts for major system development, upgrades, or sustainment for platforms like aircraft carriers, submarines, or advanced aircraft can easily reach hundreds of millions or even billions of dollars. However, for specific engineering support services focused on particular systems like JPALS and N-UCAS, $38 million represents a significant investment. Benchmarking against publicly available data for similar niche engineering support contracts suggests that this value is competitive, especially considering the specialized expertise required. The cost-plus-fixed-fee structure also means the final expenditure could vary, but the initial award value is consistent with the complexity and duration of the services.

What are the primary risks associated with this cost-plus-fixed-fee contract?

The primary risks associated with this Cost-Plus-Fixed-Fee (CPFF) contract revolve around cost control and contractor performance. For the government, the main risk is that the contractor may not manage costs efficiently, potentially leading to expenditures exceeding initial estimates, even with a fixed fee component. The 'cost-plus' aspect means the government reimburses allowable costs, and if these are not tightly controlled or are inflated, the overall program cost increases. The 'fixed fee' provides the contractor with an incentive to control costs to maximize profit, but it doesn't eliminate the risk of cost overruns. For the contractor, the risk lies in accurately estimating the costs required to perform the work and ensuring the fixed fee adequately compensates them for the effort and risk undertaken. Inadequate cost estimation or unforeseen technical challenges could erode their profit margin.

How effective is the competition level in ensuring value for money for taxpayers?

The competition level for this contract, with only two bidders participating under a full and open solicitation, presents a mixed picture for taxpayer value. On one hand, having multiple bidders, even just two, introduces some level of price discovery and encourages competitive pricing. The government benefits from having options and the ability to compare proposals. However, a pool of only two bidders is generally considered limited competition. This suggests that the market for these highly specialized engineering services might be narrow, or that barriers to entry (e.g., security clearances, specific technical expertise, past performance requirements) are high. Limited competition can sometimes lead to higher prices than would be achieved in a more robustly contested procurement, as the pressure to underbid rivals is reduced. Therefore, while the process was open, the limited number of participants may have constrained the potential for achieving the absolute best value for taxpayers.

What is the historical spending trend for engineering and integration support within the Department of the Navy?

Historical spending trends for engineering and integration support within the Department of the Navy (DoN) show a consistent and significant demand for these services, driven by the continuous need to modernize, maintain, and upgrade complex naval systems. Over the past decade, the DoN has allocated billions of dollars annually towards R&D, systems engineering, and technical support contracts. Spending in this category fluctuates based on major acquisition programs, platform lifecycle management, and emerging technological requirements, such as cybersecurity and unmanned systems. Contracts like the one awarded to Booz Allen Hamilton for JPALS and N-UCAS integration represent a portion of this broader spending. While specific figures for 'engineering and integration support' can vary depending on how the category is defined (e.g., by NAICS code or functional description), the overall trend indicates sustained, substantial investment in maintaining technological superiority and operational readiness for the naval forces.

What are the implications of the contract duration (over 5 years) on cost and performance?

The contract duration of over five years (March 2012 - August 2017, totaling approximately 65 months) has several implications for cost and performance. For cost, a longer duration allows for potential economies of scale and more predictable resource planning for the contractor, which can sometimes translate into better pricing over the long term compared to multiple short-term contracts. However, it also increases the risk of cost escalation due to inflation, evolving requirements, or unforeseen technical challenges that may arise over an extended period. For performance, a longer contract provides stability and continuity for critical engineering and integration efforts, allowing the contractor to develop deep expertise and a thorough understanding of the systems involved. This continuity can lead to higher quality outcomes and better integration. Conversely, it also means that any performance issues or inefficiencies may persist for a longer duration, requiring diligent government oversight throughout the contract's life.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002410R3380

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Address: 2551 RIVA ROAD, ANNAPOLIS, MD, 21401

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $40,761,890

Exercised Options: $40,434,483

Current Obligation: $38,228,840

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $12,522,399

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4016

IDV Type: IDC

Timeline