DoD's $36M IT services contract awarded to Northrop Grumman shows fair value despite limited competition

Contract Overview

Contract Amount: $35,937,326 ($35.9M)

Contractor: Northrop Grumman Information Technology Inc

Awarding Agency: Department of Defense

Start Date: 2008-04-08

End Date: 2011-09-23

Contract Duration: 1,263 days

Daily Burn Rate: $28.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: IT SOLUTIONS SERVICES TAS::97 0100::TAS

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 $35.9 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC for work described as: IT SOLUTIONS SERVICES TAS::97 0100::TAS Key points: 1. Contract awarded for custom computer programming services, indicating a need for specialized IT solutions. 2. The contract duration of over three years suggests a significant, ongoing requirement. 3. Awarded under full and open competition, but the number of bids received warrants further examination. 4. The Time and Materials pricing structure can pose risks if not closely managed. 5. Northrop Grumman's extensive experience in defense IT likely influenced the award. 6. The contract's value is substantial, reflecting the complexity and scope of IT support needed by DISA.

Value Assessment

Rating: good

The contract value of approximately $36 million over three years for custom computer programming services appears reasonable when benchmarked against similar large-scale IT support contracts within the Department of Defense. While specific per-unit cost data is not provided, the overall award amount suggests a fair price for the services rendered, considering the specialized nature of the work and the contractor's established capabilities. The Time and Materials (T&M) pricing model, however, necessitates diligent oversight to ensure costs remain within expected parameters and do not escalate due to inefficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is the preferred method for ensuring the widest possible access to the marketplace. However, with 16 bids received, the level of competition, while present, might not have been as robust as anticipated for a contract of this magnitude. A higher number of bids could potentially drive prices lower and foster greater innovation. The presence of multiple bidders indicates that the requirement was accessible, but the final number suggests potential barriers to entry or a highly specialized market.

Taxpayer Impact: While full and open competition was utilized, the number of bids received suggests that taxpayers may not have benefited from the most aggressive pricing possible. However, the process did ensure a degree of market vetting.

Public Impact

The Department of Defense, specifically the Defense Information Systems Agency (DISA), benefits from enhanced IT infrastructure and support. Services delivered include custom computer programming, crucial for maintaining and upgrading critical defense systems. The geographic impact is primarily within the defense sector's operational areas, supporting national security. Workforce implications include the potential for skilled IT professionals to be engaged in supporting defense missions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials (T&M) pricing can lead to cost overruns if not managed effectively.
The number of bids (16) might indicate less intense competition than ideal for a contract of this size, potentially impacting price optimization.
Lack of specific performance metrics in the provided data makes it difficult to assess the efficiency and effectiveness of the services delivered.
The contract's duration could lead to vendor lock-in if not periodically re-evaluated for competitive alternatives.

Positive Signals

Awarded under full and open competition, maximizing potential bidder pool.
Northrop Grumman is a large, established contractor with significant experience in defense IT, suggesting reliability.
The contract value appears reasonable for the scope of custom IT services required by a major defense agency.
The contract duration of over three years indicates a stable, long-term need being met.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically custom computer programming services. The IT services market for the federal government is vast, with significant spending allocated to software development, system integration, and IT support. Contracts like this are essential for agencies like the Defense Information Systems Agency (DISA) to maintain and modernize their complex technological infrastructure. Benchmarks for similar custom programming contracts often range from tens to hundreds of millions of dollars, depending on the scope and duration.

Small Business Impact

This contract was not set aside for small businesses, and the data does not indicate any subcontracting requirements for small businesses. As a large prime contract awarded to a major defense contractor, the primary impact on the small business ecosystem would be indirect, potentially through opportunities if Northrop Grumman chooses to subcontract portions of the work. However, without explicit set-aside provisions or reported subcontracting plans, direct benefits to small businesses are not evident from this award alone.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program management office within the Defense Information Systems Agency (DISA). The Time and Materials (T&M) pricing structure necessitates close monitoring of labor hours and material costs to ensure compliance with the contract terms and prevent overspending. Transparency is generally maintained through contract reporting mechanisms, and accountability rests with both the contractor to deliver services as specified and the agency to manage the contract effectively. Inspector General involvement would be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Defense Information Systems Agency (DISA) IT Support Contracts
Custom Computer Programming Services (NAICS 541511)
Department of Defense IT Modernization Programs
Time and Materials IT Contracts

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Limited number of bidders may indicate suboptimal price competition.
Lack of specific performance metrics hinders effectiveness assessment.
Long contract duration could lead to vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.9 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC. IT SOLUTIONS SERVICES TAS::97 0100::TAS

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 (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $35.9 million.

What is the period of performance?

Start: 2008-04-08. End: 2011-09-23.

What is Northrop Grumman's track record with similar IT services contracts within the Department of Defense?

Northrop Grumman Information Technology Inc. has a substantial track record with the Department of Defense, frequently securing large contracts for IT services, systems integration, and cybersecurity solutions. Their history includes numerous awards for complex projects supporting various military branches and defense agencies, including DISA. This extensive experience suggests a deep understanding of the DoD's operational requirements, security protocols, and procurement processes. While specific performance metrics for this particular contract are not detailed, Northrop Grumman's consistent presence as a prime contractor in the defense IT space indicates a generally accepted capability and reliability in delivering complex IT solutions to government clients.

How does the $35.9 million contract value compare to other custom computer programming services contracts awarded by DISA or the DoD?

The $35.9 million contract value for custom computer programming services awarded to Northrop Grumman is a significant but not extraordinary amount for a multi-year IT support contract within the Department of Defense. DISA and other DoD components frequently award contracts in the tens to hundreds of millions of dollars for similar services, especially those involving system development, integration, and maintenance of critical infrastructure. For instance, contracts for enterprise resource planning (ERP) systems, network modernization, or cybersecurity solutions can easily exceed this value. When compared to the broader landscape of federal IT procurements, this contract represents a mid-to-large-sized award, reflecting a substantial but typical investment for specialized programming needs within a major defense agency.

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

The primary risk associated with the Time and Materials (T&M) pricing structure is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts pay the contractor for the actual labor hours expended and the cost of materials used. This can lead to higher overall costs for the government if the project takes longer than anticipated, if labor productivity is low, or if material costs are higher than estimated. Effective oversight, including detailed tracking of hours, verification of work performed, and negotiation of labor rates, is crucial to mitigate these risks. Without stringent management, T&M contracts can become significantly more expensive than initially projected, impacting the overall value for money.

Given the 'full and open competition' award type, why might only 16 bids have been submitted for a contract of this size?

While 'full and open competition' theoretically allows all responsible sources to submit bids, several factors could explain why only 16 bids were received for this contract. Firstly, the specialized nature of 'Custom Computer Programming Services' (NAICS 541511) may limit the number of companies possessing the requisite technical expertise, clearances, and past performance. Secondly, large-scale defense contracts often involve complex requirements, extensive documentation, and significant proposal preparation costs, which can deter smaller or less experienced companies. Thirdly, the incumbent contractor (if applicable) or established players in the defense IT market might have a competitive advantage. Finally, the specific technical requirements or security demands of the Defense Information Systems Agency could narrow the field of qualified bidders.

What does the contract's duration (1263 days) imply about the nature of the IT services being procured?

The contract duration of 1263 days, approximately 3.5 years, implies that the IT services being procured are for ongoing, long-term needs rather than short-term projects. This suggests requirements related to the sustainment, maintenance, enhancement, or development of complex systems that require continuous support. Such durations are common for services like software lifecycle management, network operations, cybersecurity monitoring, or the continuous evolution of mission-critical applications. A longer contract term also indicates a level of stability and predictability sought by the agency, allowing the contractor to invest in resources and personnel dedicated to the program, while also potentially leading to vendor lock-in if not managed carefully.

How does the 'AW: DO' award action code typically relate to the contract type and competition?

The 'AW: DO' award action code generally signifies an 'Awarded' action, and the 'DO' often implies 'Department of Defense' or a specific type of award action within DoD. In the context of this contract, which was awarded under 'Full and Open Competition,' the 'DO' likely confirms it as a standard award resulting from a competitive process managed by the Department of Defense. It doesn't inherently specify the contract type (like T&M, FFP, etc.) but rather the administrative action of awarding the contract. Its presence alongside 'Full and Open Competition' reinforces that the award followed a standard, competitive procurement procedure within the DoD framework.

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: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

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

Address: 7575 COLSHIRE DRIVE, MC LEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $38,536,652

Exercised Options: $38,536,652

Current Obligation: $35,937,326

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ07D0005

IDV Type: IDC

Timeline