DoD's $35M software maintenance contract awarded to Northrop Grumman shows fair value with 16 bids
Contract Overview
Contract Amount: $34,993,981 ($35.0M)
Contractor: Northrop Grumman Information Technology Inc
Awarding Agency: Department of Defense
Start Date: 2011-01-20
End Date: 2013-08-30
Contract Duration: 953 days
Daily Burn Rate: $36.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 16
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: SOFTWARE MAINTENANCE AND SUPPORT SERVICES
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 $35.0 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC for work described as: SOFTWARE MAINTENANCE AND SUPPORT SERVICES Key points: 1. The contract's value appears reasonable given the scope of software maintenance and support. 2. A robust competition with 16 bidders suggests a healthy market for these services. 3. The cost-plus-fixed-fee structure warrants scrutiny for potential cost overruns. 4. This contract supports critical Department of the Army IT infrastructure. 5. Northrop Grumman's performance on similar contracts will be a key indicator of success. 6. The duration of the contract (953 days) indicates a long-term need for these services.
Value Assessment
Rating: good
The total award amount of $34,993,981 for software maintenance and support services over approximately 2.5 years appears to be within a reasonable range for this type of specialized IT support. Benchmarking against similar contracts for custom computer programming services (NAICS 541511) would provide a more precise value-for-money assessment. However, the presence of 16 bids suggests that the pricing was competitive, which generally leads to better value.
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 bids. The participation of 16 bidders is a strong positive signal, suggesting a competitive marketplace for these software maintenance and support services. A high number of bidders typically drives down prices and encourages innovation as contractors vie for the award.
Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers, as it likely resulted in a more favorable price than a sole-source or limited competition award would have.
Public Impact
The primary beneficiaries are the Department of the Army, which receives essential IT support. The services delivered include maintenance and support for critical software systems. The geographic impact is primarily within the United States, supporting Army operations. Workforce implications include the employment of skilled IT professionals by the contractor.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contracts can incentivize contractors to increase costs to maximize profit if not closely monitored.
- The specific software systems being maintained are not detailed, which could obscure potential risks.
- Reliance on a single large contractor for critical software support could pose a risk if performance degrades.
Positive Signals
- Awarded under full and open competition with a significant number of bidders (16).
- The contract is for essential software maintenance and support, indicating a clear need.
- Northrop Grumman is a large, established defense contractor with significant IT capabilities.
Sector Analysis
This contract falls within the Information Technology sector, specifically custom computer programming services. The market for IT maintenance and support is substantial, with government spending on such services consistently high. This contract represents a portion of the Department of Defense's broader IT modernization and sustainment efforts, aligning with industry trends towards outsourcing specialized IT functions to large, capable providers.
Small Business Impact
The contract was not set aside for small businesses, and the prime contractor, Northrop Grumman, 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 is likely minimal unless Northrop Grumman voluntarily engages small businesses for subcontracting opportunities.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and the program management office within the Department of the Army. Accountability measures are embedded in the contract terms, including performance standards and payment schedules tied to deliverables. Transparency is generally maintained through contract award databases, though specific performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Department of Defense IT Services
- Custom Computer Programming Services
- Software Maintenance Contracts
- Northrop Grumman IT Contracts
Risk Flags
- Cost-plus-fixed-fee contract type requires diligent oversight to manage costs.
- Potential for vendor lock-in if specific software is proprietary and requires specialized support.
- Lack of detailed information on the specific software systems supported.
Tags
it, defense, department-of-the-army, software-maintenance, northrop-grumman, cost-plus-fixed-fee, full-and-open-competition, custom-computer-programming-services, large-business, usa
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $35.0 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC. SOFTWARE MAINTENANCE AND SUPPORT SERVICES
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 Army).
What is the total obligated amount?
The obligated amount is $35.0 million.
What is the period of performance?
Start: 2011-01-20. End: 2013-08-30.
What is Northrop Grumman's track record with similar IT maintenance and support contracts for the Department of Defense?
Northrop Grumman has a long history of providing IT services and support to the Department of Defense across various branches. Their experience spans complex system integration, software development, cybersecurity, and sustainment. Analyzing their past performance on cost-plus-fixed-fee contracts, specifically for software maintenance, would reveal their ability to manage costs effectively and deliver reliable support. Past performance reviews, contract termination data, and any documented disputes or awards associated with similar contracts would provide a clearer picture of their reliability and value proposition in this domain. Given their size and tenure, it's likely they have extensive relevant experience, but specific contract data is needed for a definitive assessment.
How does the value of this contract compare to other similar software maintenance contracts awarded by the DoD?
The total award of approximately $35 million over roughly two and a half years for software maintenance and support services needs to be benchmarked against comparable contracts. Factors such as the complexity of the software, the number of users supported, the criticality of the systems, and the specific services included (e.g., 24/7 support, patching, upgrades) significantly influence pricing. Without detailed specifications of the software and services covered, a direct comparison is challenging. However, considering the NAICS code (541511 - Custom Computer Programming Services) and the contract type (Cost Plus Fixed Fee), this award appears to be within a typical range for large-scale government IT support. A more granular analysis would involve comparing the average cost per service hour or per system supported against industry benchmarks and other government contracts of similar scope.
What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract structure?
The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is reimbursed for allowable costs, the 'fixed fee' component is predetermined. This structure can incentivize contractors to incur higher costs, as their profit (the fee) remains constant regardless of the actual costs incurred. This necessitates robust oversight from the government to ensure that all costs are reasonable, allocable, and necessary. Without stringent monitoring and clear performance metrics, the government may end up paying more than anticipated. Conversely, CPFF can be beneficial when the scope of work is not well-defined initially, allowing flexibility while providing the contractor with a guaranteed profit margin.
How effective is the competition level (16 bidders) in ensuring price discovery and value for the taxpayer?
A competition level of 16 bidders is generally considered very strong and is highly effective in ensuring price discovery and achieving good value for taxpayers. This high number of participants indicates a robust and accessible market for the required software maintenance and support services. Intense competition typically drives down proposed prices as contractors strive to be the most cost-competitive while meeting technical requirements. It also encourages contractors to offer innovative solutions and superior service levels to win the contract. The significant number of bids suggests that the government received a wide range of pricing options, allowing for a thorough evaluation and selection of the most advantageous offer, thereby maximizing taxpayer value.
What are the potential performance implications given the contract duration of 953 days?
A contract duration of 953 days (approximately 2 years and 7 months) suggests a stable, long-term requirement for the software maintenance and support services. This extended period allows the contractor, Northrop Grumman, to develop deep expertise in the specific systems being supported, potentially leading to more efficient and effective service delivery over time. It also provides continuity for the Department of the Army, reducing the disruption associated with frequent contract transitions. However, a long duration also means that performance issues, if they arise, could persist for an extended period if not addressed promptly through contract management and oversight. Regular performance reviews and clear communication channels are crucial to ensure sustained high performance throughout the contract lifecycle.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 16
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 7575 COLSHIRE DRIVE, MC LEAN, VA, 22102
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $34,993,981
Exercised Options: $34,993,981
Current Obligation: $34,993,981
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W91QUZ07D0005
IDV Type: IDC
Timeline
Start Date: 2011-01-20
Current End Date: 2013-08-30
Potential End Date: 2013-08-30 00:00:00
Last Modified: 2017-03-07
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