GSA's $25M custom programming contract with Northrop Grumman shows fair value despite limited competition

Contract Overview

Contract Amount: $25,025,559 ($25.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: General Services Administration

Start Date: 2002-11-15

End Date: 2006-05-05

Contract Duration: 1,267 days

Daily Burn Rate: $19.8K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Place of Performance

Location: VIRGINIA

State: Virginia Government Spending

Plain-Language Summary

General Services Administration obligated $25.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. The contract achieved a reasonable value for custom computer programming services, aligning with benchmarks for similar engagements. 2. Competition was limited, with only two bidders, potentially impacting price discovery and overall cost-effectiveness. 3. The cost-plus-fixed-fee structure introduces some risk of cost overruns, though oversight mechanisms can mitigate this. 4. Performance duration was substantial, indicating a long-term need for these specialized programming services. 5. This contract falls within the IT services sector, specifically custom computer programming, a critical area for government operations. 6. The absence of small business set-asides suggests a focus on large, established contractors for this specific requirement.

Value Assessment

Rating: fair

The total award of approximately $25 million over its period of performance suggests a moderate investment for custom computer programming. Benchmarking against similar government contracts for IT services indicates that the pricing was within an acceptable range, though not exceptionally low. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex projects, inherently carries more risk of cost escalation compared to fixed-price contracts. However, the fixed fee component provides some predictability. Without detailed cost breakdowns, a precise value-for-money assessment is challenging, but the overall expenditure appears reasonable given the scope and duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded as a competitive delivery order, but with only two bidders, the level of competition was limited. While competition existed, the low number of participants may have restricted the range of innovative solutions and potentially led to less aggressive pricing than a more robust bidding process might have yielded. The General Services Administration (GSA) likely leveraged existing contract vehicles or established procurement processes that may have influenced the number of interested parties. The limited competition warrants scrutiny to ensure the government secured the best possible value.

Taxpayer Impact: Limited competition means taxpayers may have paid a higher price than if more vendors had vied for the contract. It also suggests fewer opportunities for new or smaller businesses to compete for this type of work.

Public Impact

Federal agencies requiring custom computer programming services benefited from the development and maintenance of specialized software solutions. The contract supported the modernization and operational efficiency of government IT infrastructure. Workforce implications include the employment of skilled software developers, programmers, and IT professionals by the contractor. Geographic impact is primarily concentrated where Northrop Grumman Systems Corporation has development centers, likely supporting national IT capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure can incentivize cost overruns if not closely monitored.
Limited competition may result in suboptimal pricing for taxpayers.
Long contract duration increases exposure to evolving technology risks and potential obsolescence.

Positive Signals

Awarded to a large, established contractor with a significant track record in defense and aerospace.
The contract was competitively awarded, indicating some level of market vetting.
Services provided are critical for government IT infrastructure and operations.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically under Custom Computer Programming Services (NAICS 541511). This is a vital segment of the federal IT market, encompassing the design, development, and implementation of tailored software solutions. The federal government is a major consumer of these services, often requiring highly specialized applications to meet unique mission needs. Spending in this area is substantial, with numerous contracts awarded annually. This particular contract's value of approximately $25 million places it in the mid-to-large tier for custom programming engagements.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). This suggests that the requirement was likely fulfilled through a vehicle or process that did not prioritize small business participation, or that the nature of the custom programming services required capabilities typically found in larger firms. Consequently, there are likely no direct subcontracting opportunities mandated for small businesses under this specific award, potentially limiting the direct impact on the small business IT ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would have been managed by the General Services Administration (GSA), likely through its Federal Acquisition Service. Mechanisms would include regular progress reports from the contractor, performance reviews, and financial audits, particularly given the Cost Plus Fixed Fee (CPFF) structure. The contract's duration and value necessitate diligent oversight to ensure adherence to scope, budget, and quality standards. Transparency would be facilitated through contract databases and reporting requirements, though specific details of internal oversight processes are not publicly detailed.

Related Government Programs

IT Professional Services
Custom Software Development
IT Services for Federal Agencies
General Services Administration IT Contracts

Risk Flags

Limited Competition
Cost-Plus-Fixed-Fee Structure
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $25.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.0 million.

What is the period of performance?

Start: 2002-11-15. End: 2006-05-05.

What was Northrop Grumman Systems Corporation's track record with the GSA prior to this award?

Prior to this specific award in November 2002, Northrop Grumman Systems Corporation had a substantial history of contracting with the U.S. federal government, including with the General Services Administration (GSA). As a major defense contractor and technology provider, they have consistently secured large and complex contracts across various agencies. Their experience typically spans areas like IT services, aerospace, defense systems, and logistics. While specific GSA contract history details prior to 2002 are not exhaustively detailed in this data, their established presence in the federal contracting landscape suggests a proven capability to meet government requirements, albeit often at significant cost.

How does the $25 million award compare to similar custom programming contracts?

The $25 million award for custom computer programming services over its approximately 3.5-year duration (1267 days) is a substantial but not extraordinary figure within the federal IT landscape. Comparable contracts for similar services, especially those involving complex system development or integration, often range from tens to hundreds of millions of dollars. For instance, large-scale software development projects for agencies like the Department of Defense or Homeland Security can easily exceed this amount. The value appears to be in the mid-range for significant custom programming efforts, suggesting it was a substantial project but not necessarily a flagship or exceptionally large-scale undertaking compared to the entirety of federal IT spending.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract like this one?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the contractor may have less incentive to control costs compared to a fixed-price contract. While the 'fixed fee' provides a defined profit margin, the 'cost plus' element means the government reimburses the contractor's allowable costs. If cost controls are weak or if the contractor inflates costs, the total expenditure can exceed initial estimates, even though the fee remains constant. This necessitates robust government oversight to scrutinize incurred costs and ensure they are reasonable, allocable, and allowable. Another risk is potential scope creep, where the project expands beyond initial definitions, leading to increased costs and potentially delays.

How effective are GSA's oversight mechanisms for large IT contracts?

GSA's oversight mechanisms for large IT contracts are generally structured to ensure compliance and value, though effectiveness can vary. They typically involve contract officers, technical monitors, and program managers who review contractor performance, deliverables, and financial reports. For CPFF contracts, rigorous auditing of costs is crucial. GSA utilizes various tools and processes, including performance metrics, regular meetings, and contract close-out procedures. However, the sheer volume and complexity of contracts managed by GSA can strain resources, potentially impacting the depth of oversight on any single contract. Inspector General reports often highlight areas for improvement in oversight and contract management across federal agencies, including GSA.

What were historical spending patterns for custom computer programming services by the GSA?

Historical spending patterns for custom computer programming services by the GSA, particularly in the early 2000s when this contract was active, show a consistent and significant investment in IT modernization and support. GSA, as a primary provider of IT services and procurement vehicles for other agencies, consistently awarded substantial contracts in this category. Spending was driven by the need for agencies to develop bespoke software solutions for unique operational requirements, replace legacy systems, and enhance digital capabilities. While specific aggregate spending figures for GSA in this exact sub-category from that era require deeper data dives, the overall trend was upward, reflecting the increasing reliance on technology across the federal government.

What does the limited competition (2 bidders) imply for price discovery and taxpayer value?

Limited competition, such as having only two bidders, generally implies weaker price discovery. When more companies compete, they are incentivized to offer more competitive pricing to win the contract. With only two bidders, the lower-priced offer might still be significantly higher than what could have been achieved in a more crowded field. This can lead to taxpayers potentially overpaying for the services rendered. While the government still aims for the 'best value,' the range of options and the pressure to undercut rivals are diminished, making it harder to ascertain if the absolute lowest reasonable price was secured.

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: COMPETITIVE DELIVERY ORDER

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

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

Address: 12900 FEDERAL SYSTEMS PARK DR, FAIRFAX, VA, 11

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $25,034,157

Exercised Options: $25,917,468

Current Obligation: $25,025,559

Parent Contract

Parent Award PIID: GS07T00BGD0066

IDV Type: GWAC

Timeline