HHS Spends $90M on Northrop Grumman IT Services, Facing Potential Overpricing Concerns
Contract Overview
Contract Amount: $90,393,096 ($90.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2011-11-28
End Date: 2017-07-30
Contract Duration: 2,071 days
Daily Burn Rate: $43.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: IT AND TELECOM- PROGRAMMING
Place of Performance
Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $90.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IT AND TELECOM- PROGRAMMING Key points: 1. Significant contract value of $90.4M awarded to a single large vendor. 2. Limited visibility into specific performance metrics and value realization. 3. Potential for overpricing due to Cost Plus Award Fee structure. 4. IT and Telecom sector, specifically Computer Systems Design Services.
Value Assessment
Rating: questionable
The Cost Plus Award Fee (CPAF) contract type can lead to higher costs compared to fixed-price contracts, especially without clear performance benchmarks. The total award of $90.4M over several years warrants scrutiny against industry standards for similar IT services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the CPAF structure may still allow costs to escalate beyond initial expectations.
Taxpayer Impact: Taxpayer funds are utilized for this contract. While competition was present, the fee structure necessitates careful monitoring to ensure cost-effectiveness and prevent unnecessary expenditure.
Public Impact
Citizens rely on the Centers for Medicare and Medicaid Services (CMS) for critical healthcare information and services, making IT infrastructure vital. The substantial investment in IT programming suggests a focus on enhancing or maintaining essential government functions. Transparency in how this $90M was spent and the outcomes achieved is crucial for public trust.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure may incentivize higher costs.
- Lack of specific performance data makes value assessment difficult.
- Long contract duration (2011-2017) could lead to outdated technology or scope creep.
Positive Signals
- Awarded under full and open competition.
- Contract supports critical healthcare functions via CMS.
Sector Analysis
This contract falls within the IT and Telecommunications sector, specifically Computer Systems Design Services. Spending benchmarks for similar government IT contracts vary widely based on scope, but $90M over six years for programming services is a significant investment.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large business. There is no indication of small business participation in this specific award, suggesting a missed opportunity for small business engagement.
Oversight & Accountability
The contract was managed by the Department of Health and Human Services, Centers for Medicare and Medicaid Services. Oversight would involve monitoring performance against award fee criteria and ensuring adherence to contract terms, particularly given the CPAF structure.
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.
- Potential for cost overruns.
- Lack of detailed performance metrics.
- Long contract duration.
- No stated small business participation.
Tags
computer-systems-design-services, department-of-health-and-human-services, md, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $90.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IT AND TELECOM- PROGRAMMING
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 $90.4 million.
What is the period of performance?
Start: 2011-11-28. End: 2017-07-30.
What specific IT programming services were rendered, and how did they directly contribute to CMS's mission objectives?
The contract focused on Computer Systems Design Services. While the exact nature of the programming is not detailed, it likely supported the development, integration, or maintenance of IT systems crucial for CMS operations, such as data processing, beneficiary management, or provider services. The effectiveness would be measured by system uptime, functionality, and alignment with evolving healthcare policy requirements.
How was the 'Award Fee' component determined, and what mechanisms were in place to ensure it reflected genuine value and performance rather than just cost incurrence?
The 'Award Fee' is typically determined based on pre-defined performance criteria and subjective evaluations by the government. For a CPAF contract, the government assesses contractor performance against these criteria and determines a fee, which can range from zero to a maximum amount. Robust oversight and clear, objective metrics are essential to ensure the fee truly reflects exceptional performance and value, rather than simply reimbursing costs.
Given the contract's duration (2011-2017), what steps were taken to ensure the technology remained current and effective, and what was the process for addressing potential scope creep?
Long-duration contracts require proactive management to prevent technological obsolescence. This typically involves regular reviews of the technology landscape, incorporating modernization efforts into contract modifications, and potentially exercising options for updated services. Scope creep is managed through formal change control processes, requiring documented justification, cost-benefit analysis, and formal approval for any additions or modifications to the original scope of work.
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: $100,067,967
Exercised Options: $90,393,096
Current Obligation: $90,393,096
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HHSM500200700014I
IDV Type: IDC
Timeline
Start Date: 2011-11-28
Current End Date: 2017-07-30
Potential End Date: 2017-07-30 00:00:00
Last Modified: 2019-11-25
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