DoD's $36.8M wired telecom contract awarded to Northrop Grumman Information Technology Inc. for services in Virginia

Contract Overview

Contract Amount: $36,848,779 ($36.8M)

Contractor: Northrop Grumman Information Technology Inc

Awarding Agency: Department of Defense

Start Date: 2010-09-03

End Date: 2012-03-04

Contract Duration: 548 days

Daily Burn Rate: $67.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: IT

Official Description: DTS

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $36.8 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC for work described as: DTS Key points: 1. Contract value of $36.8M over 548 days suggests a significant investment in telecommunications infrastructure. 2. Awarded under full and open competition, indicating a broad market solicitation. 3. The contract type 'COST NO FEE' implies the government bears the cost of performance, with the contractor receiving no fee. 4. The duration of 548 days (approx. 1.5 years) points to a medium-term service requirement. 5. The North American Industry Classification System (NAICS) code 517110 signifies a focus on wired telecommunications carriers. 6. The contract was awarded by the Department of the Air Force, a major component of the DoD.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service details. However, a $36.8M contract over approximately 1.5 years for wired telecommunications services represents a substantial expenditure. The 'COST NO FEE' contract type is unusual and warrants further investigation into the rationale behind it, as it typically suggests a situation where the contractor's profit is not the primary driver, or perhaps a cost-reimbursement structure with no additional fee. Without comparable contract data for similar services and scope, assessing value for money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' suggesting that all responsible sources were permitted to submit bids. This typically leads to a more competitive environment, potentially resulting in better pricing and terms for the government. The number of bidders is not specified, but the open competition framework is a positive indicator for price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive marketplace, which can drive down costs and encourage innovation. It ensures that the government explores a wide range of potential providers, increasing the likelihood of securing the best value.

Public Impact

The primary beneficiaries are likely military personnel and operations within the Department of the Air Force that rely on robust wired telecommunications. The services delivered are essential for maintaining secure and reliable communication networks. The geographic impact is concentrated in Virginia, where the services were presumably rendered. Workforce implications could include employment opportunities for telecommunications technicians and support staff, both within the contractor's organization and potentially in related support industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'COST NO FEE' contract type raises questions about the contractor's incentive structure and potential for cost overruns, as profit is not directly tied to efficiency.
Lack of specific performance metrics or deliverables makes it difficult to assess the quality and effectiveness of the services provided.
The absence of small business subcontracting information suggests potential missed opportunities for small business participation.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
The contractor, Northrop Grumman Information Technology Inc., is a large, established entity with significant experience in government contracting.
The contract supports critical Department of Defense telecommunications infrastructure.

Sector Analysis

The wired telecommunications carriers sector involves companies that build, operate, and maintain telecommunications infrastructure, including fiber optic networks and other wired systems. This contract falls within the broader IT and telecommunications services market, which is a significant area of federal spending. Comparable spending benchmarks would typically involve analyzing other large-scale telecommunications infrastructure contracts awarded by federal agencies, particularly within the Department of Defense, to understand typical pricing and scope for similar services.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). There is no explicit information regarding subcontracting plans or performance. This suggests that the primary contractor, Northrop Grumman, likely handled the majority of the work, potentially limiting opportunities for small businesses to participate in this specific contract's execution. Further investigation into subcontracting reports would be needed to confirm the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be defined in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract award databases, though detailed performance data may be less accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

DoD Telecommunications Services
Air Force Network Infrastructure
Wired Network Services
Federal Communications Contracts
IT Infrastructure Support

Risk Flags

Unusual contract type ('COST NO FEE') requires careful cost oversight.
Lack of detailed performance metrics makes value assessment difficult.
Potential for limited small business subcontracting opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.8 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC. DTS

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 $36.8 million.

What is the period of performance?

Start: 2010-09-03. End: 2012-03-04.

What specific wired telecommunications services were provided under this contract?

The provided data identifies the NAICS code as 517110 (Wired Telecommunications Carriers), indicating services related to the operation and maintenance of telecommunications networks. However, the specific nature of the services—such as installation, maintenance, bandwidth provision, or network management—is not detailed. These services are crucial for enabling voice, data, and video communications within the Department of Defense, supporting command and control, intelligence, and administrative functions. The contract's value and duration suggest a significant scope, likely encompassing a substantial portion of the Air Force's wired communication needs in the specified region.

How does the 'COST NO FEE' contract type impact contractor incentives and government risk?

The 'COST NO FEE' (CNF) contract type is relatively uncommon and presents a unique incentive structure. In a typical cost-plus contract, the contractor is reimbursed for allowable costs plus a fee (profit). Under CNF, the contractor is reimbursed for allowable costs but receives no additional fee. This suggests that the contractor's primary motivation might not be profit maximization but rather fulfilling a contractual obligation, perhaps due to strategic importance, a desire to maintain a relationship with the government, or because the costs themselves are highly predictable and minimal. For the government, this structure shifts risk; while the government covers all allowable costs, the lack of a fee might reduce the contractor's incentive to control costs aggressively compared to a fixed-fee or incentive-fee contract. It necessitates stringent oversight to ensure costs remain reasonable and necessary.

What is the significance of awarding this contract under 'FULL AND OPEN COMPETITION'?

Awarding this contract under 'FULL AND OPEN COMPETITION' signifies that the Department of the Air Force solicited bids from all interested and qualified sources. This approach is generally preferred as it maximizes the pool of potential offerors, fostering robust competition. The expectation is that this broad solicitation leads to a more competitive bidding process, potentially resulting in better pricing, innovative solutions, and higher quality services for the government. It also enhances transparency and fairness in the procurement process, ensuring that the government secures the best possible value by considering the widest range of market capabilities.

What is the typical cost range for similar wired telecommunications contracts within the DoD?

Determining a precise typical cost range for similar wired telecommunications contracts within the DoD is complex due to variations in scope, duration, technology, and geographic location. However, contracts for large-scale telecommunications infrastructure and services can range from millions to hundreds of millions of dollars annually. Factors influencing cost include the type of service (e.g., dedicated fiber, managed network services, bandwidth provisioning), the number of users or locations supported, security requirements, and the level of service required (e.g., uptime guarantees, latency). The $36.8M value over approximately 1.5 years for this specific contract suggests a significant, medium-to-large scale undertaking within its domain.

What are the potential risks associated with a 'COST NO FEE' contract for telecommunications services?

The primary risk associated with a 'COST NO FEE' contract is the potential lack of contractor incentive to control costs. Since the contractor is reimbursed for all allowable expenses without an additional profit margin tied to efficiency, there might be less motivation to seek cost-saving measures. This could lead to higher overall government expenditure than anticipated if oversight is not rigorous. Additionally, defining and auditing 'allowable costs' can be complex and resource-intensive for the government. There's also a risk that the contractor might prioritize other, more profitable contracts if resources become constrained, potentially impacting service delivery timelines or quality, although the 'COST NO FEE' structure is often used for specific strategic reasons where profit is secondary.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 7575 COLSHIRE DRIVE, MCLEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $36,848,779

Exercised Options: $36,848,779

Current Obligation: $36,848,779

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA877104D0004

IDV Type: IDC

Timeline