Costs of no-bid contract at DHS balloon

Published 28 June 2007

DHS had to hit the ground running in 2003, so it awarded a no-bid contract for Booz Allen to get intelligence operations going; costs soared, and the original $2 million contract grew to $124 million

The Washington Post’s Robert O’Harrow Jr. reports that a project DHS started in 2003 with a $2 million contract to help the new department get an intelligence operation up and running soon ballooned way beyond the original parmeters. During the following year, the cost of the no-bid arrangement with McLean, Virginia-based consultant Booz Allen Hamilton increased by millions of dollars per month, as the consulting firm provided analysts, administrators, and other contract employees to the department’s Information Analysis and Infrastructure Protection offices. In the end, the $2 million contract evolved into work worth more than 60 times its original estimated value.

Booz Allen is one of the U.S. government’s biggest contractors, with about $2 billion in federal revenue. The firm has done extensive work for defense and intelligence agencies, and the General Services Administration (GSA) had preapproved Booz Allen to provide engineering and professional services to federal agencies at set labor rates. We should also note that the arrangements with the Booz Allen is not unique, in that more and more government agencies rely on private consultants to fill staffing shortfalls in federal agencies.

O’Harrow writes that, last year, Booz Allen finally faced competition for its DHS contracting as DHS had broken the work into five contracts. In total, those contracts were worth more than $50 million over a year’s time. Booz Allen won them all.