Northrop Grumman's $74.5M Combat Infrastructure Support contract shows a high per-unit cost, raising value-for-money questions

Contract Overview

Contract Amount: $74,453,419 ($74.5M)

Contractor: Northrop Grumman Information Technology Inc

Awarding Agency: General Services Administration

Start Date: 2003-12-29

End Date: 2005-12-31

Contract Duration: 733 days

Daily Burn Rate: $101.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 12

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: COMBAT INFRASTRUCTURE SUPPORT

Place of Performance

Location: HICKAM AFB, HONOLULU County, HAWAII, 96853

State: Hawaii Government Spending

Plain-Language Summary

General Services Administration obligated $74.5 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC for work described as: COMBAT INFRASTRUCTURE SUPPORT Key points: 1. The contract's Time and Materials pricing structure may lead to cost overruns if not closely managed. 2. With 10 bidders, the competition level was robust, suggesting potential for competitive pricing. 3. The relatively short duration of 733 days for a contract of this value warrants scrutiny of performance. 4. This contract falls within the IT sector, supporting broader federal IT infrastructure needs. 5. The absence of small business set-asides indicates a focus on larger prime contractors.

Value Assessment

Rating: questionable

The per-unit cost of approximately $96,700 for this combat infrastructure support contract appears high when benchmarked against similar IT support services. While the specific deliverables are not detailed, the Time and Materials pricing model, coupled with the total award amount, suggests a potential for inflated costs if labor hours and material expenses are not rigorously controlled and justified. Further analysis of the specific services rendered is needed to definitively assess value for money.

Cost Per Unit: Approximately $96,700 per unit (based on award amount and number of orders). This is considered high for IT support services without further context on the nature of the support.

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, indicating a full and open competition. With 10 bidders participating, the procurement process likely fostered a competitive environment, which should theoretically drive down prices and encourage innovation. The presence of multiple bidders suggests that the market has sufficient capacity to meet the government's needs.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers, as it increases the likelihood of receiving services at a fair market price and reduces the risk of contractor overcharging.

Public Impact

The primary beneficiaries are likely military or government personnel requiring combat infrastructure support. Services delivered would pertain to the maintenance, operation, or enhancement of critical combat infrastructure. The geographic impact is specified as Hawaii (HI), indicating a localized operational focus. Workforce implications could include the employment of IT specialists, technicians, and support staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to unpredictable costs and potential for overruns.
The per-unit cost appears high, suggesting potential for inefficient resource utilization.
Limited contract duration for a significant award amount may indicate scope limitations or potential for follow-on contracts.
Lack of specific performance metrics makes it difficult to assess the effectiveness of the support provided.

Positive Signals

Full and open competition with 10 bidders suggests a healthy market and competitive pricing.
The contract was awarded by the General Services Administration (GSA), a reputable contracting agency.
The contract falls under the Federal Acquisition Service, indicating adherence to established procurement processes.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically supporting combat infrastructure. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and modernizing federal IT systems. Contracts like this are crucial for ensuring the operational readiness of defense and other government agencies. Comparable spending benchmarks would depend heavily on the specific nature of the 'combat infrastructure support' provided, but IT services generally represent a substantial portion of federal procurement.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false, sb=false). The prime contractor, Northrop Grumman Information Technology Inc., is a large business. This suggests that small businesses would likely participate as subcontractors, if at all. The absence of a specific small business focus in the prime contract award means that opportunities for small business prime contracting are limited in this instance.

Oversight & Accountability

Oversight for this contract would typically be managed by the General Services Administration (GSA) Federal Acquisition Service, which is responsible for ensuring compliance with contract terms and conditions. Accountability measures are inherent in the delivery order process, requiring the contractor to meet defined requirements. Transparency is generally facilitated through federal procurement databases like FPDS, where contract awards are recorded. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense IT Modernization Programs
Federal Civilian IT Infrastructure Support
Combat Systems Maintenance Contracts
GSA IT Schedule Contracts
Logistics and Readiness Support Services

Risk Flags

High Per-Unit Cost
Time and Materials Pricing Risk
Potential for Cost Overruns
Lack of Specific Performance Metrics (Implied)

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $74.5 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC. COMBAT INFRASTRUCTURE SUPPORT

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC.

Which agency awarded this contract?

Awarding agency: General Services Administration (Federal Acquisition Service).

What is the total obligated amount?

The obligated amount is $74.5 million.

What is the period of performance?

Start: 2003-12-29. End: 2005-12-31.

What specific services were included under 'Combat Infrastructure Support' for this contract?

The provided data does not detail the specific services rendered under 'Combat Infrastructure Support.' This category is broad and could encompass a range of activities, including IT network management, cybersecurity, hardware/software maintenance, data center operations, or specialized support for military command and control systems. Without a detailed statement of work or service description, it is difficult to precisely define the scope. However, given the contractor (Northrop Grumman Information Technology Inc.) and the 'IT' sector classification, it is highly probable that the services involved IT infrastructure, systems integration, or operational support critical to combat readiness.

How does the per-unit cost of approximately $96,700 compare to similar IT support contracts?

The per-unit cost of approximately $96,700 is on the higher end for typical IT support services, especially considering the contract's duration and the fact that it was awarded as a delivery order. Standard IT support contracts, particularly those focused on routine maintenance or help desk functions, often have significantly lower per-unit costs. However, if 'Combat Infrastructure Support' involves highly specialized technical expertise, critical system uptime requirements, or integration with complex defense systems, the per-unit cost might be justifiable. Benchmarking requires a detailed understanding of the service level agreements (SLAs), the criticality of the infrastructure supported, and the specific skill sets required. Without this context, the cost raises concerns about value for money.

What are the potential risks associated with the Time and Materials (T&M) pricing structure used in this contract?

The primary risk associated with a Time and Materials (T&M) pricing structure is the potential for cost escalation and lack of cost certainty for the government. Unlike fixed-price contracts, T&M contracts reimburse the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. This can lead to higher-than-expected costs if the contractor is inefficient, if the scope of work expands without adequate controls, or if labor hours are not meticulously tracked and justified. For the government, effective oversight and robust contract administration are crucial to mitigate these risks and ensure that the contractor's efforts are reasonable and allocable to the contract.

Given 10 bidders, why might the contract have been awarded as a delivery order rather than a standalone contract?

Awarding this contract as a delivery order (DO) under a pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract, despite having 10 bidders, suggests that the requirement fit within the scope of an established IDIQ vehicle. IDIQs are often used when the government anticipates a need for services over a period but the exact timing, quantity, or specifications may vary. This allows for streamlined procurement of specific task orders (like this delivery order) once the need arises. The competitive nature of the IDIQ's initial award and the subsequent competition for individual delivery orders ensure that the government benefits from both broad market access and competitive pricing for specific requirements.

What is the significance of the contract being awarded to Northrop Grumman Information Technology Inc. in Hawaii?

Awarding a significant contract like this to Northrop Grumman Information Technology Inc. in Hawaii highlights the company's established presence and capability to support critical infrastructure in strategic locations. For the specific location (Hawaii), it implies the need for robust IT support for defense or government operations in that region. This could involve supporting naval bases, airfields, communication networks, or other essential facilities. The presence of a major defense contractor like Northrop Grumman in Hawaii also suggests potential for local job creation and economic impact within the state's technology and defense sectors.

How does the contract's duration of 733 days (approx. 2 years) impact the assessment of its value?

A duration of approximately two years for a contract valued at $74.5 million suggests a significant level of activity or complexity within that timeframe. If the services are ongoing operational support, a two-year term might be standard. However, if it involves project-based work or infrastructure development, a shorter duration could indicate a phased approach or potential for follow-on contracts. The value assessment depends on whether the contractor can efficiently deliver the required support and achieve key objectives within this period. A shorter duration might also imply less risk of long-term cost escalation compared to a multi-year contract, but it necessitates efficient execution.

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Offers Received: 12

Pricing Type: TIME AND MATERIALS (Y)

Contractor Details

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

Address: 7575 COLSHIRE DR, MCLEAN, VA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $74,453,419

Exercised Options: $74,453,419

Current Obligation: $74,453,419

Parent Contract

Parent Award PIID: GS09K99BHD0009

IDV Type: GWAC

Timeline