Northrop Grumman's GCSS-ARMY contract awarded over $1.27 billion by the Department of the Army

Contract Overview

Contract Amount: $1,270,490,999 ($1.3B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2007-12-05

End Date: 2020-05-15

Contract Duration: 4,545 days

Daily Burn Rate: $279.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: GCSS-ARMY (F/T)

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $1.27 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: GCSS-ARMY (F/T) Key points: 1. Contract value exceeds $1.27 billion, indicating a significant investment in IT services. 2. Full and open competition suggests a robust bidding process. 3. The contract spans over 12 years, implying long-term system development and support. 4. The primary contractor, Northrop Grumman, has a substantial presence in the defense sector. 5. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 6. The North American Industry Classification System (NAICS) code 541511 points to custom computer programming services.

Value Assessment

Rating: fair

The total award amount of over $1.27 billion for GCSS-ARMY over 12 years suggests a substantial investment. Benchmarking this against similar large-scale IT system development and sustainment contracts within the Department of Defense is challenging without more granular data on scope and deliverables. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, inherently carries a higher risk of cost escalation compared to fixed-price contracts. The number of delivery orders (16) indicates ongoing tasking and potential for scope adjustments over the contract's life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. This suggests a competitive environment was established to secure the best value for the government. The presence of 16 delivery orders implies that the initial award was likely a broad requirement, with subsequent taskings being competed or awarded under the initial umbrella. The specific number of bidders for the original solicitation is not provided, but the 'full and open' designation generally implies multiple interested parties.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to drive down costs through market forces and encourage a wider range of innovative solutions.

Public Impact

The primary beneficiary is the Department of the Army, which receives custom computer programming services for its Global Combat Support System (GCSS-ARMY). This contract supports the modernization and sustainment of critical Army IT infrastructure. The services delivered are essential for operational efficiency, logistics, and resource management within the Army. The geographic impact is primarily within the United States, supporting Army installations and personnel. Workforce implications include employment for IT professionals, software developers, and support staff at Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type introduces potential for cost overruns if not rigorously managed.
Long contract duration (over 12 years) increases the risk of scope creep and evolving technological requirements.
Lack of specific performance metrics or outcome data makes it difficult to assess true value for money.
The sheer scale of the contract could present integration challenges with other Army systems.
Reliance on a single primary contractor for such a critical system warrants close monitoring of performance and financial stability.

Positive Signals

Awarded through full and open competition, suggesting a competitive process to achieve best value.
The contractor, Northrop Grumman, is a major defense contractor with extensive experience in large-scale IT systems.
The contract has been active for over a decade, indicating a sustained need and successful delivery to date.
Multiple delivery orders suggest adaptability to evolving Army requirements over time.
The contract supports a critical system (GCSS-ARMY) vital for Army operations.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically custom computer programming services. The federal IT market is vast, with agencies like the Department of Defense being major consumers. Spending in this area often focuses on developing, integrating, and maintaining complex software systems that support mission-critical operations. Comparable spending benchmarks would involve analyzing other large-scale enterprise resource planning (ERP) or command and control system development contracts within the federal government, particularly those awarded to major defense contractors.

Small Business Impact

The provided data indicates that small business participation (sb) was false and the contract was not a small business set-aside (ss). This suggests that the primary contract was not specifically targeted towards small businesses. However, large prime contractors like Northrop Grumman often engage small businesses as subcontractors to fulfill specific requirements or to meet small business subcontracting goals. The extent of small business involvement would depend on the subcontracting plan negotiated for this contract, which is not detailed here. Without this information, the direct impact on the small business ecosystem is unclear, but it likely represents opportunities for specialized IT firms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates close monitoring of costs incurred by the contractor to ensure they align with the fixed fee and the overall objective. Transparency is typically managed through contract reporting requirements, performance reviews, and potentially audits by the Defense Contract Audit Agency (DCAA). Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or identified.

Related Government Programs

Global Combat Support System - Army (GCSS-ARMY)
Department of Defense IT Modernization Programs
Enterprise Resource Planning (ERP) Systems
Army Logistics Modernization
Defense Business Systems

Risk Flags

Potential for cost overruns due to CPFF contract type.
Risk of technological obsolescence over the long contract duration.
Scope creep management challenges.
Dependence on a single prime contractor for a critical system.
Need for robust government oversight and cost control.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.27 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. GCSS-ARMY (F/T)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $1.27 billion.

What is the period of performance?

Start: 2007-12-05. End: 2020-05-15.

What is the specific scope of services provided under the GCSS-ARMY contract?

The GCSS-ARMY contract, primarily associated with NAICS code 541511 (Custom Computer Programming Services), involves the development, integration, sustainment, and modernization of the Army's Global Combat Support System. This system is designed to provide a unified platform for managing logistics, personnel, financial, and operational data across the Army. Services likely include software development, system maintenance, data migration, user training, and ongoing technical support to ensure the system meets evolving operational requirements and technological standards. The contract's duration and substantial value suggest a comprehensive, long-term engagement covering the full lifecycle of a major enterprise IT system.

How does the Cost Plus Fixed Fee (CPFF) structure impact the value for money in this contract?

The Cost Plus Fixed Fee (CPFF) contract structure means the contractor is reimbursed for all allowable costs plus a predetermined fixed fee representing profit. While this structure offers flexibility for complex projects where the scope may evolve (like large IT systems), it inherently carries a higher risk of cost overruns compared to fixed-price contracts. The government bears the risk of cost increases, and the contractor has less incentive to control costs beyond what is necessary to complete the work within the agreed-upon scope. Effective value for money in a CPFF contract heavily relies on robust government oversight, stringent cost controls, clear definition of allowable costs, and diligent negotiation of the fixed fee to ensure it is reasonable for the risk undertaken by the contractor.

What are the potential risks associated with a contract spanning over 12 years?

A contract duration exceeding 12 years, like the GCSS-ARMY contract, presents several significant risks. Firstly, technological obsolescence is a major concern; systems developed early in the contract may become outdated before its completion, requiring costly upgrades or replacements. Secondly, scope creep is highly probable, as requirements often change significantly over such long periods due to evolving military needs, policy shifts, or new threats. Managing these changes effectively without uncontrolled cost increases is challenging. Thirdly, contractor performance and stability can fluctuate over a decade; key personnel may leave, or the contractor's strategic priorities might shift. Finally, long-term contracts can reduce flexibility for the government to adopt newer, potentially more cost-effective solutions that emerge during the contract's term.

What is Northrop Grumman's track record with large-scale Department of Defense IT contracts?

Northrop Grumman is a major defense contractor with a long history of developing and managing large-scale IT systems and complex programs for the Department of Defense (DoD) and other government agencies. They have been involved in numerous high-value contracts related to command and control, intelligence, surveillance, reconnaissance, logistics, and enterprise resource planning systems. Their experience includes managing intricate software development, system integration, cybersecurity, and sustainment services. While specific performance details for every contract are not publicly available, their continued success in winning and executing large DoD contracts suggests a generally strong capability in handling complex technological challenges and meeting stringent government requirements, although like any large contractor, they may have faced challenges or controversies on specific programs.

How does the number of delivery orders (16) inform the contract's execution and flexibility?

The issuance of 16 delivery orders under this contract indicates a dynamic execution approach rather than a single, monolithic delivery. This suggests that the GCSS-ARMY requirement was likely structured as a larger indefinite-delivery/indefinite-quantity (IDIQ) or similar vehicle, allowing the Army to task specific work through individual orders over time. This flexibility enables the Army to adapt to changing needs, procure services incrementally, and potentially adjust scope or priorities as the project progresses. For the contractor, it means managing multiple work streams and potentially varying requirements across different orders. It also implies that the initial award established a framework and pricing structure under which subsequent, more defined tasks were ordered and executed.

Are there comparable federal spending benchmarks for custom computer programming services of this magnitude?

Finding direct, precise spending benchmarks for custom computer programming services of this magnitude ($1.27 billion over 12+ years) is challenging due to the unique nature of large enterprise IT systems and the proprietary details of specific contracts. However, comparable benchmarks can be drawn from other large-scale federal IT procurements, particularly those involving Enterprise Resource Planning (ERP) systems (like SAP or Oracle implementations), large command and control systems, or major defense software development initiatives. For instance, other branches of the military or civilian agencies undertaking similar system modernizations (e.g., FAA's NextGen, IRS's IT modernization efforts, or other DoD enterprise systems) represent relevant comparison points. The key is to compare not just dollar amounts but also contract duration, scope complexity, and contract type (e.g., CPFF vs. FFP) to assess value.

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

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

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,478,032,419

Exercised Options: $1,478,032,419

Current Obligation: $1,270,490,999

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ07D0005

IDV Type: IDC

Timeline