Northrop Grumman awarded $10.1M for FAA systems enhancements, a competitive delivery order

Contract Overview

Contract Amount: $10,091,988 ($10.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: General Services Administration

Start Date: 2007-09-24

End Date: 2011-09-23

Contract Duration: 1,460 days

Daily Burn Rate: $6.9K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: SYSTEMS ENHANCEMENTS IN SUPPORT OF FAA

Place of Performance

Location: FORT MCNAIR, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20024, UNITED STATES OF AMERICA

State: District of Columbia Government Spending

Plain-Language Summary

General Services Administration obligated $10.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SYSTEMS ENHANCEMENTS IN SUPPORT OF FAA Key points: 1. The contract was awarded competitively, suggesting potential for good value. 2. The pricing structure is Cost Plus Award Fee, which can incentivize performance but requires careful oversight. 3. The duration of 1460 days (4 years) indicates a significant, long-term need for these services. 4. The services fall under Computer Systems Design, a common area for federal IT spending. 5. The contract was awarded by GSA, a common intermediary for agency IT procurements. 6. The small business set-aside flag is false, indicating no specific preference for small businesses in this award.

Value Assessment

Rating: good

The contract's value of approximately $10.1 million over four years for systems enhancements appears reasonable for a large federal IT project. While specific benchmarks for 'systems enhancements' are difficult without more detail, the competitive nature of the award suggests that pricing was vetted against market alternatives. The Cost Plus Award Fee (CPAF) structure allows for performance-based incentives, which can lead to better value if managed effectively, but also carries a risk of cost overruns if award criteria are not stringent.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a 'COMPETITIVE DELIVERY ORDER', indicating it was part of a larger, previously competed contract vehicle. The presence of two bidders (no: 2) suggests a moderate level of competition for this specific delivery order. While more than one bidder is positive, a higher number of bidders typically leads to more robust price discovery and potentially better pricing for the government.

Taxpayer Impact: The competitive award process, even with two bidders, is beneficial for taxpayers as it helps ensure that the government is not overpaying for the required systems enhancements.

Public Impact

The Federal Aviation Administration (FAA) benefits from improved systems, which are critical for air traffic control and safety. The contract delivers computer systems design services, likely involving software development, integration, and maintenance. The geographic impact is primarily within the District of Columbia, where the contract is managed and likely where services are performed or overseen. The workforce implications include employment for IT professionals, engineers, and support staff at Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPAF contract type requires diligent oversight to ensure award fees are justified and costs remain controlled.
Limited competition (2 bidders) for this specific delivery order might mean less aggressive pricing than a broader competition.
The long duration could lead to scope creep or evolving requirements that may not be optimally priced if not managed proactively.

Positive Signals

The contract was awarded competitively, indicating a fair process and potential for value.
Northrop Grumman is a large, established defense and aerospace contractor with significant experience in complex systems.
The services provided are essential for the FAA's mission, suggesting a clear and important government need.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically Computer Systems Design Services. The federal IT market is vast, with agencies consistently investing in modernizing and enhancing their systems. Comparable spending benchmarks for IT systems design can vary widely based on complexity, but contracts in the multi-million dollar range over several years are common for critical infrastructure like that managed by the FAA. This contract represents a portion of the broader federal spending on IT modernization and operational support.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). Therefore, there are no direct subcontracting implications mandated by a small business set-aside. However, as a large prime contractor, Northrop Grumman may still engage small businesses as subcontractors, contributing to the broader small business ecosystem, though this is not a contractual requirement stemming from this specific award.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers within the General Services Administration (GSA) and the benefiting agency, the FAA. The Cost Plus Award Fee (CPAF) structure necessitates robust performance monitoring and evaluation to justify any award fees paid. Transparency is generally maintained through contract award databases and reporting requirements, though specific internal oversight mechanisms are not detailed in the provided data. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

FAA Air Traffic Control Modernization Programs
GSA IT Schedule Contracts
Federal Civilian Agency IT Modernization
Department of Transportation IT Spending
Northrop Grumman Federal Contracts

Risk Flags

Potential for cost overruns due to CPAF structure if not managed tightly.
Limited competition (2 bidders) may not yield the best possible pricing.
Long contract duration increases risk of scope creep or requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $10.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SYSTEMS ENHANCEMENTS IN SUPPORT OF FAA

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 $10.1 million.

What is the period of performance?

Start: 2007-09-24. End: 2011-09-23.

What is Northrop Grumman's track record with similar federal IT contracts, particularly with the FAA or GSA?

Northrop Grumman is a major defense contractor with extensive experience in large-scale IT systems integration, software development, and support services across various government agencies, including the Department of Defense and civilian agencies. Their track record with the FAA and GSA likely includes numerous contracts for complex systems, command and control, and IT infrastructure. While specific performance details for past contracts are often proprietary or require deeper investigation, their status as a prime contractor on significant federal programs suggests a history of meeting contractual requirements. However, like any large contractor, they may have faced challenges or scrutiny on specific projects, necessitating a review of past performance evaluations and any associated corrective actions if available.

How does the $10.1 million value compare to similar FAA systems enhancement contracts awarded over the past five years?

Comparing the $10.1 million value requires context on the scope and duration. This contract spans four years (1460 days), equating to roughly $2.5 million per year. For FAA systems enhancements, this figure could be considered moderate. Larger modernization efforts or enterprise-wide system overhauls can easily reach tens or hundreds of millions of dollars. Smaller, targeted enhancements or specific module developments might fall below this range. Without knowing the precise nature of the 'systems enhancements,' it's difficult to provide a precise benchmark. However, given the competitive award and the duration, the annual spend seems aligned with substantial, but not necessarily transformative, IT projects within a large federal agency.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract structure for this type of service?

The primary risks with a CPAF contract for IT systems enhancements revolve around cost control and the definition of 'awardable' performance. The government pays the contractor's allowable costs plus a fee that is composed of a base amount and an award amount, which is earned based on meeting or exceeding certain performance objectives. The risk is that if the performance criteria are poorly defined, too easily met, or if oversight is lax, the contractor may receive a higher award fee than warranted, increasing the overall cost to the government. Conversely, if criteria are too stringent or subjective, it can demotivate the contractor. Effective management requires clear, measurable metrics and diligent oversight to ensure award fees truly reflect exceptional performance and value.

How effective are GSA's competitive delivery orders in ensuring value for money compared to other contracting methods?

GSA's competitive delivery orders, often issued against pre-competed Multiple Award Schedules (MAS) or other Indefinite Delivery/Indefinite Quantity (IDIQ) vehicles, are generally considered an effective mechanism for achieving value for money, especially for IT services. By leveraging existing competition established during the initial IDIQ or schedule contract award, GSA can streamline the procurement process while still soliciting competition among the awardees for specific task orders. This approach balances speed and efficiency with price competition. However, the level of competition for individual delivery orders (like the 2 bidders here) can influence the final price. While often more efficient than a full and open competition for each need, the value proposition is maximized when multiple qualified vendors actively compete on each order.

What is the historical spending trend for Computer Systems Design Services (NAICS 541512) by the FAA or GSA?

Historical spending data for NAICS code 541512 (Computer Systems Design Services) by the FAA and GSA would likely show a consistent and significant investment over the years. Both agencies rely heavily on IT systems for their core missions. The FAA requires sophisticated systems for air traffic management, safety, and operational efficiency, while GSA procures IT services for its own operations and provides them to other federal agencies. Spending in this category typically increases during periods of major system modernization, upgrades, or when new technological requirements emerge. Analyzing trends would reveal peaks and troughs related to specific large-scale projects or shifts in federal IT spending priorities. This particular $10.1M contract represents a segment of that ongoing investment.

What are the implications of awarding this contract to a large, non-small business contractor like Northrop Grumman?

Awarding this contract to a large business like Northrop Grumman means that the direct contract value does not count towards small business prime contracting goals. While large businesses are required to meet small business subcontracting goals, the primary benefit of direct contract dollars flowing to small businesses is missed. However, large contractors often possess the scale, resources, and specialized expertise required for complex, high-value projects like FAA systems enhancements, which may not be readily available within the small business sector. The government must balance the need to support small businesses with the requirement to procure necessary services effectively and efficiently, often leading to a mix of large and small prime contractors across its portfolio.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: GSCTFMG07M085

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 7575 COLSHIRE DR, MCLEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,169,040

Exercised Options: $16,154,743

Current Obligation: $10,091,988

Parent Contract

Parent Award PIID: GS00T99ALD0207

IDV Type: GWAC

Timeline