Northrop Grumman awarded $9.9M for CAD/CAM services by HHS CDC, highlighting custom programming needs
Contract Overview
Contract Amount: $9,915,927 ($9.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2006-07-01
End Date: 2011-05-31
Contract Duration: 1,795 days
Daily Burn Rate: $5.5K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: COMPUTER AIDED DESGN/MFG SVCS
Place of Performance
Location: ATLANTA, DEKALB County, GEORGIA, 30329
State: Georgia Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $9.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: COMPUTER AIDED DESGN/MFG SVCS Key points: 1. Contract value of $9.9M for Computer Aided Design/Manufacturing services indicates significant investment in specialized technical support. 2. The full and open competition suggests a robust market for these services, potentially leading to competitive pricing. 3. A Cost Plus Fixed Fee contract type may introduce cost overrun risks if not closely managed. 4. The duration of the award (over 4 years) points to a long-term need for these specialized design and manufacturing services. 5. This contract falls under the Custom Computer Programming Services NAICS code, emphasizing the software and system development aspect of CAD/CAM. 6. The award to a large, established contractor like Northrop Grumman suggests a focus on reliability and extensive capabilities.
Value Assessment
Rating: good
The contract value of $9.9 million for Computer Aided Design/Manufacturing services appears reasonable given the duration of over four years and the specialized nature of the work. Benchmarking against similar contracts for custom computer programming services (NAICS 541511) would provide a clearer picture of value for money. However, the fixed fee component within a Cost Plus structure suggests an attempt to control costs while allowing for flexibility in technical execution.
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 bids. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The specific number of bidders is not provided, but the method itself suggests a healthy level of market interest and availability of qualified contractors for these specialized CAD/CAM services.
Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring that the government receives the most advantageous offers available.
Public Impact
The Centers for Disease Control and Prevention (CDC) benefits from advanced design and manufacturing capabilities, likely supporting critical research, development, or operational needs. Services delivered include Computer Aided Design and Manufacturing (CAD/CAM), crucial for creating and refining complex technical specifications and prototypes. The contract's geographic impact is centered around the agency's operations, with potential downstream effects on federal health initiatives. Workforce implications may involve highly skilled engineers, designers, and programmers, both within the contractor's organization and potentially through subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if the fixed fee is not adequately justified by the scope of work and if costs escalate beyond initial projections.
- Lack of specific performance metrics or detailed scope of work in the provided data makes it difficult to assess the efficiency and effectiveness of the services rendered.
- The long contract duration without clear break clauses or performance reviews could potentially reduce contractor incentive to innovate or optimize costs over time.
Positive Signals
- Awarded under full and open competition, suggesting a competitive bidding process that likely secured a fair market price.
- The selection of a large, established contractor like Northrop Grumman implies a high degree of confidence in their technical expertise and ability to deliver complex services.
- The contract's focus on CAD/CAM services indicates investment in advanced technological capabilities essential for modern research and development or operational support.
Sector Analysis
The Computer Aided Design/Manufacturing (CAD/CAM) services sector is a critical component of the broader IT and professional services market, supporting industries ranging from defense and aerospace to healthcare and consumer goods. This contract, falling under NAICS code 541511 (Custom Computer Programming Services), highlights the software and system integration aspects of CAD/CAM. The federal government is a significant consumer of such services, utilizing them for everything from complex engineering designs to simulation and prototyping. Spending in this area is often driven by the need for specialized technical expertise that may not be available in-house.
Small Business Impact
This contract does not appear to have a small business set-aside, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman Systems Corporation, is a large business. There is no explicit information provided regarding subcontracting plans or goals for small businesses. Without this data, it is difficult to assess the direct impact on the small business ecosystem, though large prime contracts often include subcontracting opportunities.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of Health and Human Services, specifically the Centers for Disease Control and Prevention (CDC). The Cost Plus Fixed Fee (CPFF) structure necessitates robust financial oversight to ensure costs are reasonable and allocable, and that the fixed fee is earned. Accountability measures would likely involve contract performance reviews, milestone tracking, and adherence to the defined scope of work. Transparency is generally maintained through contract databases and reporting requirements, though specific internal oversight mechanisms are not detailed here.
Related Government Programs
- Custom Computer Programming Services
- Information Technology Professional Services
- Research and Development Support Services
- Engineering and Technical Services
Risk Flags
- Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost escalations.
- Long contract duration may increase risk of technological obsolescence or performance drift.
- Lack of specific performance metrics in provided data hinders detailed effectiveness assessment.
Tags
computer-aided-design, computer-aided-manufacturing, custom-computer-programming-services, northrop-grumman-systems-corporation, department-of-health-and-human-services, centers-for-disease-control-and-prevention, cost-plus-fixed-fee, full-and-open-competition, it-services, professional-services, large-business, georgia
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $9.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. COMPUTER AIDED DESGN/MFG SVCS
Who is the contractor on this award?
The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).
What is the total obligated amount?
The obligated amount is $9.9 million.
What is the period of performance?
Start: 2006-07-01. End: 2011-05-31.
What is the historical spending trend for CAD/CAM services by the CDC?
Analyzing historical spending trends for CAD/CAM services by the CDC requires access to detailed federal procurement data beyond this single contract. While this $9.9 million award from 2006-2011 indicates a significant investment during that period, it does not represent the entirety of CDC's spending in this area. To understand the trend, one would need to aggregate spending on similar contracts (identified by relevant NAICS codes like 541511 or specific Product Service Codes) awarded by the CDC over multiple fiscal years. Factors influencing trends could include shifts in research priorities, technological advancements requiring new design tools, or changes in outsourcing strategies. Without a broader dataset, this single award serves as a data point rather than a trend indicator.
How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar IT services?
The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is well-defined but the exact costs are uncertain, allowing for flexibility while providing the contractor with a fixed profit margin. For IT services, other common contract types include Firm-Fixed-Price (FFP), which offers the most price certainty for the government but less flexibility for scope changes, and Time and Materials (T&M), which is suitable for smaller efforts or when the scope is highly unpredictable but can lead to higher costs if not managed closely. CPFF strikes a balance, offering more flexibility than FFP but aiming for better cost control than T&M, making it suitable for complex projects like CAD/CAM where innovation or evolving requirements are possible. However, it requires diligent government oversight to manage costs effectively.
What are the typical profit margins for large defense contractors like Northrop Grumman in IT service contracts?
Profit margins for large defense contractors like Northrop Grumman can vary significantly based on contract type, competition level, specific services, and negotiation. For Cost Plus Fixed Fee (CPFF) contracts, the 'fixed fee' component represents the contractor's profit. This fee is typically negotiated as a percentage of the estimated cost. While specific profit percentages are often proprietary and depend heavily on the contract's specifics, historical data and industry analysis suggest that profit margins on government IT service contracts for large, established companies can range from around 5% to 15% or higher, depending on the risk, complexity, and strategic importance of the contract. Factors such as the level of competition and the contractor's established relationship with the agency also play a role.
What specific CAD/CAM capabilities does NAICS code 541511 encompass?
NAICS code 541511, 'Custom Computer Programming Services,' broadly covers the design, development, and implementation of custom software solutions. While not exclusively dedicated to CAD/CAM, it encompasses the programming and system integration aspects crucial for Computer-Aided Design and Computer-Aided Manufacturing. This includes developing software that enables engineers to create 2D and 3D designs, simulate product performance, and generate manufacturing instructions. It can also involve integrating CAD/CAM software with other enterprise systems (like ERP or PLM), customizing existing CAD/CAM packages to meet specific agency needs, and providing ongoing technical support and maintenance for these specialized software environments. The 'custom' aspect implies tailoring solutions beyond off-the-shelf software.
What are the potential risks associated with a 5-year contract for specialized IT services?
Potential risks associated with a long-term (e.g., 5-year) contract for specialized IT services like CAD/CAM include technological obsolescence, where the contracted technology or software may become outdated before the contract ends. There's also the risk of scope creep, where requirements evolve beyond the original agreement, potentially leading to cost overruns if not managed properly, especially under CPFF. Contractor performance degradation over time is another concern, as initial high performance may wane. Furthermore, market conditions and pricing can change, potentially making the contracted rates less competitive over the contract's life. Finally, dependency on a single contractor for critical services can pose a risk if the contractor faces financial instability or undergoes significant organizational changes.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services
Product/Service Code: INSTRUMENTS AND LABORATORY EQPT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: 2000N00120
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 12011 SUNSET HILLS RD, RESTON, VA, 20190
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $81,070,367
Exercised Options: $81,070,367
Current Obligation: $9,915,927
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: HHSD200200403409I
IDV Type: IDC
Timeline
Start Date: 2006-07-01
Current End Date: 2011-05-31
Potential End Date: 2011-05-31 00:00:00
Last Modified: 2023-01-10
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