Federal Contracting Activities and Contract Types
History and Background of Companies Competing for the Contract
Considered as the forerunner in the advancement of the consulting business, Booz Allen & Hamilton Inc., is regarded as an international management and technology consulting company that deals in technology, business strategy, business operations, and systems consulting services through nearly 60 branches in the world. The company traces its origin from Edwin G. Booz. Booz established a small consulting firm, and two years later, the company moved quickly through the ranks. Unlike most ‘efficiency-engineering’ consulting firm, the company assumed a personnel-oriented, applied-psychology approach that included interviewing its workers with the aim of assessing the organizational structures of companies. In 1953, the company received its first international contract – to study and assist in reorganizing land ownership records for the Philippine government. Since then, the company has been renowned as the largest and most prestigious management consulting firm,’ having served 75% of the country’s largest businesses, 60% of the federal government’s departments, and various types of nonprofit institutions.
On the other hand, headquartered in Reston, Virginia, Science Applications International Corporation (SAIC) is also an American company that offers government services and information technology support. SAIC was established in 1969 by J. Robert Beyster. Over the decades, the company entailed its continuity, until in 2013, when it spun off a $4.5B unit which retained its name, whilst the original company was renamed to Leidos. Following the split, Antony J. Moraco was appointed as the CEO of SAIC Company and on the other hand, John P. Jumper for Leidos Company. The main reason for the spinoff enumerated from the conflict of interest in the Federal Acquisition Regulations. However, over the years, SAIC Company has expanded its presence in the intelligence industry through confidential contracts, cleared personnel, and a strong security structure.
Recent Major Contracts Awarded to both Companies
Booz Allen & Hamilton Company was recently awarded a place on $ 37.5 billion services contract by the U.S Army. The U.S Army, under the Responsive Strategic Sourcing for Services Program Office, saw the company as being steered by the values of hard work and integrity and thus would ensure a world-class program management and procurement services. The Army picked Booz Allen Hamilton Company for the purpose of serving as the key contractor for professional services under a cost-plus-fixed charge, firm-fixed-cost, cost-plus-incentive-fee, and cost contract. The Army also considered that the company would offer a wide range of support services that will focus on control, command, communications, intelligence, investigation, computers, and surveillance solutions. The contract carried a potential of total ceiling value of $37.5B.
Science Applications International Corporation (SAIC) was recently awarded a $155M contract by the Commonwealth of Virginia. The primary purpose of the contract was for the company to serve as a multi-sourcing service integrator (MSI). The contract specifies that the company will offer an innovative strategy to help the Virginia Information Technologies Agency (VITA) with modernizing the state’s technology infrastructure. Commonwealth picked the company for the effect that it delivers modern and responsive technological solutions which are the key priority to VITA. The company is also proud to work with VITA to aid as its new MSI provider to assist Virginia in executing a marketplace of consolidated IT amenities and resolutions to ensure and oversight main IT projects, and the procurement of technology-related commodities and services. The contract has a 5 year base period of performance delegated in a two-year option, with a potential of $270M, if all options are exercised.
Type of Contract
The Department of Defense plans to issue a $400,000 federal contract to a company that specializes in drone navigation technologies. As a result, the auditor to the government had been contacted to weigh up the operational data VectorCal and one competitor, Booz Allen and Hamilton to decide which company should win the government contract. The contract is very diverse in that it allows a cost-plus-fixed-fee, cost-plus-award-fee, firm fixed price, time and material, and fixed price award fee task orders, permitting the client maximum elasticity in meeting their specific requirements (Pro & Counsel, 2018). The contract aims at supporting the U.S Army’s infrastructure objectives with a wide range of innovative and world-class technology solutions at an equitable price.
Booz Allen Hamilton Company offers its solutions through indefinite Delivery/Indefinite Quantity Contracts which are usually based on both a fixed-price and cost-reimbursement basis. It’s for a fact that all government agencies use fixed-price contracts where an adjustable price may be applicable, as the ceiling price, a target price, or both. Through the Government-Wide Acquisition (GWAC) for additional earning, and Blanket Purchase Agreements (BPA) for filling anticipated government repetitive needs, which has been awarded to Booz, it certainly shows that the company offers a wide range of services. The company tends to manage a wide portfolio of government contracts that provide its clients with quick and flexible channels to access the full range of their management and technology services thus, qualifying for the contract.
On the other side, VectorCal Company has been the only company that served the government for many years. The company does not make use of the more efficient qualitative methods of forecasting where it can be able to utilize the short term predictions which are gained through this method to ensure that it corners the market.
Direct and Indirect Costs incurred by the Companies
Booz Allen Hamilton Company incurs various direct and indirect costs traced to its navigation system. The direct costs incurred by the company include the following: the labor with which assists on production facility. The company has over 500000 workers with which certainly adds to the costs of the company. The company also incurs opportunity costs, material costs, equipment and relevant software. Examples of indirect costs incurred by the company include – payment of salaries, general supplies, depreciation costs, advertisement costs, electricity cost, and accounting services.
SAIC Company incurs the following direct costs; the first direct cost incurred by SAIC Company is research and development costs. It also incurs labor cost, with which work to produce the navigation system such as the workers, supervisors and production heads. The company also incurs the material cost. Examples of indirect costs incurred by the company include – administration costs, personnel and security and confidential concern costs, depreciation costs, rental cost, and maintenance of records.
With the chance of the federal contract at hand, it is a key component in considering the various costs incurred by the two competing companies, with the aim of determining the appropriate company to award the contract. Looking at the case of Booz Allen Hamilton Company, there are numerous direct costs that are associated with its proposal, besides the additional indirect costs related to the project. Equally, SAIC Company also incurs a various set of both direct and indirect costs largely linked to its proposal to the contracts at hand.
There exist various eminent similarities and outstanding differences in the two companies in regards to their direct and indirect costs. However, it very important for one to assess the elements of each company’s set of incurred costs to evaluate their management capacities, strategic methodology to cost management and relate all the data to the nature of the contract (Pearce, Robinson, & Subramanian, 2000).
The Company that should be awarded the Contract
Basing the arguments from the analysis of the data described the two competing companies, the contract should be awarded to SAIC Company. Firstly, as much the company invests much in Research and Development, the essence of R&D Department is to help the company in determining the strategies that provide mission-focused technology solutions and advancement of its capabilities and integrating them with consulting expertise (Slack, 2015). Secondly, SAIC Company has also proven to be efficient in its cost management, given that its cost-effectiveness was one of the main concerns that led to the company being awarded the most recent contract. Thirdly, the company is more proficient at managing the direct costs associated with the project, through minimization of such threats of experiencing complications associated with cost constraints. Fourthly, as much the two are quite similar in cost structures, Booz Allen Hamilton invests much in labor cost due to which its overhead costs are therefore very high. Lastly, Booz Allen Hamilton is still under investigation into having employed two workers with whom leaked the most damaging confidential data in the history.
References
Pearce, J. A., Robinson, R. B., & Subramanian, R. (2000). Strategic management: Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill.
Pro, P., & Counsel, C. (2018). News & Events. Of Counsel.
Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.