HHS Awards Northrop Grumman $78.8M for IT Design Services Under ARRA
Contract Overview
Contract Amount: $78,848,004 ($78.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2010-04-16
End Date: 2017-04-16
Contract Duration: 2,557 days
Daily Burn Rate: $30.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: TAS::75 0510::TAS RECOVERY- NLR DESIGN & DEVELOPMENT ARRA::YES::ARRA
Place of Performance
Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102
State: Virginia Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $78.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: TAS::75 0510::TAS RECOVERY- NLR DESIGN & DEVELOPMENT ARRA::YES::ARRA Key points: 1. Significant contract value of $78.8 million awarded to a major defense contractor. 2. Competition was full and open, suggesting a competitive bidding process. 3. Contract duration of 2557 days (approx. 7 years) indicates a long-term project. 4. The sector is IT services, specifically computer systems design.
Value Assessment
Rating: fair
The contract type is Cost Plus Award Fee, which can lead to higher costs if not managed carefully. Benchmarking against similar IT design contracts is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which generally promotes competitive pricing. However, the specific pricing mechanisms within a Cost Plus Award Fee structure require close monitoring to ensure value.
Taxpayer Impact: Taxpayer funds are being used for IT modernization efforts under the ARRA stimulus program. The effectiveness of this spending depends on the successful delivery of the designed systems.
Public Impact
Impacts healthcare IT infrastructure through the Centers for Medicare and Medicaid Services. ARRA funding suggests a focus on economic stimulus and job creation. Long-term contract may lead to sustained IT support and development.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure can incentivize cost overruns.
- Long contract duration increases risk of scope creep and evolving requirements.
- Lack of specific performance metrics makes assessing value difficult.
Positive Signals
- Awarded under ARRA, indicating a focus on economic stimulus.
- Full and open competition suggests a fair market approach.
- Major contractor implies potential for robust delivery.
Sector Analysis
This contract falls within the IT services sector, specifically computer systems design. Spending benchmarks for similar large-scale IT projects can vary widely based on complexity and duration.
Small Business Impact
The awardee is Northrop Grumman Systems Corporation, a large business. There is no indication of small business participation in this specific award.
Oversight & Accountability
Oversight by the Department of Health and Human Services and Centers for Medicare and Medicaid Services is crucial, especially given the Cost Plus Award Fee structure and long duration.
Related Government Programs
- Computer Systems Design Services
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Cost Plus Award Fee structure
- Long contract duration (7 years)
- Potential for scope creep
- Lack of detailed performance metrics in summary data
Tags
computer-systems-design-services, department-of-health-and-human-services, va, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $78.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. TAS::75 0510::TAS RECOVERY- NLR DESIGN & DEVELOPMENT ARRA::YES::ARRA
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 Medicare and Medicaid Services).
What is the total obligated amount?
The obligated amount is $78.8 million.
What is the period of performance?
Start: 2010-04-16. End: 2017-04-16.
How effectively were the award fee criteria structured to incentivize both performance and cost control?
The effectiveness of the award fee criteria is not detailed in the provided data. A Cost Plus Award Fee (CPAF) contract's success hinges on well-defined metrics that reward high performance while penalizing inefficiencies or cost overruns. Without access to the specific award fee plan, it's impossible to assess how well it balanced these competing objectives and ensured taxpayer value.
What are the primary risks associated with a 7-year Cost Plus Award Fee IT design contract?
Key risks include potential for cost escalation due to the 'cost plus' nature, where contractor profit is tied to costs incurred. The long duration increases the risk of requirements becoming outdated, scope creep, and the contractor becoming entrenched, potentially reducing future competition. Ensuring robust government oversight and clear performance metrics is critical to mitigate these risks.
How does this contract contribute to the overall mission effectiveness of CMS IT systems?
This contract is intended to support the design and development of IT systems for CMS, likely related to healthcare programs. Its contribution to mission effectiveness depends on the successful delivery of functional, secure, and efficient systems that improve data management, beneficiary services, or program administration. The ARRA funding suggests a goal of modernizing critical infrastructure.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 4
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 8110 GATEHOUSE RD, FALLS CHURCH, VA, 22042
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $106,785,256
Exercised Options: $78,848,004
Current Obligation: $78,848,004
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: HHSM500200700014I
IDV Type: IDC
Timeline
Start Date: 2010-04-16
Current End Date: 2017-04-16
Potential End Date: 2017-04-16 00:00:00
Last Modified: 2016-05-16
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