Northrop Grumman's $15.1M contract for REMIS IT services shows a lack of competition and potential value concerns

Contract Overview

Contract Amount: $15,097,342 ($15.1M)

Contractor: Northrop Grumman Information Technology Inc

Awarding Agency: Department of Defense

Start Date: 2008-11-01

End Date: 2010-01-31

Contract Duration: 456 days

Daily Burn Rate: $33.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: RELIABILITY AND MAINTAINABILITY INFORMATION SYSTEM (REMIS)

Place of Performance

Location: DAYTON, GREENE County, OHIO, 45430

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $15.1 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC for work described as: RELIABILITY AND MAINTAINABILITY INFORMATION SYSTEM (REMIS) Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type offers some cost certainty but may not fully incentivize efficiency. 3. The duration of the contract (456 days) is relatively short, suggesting a focused scope of work. 4. The services provided fall under 'Other Computer Related Services,' a broad category. 5. The contract was awarded to a single bidder, raising questions about market competitiveness. 6. The absence of small business set-asides indicates a focus on larger prime contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and limited public data on comparable sole-source IT service contracts. The firm fixed-price structure provides some cost control, but without competition, it's difficult to ascertain if the pricing reflects true market value or represents a premium. The provided data does not offer enough detail to compare specific performance metrics or efficiency against industry standards. Further analysis would be needed to assess if the $15.1 million expenditure represents a good return on investment for the Air Force.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning only one vendor, Northrop Grumman Information Technology Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can lead to higher costs for the government compared to a fully competed contract. The lack of competition means taxpayers did not benefit from the potential cost savings that could arise from a bidding war among multiple qualified contractors.

Taxpayer Impact: The absence of competition means taxpayers may have paid a higher price than if multiple vendors had vied for the contract. This limits the government's ability to secure the best possible value for taxpayer dollars.

Public Impact

The primary beneficiary is the Department of the Air Force, which receives IT services for the Reliability and Maintainability Information System (REMIS). The contract supports the operational readiness and maintenance tracking capabilities of Air Force systems. The geographic impact is likely concentrated within the Air Force's IT infrastructure and potentially at locations where REMIS is managed or utilized. Workforce implications may include the employment of IT professionals by Northrop Grumman to fulfill the contract's requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for cost overruns if not managed tightly, despite fixed-price structure.
Limited opportunity for small businesses to participate as prime contractors or through competitive subcontracting.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like Northrop Grumman may indicate a known quantity regarding capability.
Contract supports a critical system (REMIS) for Air Force operations.

Sector Analysis

The IT services sector is vast and highly competitive, encompassing a wide range of services from software development to system maintenance. Contracts for IT support within the Department of Defense are substantial, reflecting the critical role technology plays in military operations. This contract, for 'Other Computer Related Services,' falls into a broad category that can include anything from IT consulting to system integration. Benchmarking spending in this specific sub-sector is difficult without more granular data, but overall IT spending by the DoD is in the tens of billions annually, making individual contracts like this a small but significant part of the larger IT ecosystem.

Small Business Impact

This contract does not appear to have included a small business set-aside, as indicated by the 'sb' field being false. The prime contractor, Northrop Grumman, is a large aerospace and defense technology company. This suggests that the contract was not specifically targeted to encourage small business participation as the prime awardee. While large prime contractors often have subcontracting plans, the absence of a set-aside means there was no direct mandate for a portion of the work to be allocated to small businesses through competitive bidding. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's discretion for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, the justification and approval process would have been subject to specific regulations and potentially higher levels of review within the agency. Transparency is limited due to the non-competitive nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or reported during the contract's performance or closeout. Accountability measures would be embedded in the contract terms and performance monitoring by the Air Force.

Related Government Programs

Defense Information Systems Agency (DISA) IT Services
Air Force Network Integration Center (AFNIC) Contracts
DoD Enterprise IT Services
Cloud Computing Services (DoD)
Cybersecurity Services (DoD)

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of transparency in procurement process.
Limited data available for comprehensive value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.1 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC. RELIABILITY AND MAINTAINABILITY INFORMATION SYSTEM (REMIS)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $15.1 million.

What is the period of performance?

Start: 2008-11-01. End: 2010-01-31.

What is the specific nature of the 'Reliability and Maintainability Information System (REMIS)' and why was it deemed necessary to award this contract on a sole-source basis?

The Reliability and Maintainability Information System (REMIS) is a critical system used by the Department of the Air Force to track and manage the reliability and maintenance status of its assets, including aircraft and other equipment. This system is vital for ensuring operational readiness, planning maintenance schedules, and optimizing resource allocation. The decision to award the contract on a sole-source basis, rather than through full and open competition, typically stems from specific justifications outlined in federal procurement regulations. These justifications often include factors such as the existence of only one responsible source capable of providing the required services, a critical and urgent need that precludes a competitive process, or if the contract is a follow-on to a previous competitive award where only the original contractor possesses the necessary knowledge or proprietary data. Without specific documentation from the Air Force, the exact reason for the sole-source award remains speculative, but it implies a belief that Northrop Grumman was uniquely positioned to fulfill the REMIS IT service requirements at that time.

How does the firm fixed-price (FFP) contract type compare to other contract types in terms of risk and cost control for this type of IT service?

A Firm Fixed-Price (FFP) contract is generally considered to offer the most cost certainty for the buyer (the government) because the price is set and not subject to adjustment based on the contractor's cost experience. For IT services like those provided for REMIS, FFP places the primary cost risk on the contractor. If Northrop Grumman's costs exceed their estimates, their profit margin shrinks; if they come in under budget, their profit increases. This structure incentivizes the contractor to manage costs efficiently and perform the work within the agreed-upon price. Compared to Cost-Plus contracts, FFP offers less flexibility for scope changes and can be less suitable for projects with high technical uncertainty where requirements are likely to evolve significantly. However, for well-defined IT services with clear deliverables, FFP is often preferred for its predictability and to prevent cost overruns, which is a common concern in government IT procurements.

What are the potential implications of awarding a $15.1 million IT contract without competition for the Air Force's budget and future procurement strategies?

Awarding a $15.1 million IT contract without competition carries several potential implications for the Air Force's budget and future procurement strategies. Budget-wise, the primary concern is the potential for paying a premium price. Without competitive bids, there's less assurance that the negotiated price represents the best value achievable in the market. This could lead to inefficient use of taxpayer funds. From a strategic perspective, relying on sole-source awards can stifle innovation and reduce market competition over time. If agencies consistently award contracts to incumbent or preferred vendors without exploring new entrants, it can create barriers for other capable companies and limit the government's access to emerging technologies or more cost-effective solutions. It may also signal to the market that competition is not a priority, potentially discouraging future bids on other contracts. Furthermore, it can reduce the agency's leverage in future negotiations if the contractor becomes indispensable.

Can we assess the contractor's track record with the Air Force or similar government IT contracts based on this single data point?

This single data point provides limited insight into Northrop Grumman Information Technology Inc.'s overall track record with the Air Force or other government entities. We know they were awarded this specific $15.1 million contract for REMIS IT services. The fact that they received a sole-source award might suggest they were the incumbent or possessed unique qualifications recognized by the Air Force at the time. However, it doesn't tell us about their performance quality, adherence to schedule, or cost management on this or other contracts. A comprehensive assessment of their track record would require analyzing multiple contract awards, performance reviews (e.g., Contractor Performance Assessment Reporting System - CPARS), past performance questionnaires, and any documented issues or successes across various programs and agencies. This single award is insufficient to form a definitive judgment on their broader capabilities or reliability.

What does the 'Other Computer Related Services' (NAICS 541519) classification imply about the scope and nature of the work performed under this contract?

The North American Industry Classification System (NAICS) code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide array of IT services not specifically covered by more specialized codes. This typically includes services such as IT consulting, computer facilities management, computer disaster recovery services, and IT support services that don't fit neatly into categories like custom software development (541511) or computer systems design (541512). For this contract with Northrop Grumman, it implies that the scope of work was likely focused on the operational aspects of the REMIS system, potentially involving system administration, maintenance, help desk support, network management, or IT infrastructure support rather than the creation of new software or hardware. The generality of the code means the specific tasks could vary significantly, but it generally points towards services that keep existing computer systems running and supported.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

Address: 7575 COLSHIRE DRIVE, MC LEAN, VA, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $84,459,295

Exercised Options: $84,459,295

Current Obligation: $15,097,342

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA877008D0008

IDV Type: IDC

Timeline