HHS awards $99.7M for computer systems design, with Northrop Grumman Systems Corporation as the primary contractor

Contract Overview

Contract Amount: $99,733,194 ($99.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2013-06-14

End Date: 2018-12-31

Contract Duration: 2,026 days

Daily Burn Rate: $49.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $99.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF Key points: 1. Value for money appears fair given the contract type and duration, though specific performance metrics are not detailed. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process. 3. Risk indicators are moderate, with the cost-plus award fee structure potentially leading to cost overruns if not managed closely. 4. Performance context is limited without specific details on deliverables and outcomes. 5. This contract falls within the IT services sector, specifically computer systems design. 6. The contract's duration of over five years indicates a significant, long-term need for these services.

Value Assessment

Rating: fair

The contract's total value of $99.7 million over approximately five years suggests a substantial investment. The Cost Plus Award Fee (CPAF) structure allows for contractor reimbursement of allowable costs plus a fee that is based on performance. While this can incentivize good performance, it also carries a risk of higher costs if performance targets are not clearly defined or if oversight is insufficient. Benchmarking against similar computer systems design contracts would be necessary for a more precise value assessment, but the scale of the award indicates a significant requirement.

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 a bid. This typically suggests a robust bidding process where multiple companies vied for the contract. The number of bidders is not specified, but the open competition is generally a positive sign for price discovery and achieving a competitive market rate.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing due to the open bidding process. This approach aims to ensure that the government receives the best value by allowing a wide range of qualified contractors to compete.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) is the primary beneficiary, utilizing these services for its operational needs. The contract supports computer systems design services, crucial for the development and maintenance of complex IT infrastructure. The geographic impact is likely concentrated around CMS operations, primarily in Maryland where the contractor is located. Workforce implications include employment opportunities for IT professionals and systems designers within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts can lead to cost escalation if performance metrics are not rigorously defined and monitored.
Lack of specific performance details makes it difficult to assess the true value and effectiveness of the services rendered.
The long contract duration could pose a risk if technology or requirements change significantly over time.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
The contractor, Northrop Grumman Systems Corporation, is a large, established entity with significant experience in government contracting.
The contract duration indicates a stable, long-term need that the contractor is positioned to fulfill.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. This is a critical area for government agencies like CMS, which rely heavily on sophisticated IT infrastructure to manage vast amounts of data and complex operations. The market for IT services is highly competitive, with numerous large and small businesses offering specialized design and development capabilities. Benchmarks for similar contracts would typically consider the scope of services, complexity of systems, and the specific technologies involved.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major defense and aerospace company, it is unlikely that significant subcontracting opportunities for small businesses were mandated or a primary focus, unless specified within the contract's detailed terms. This suggests that the primary benefits of this award would flow to the large prime contractor rather than the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and program managers within the Centers for Medicare and Medicaid Services (CMS). The Cost Plus Award Fee (CPAF) structure necessitates robust performance monitoring and evaluation to ensure that the award fee is justified. Transparency is generally maintained through contract award databases, but detailed performance reports and audits are usually internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Systems Modernization Programs
Healthcare IT Infrastructure Support
Federal Civilian Agency IT Services
Computer Systems Design and Integration

Risk Flags

Cost-Plus Award Fee structure requires diligent oversight to prevent cost overruns.
Contract duration of over five years may pose risks if technological needs evolve rapidly.
Lack of specific performance metrics in the provided data hinders a full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $99.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF

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 $99.7 million.

What is the period of performance?

Start: 2013-06-14. End: 2018-12-31.

What is Northrop Grumman Systems Corporation's track record with similar government contracts, particularly within the Department of Health and Human Services?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience across various government agencies, including HHS. Their portfolio includes a wide range of IT services, systems integration, and complex program management. While specific details on past performance for this exact contract are not provided, their history suggests a capacity to handle large-scale, complex IT projects. Performance evaluations on previous HHS contracts would offer further insight into their reliability and effectiveness in delivering services aligned with agency needs. Analyzing past performance metrics, such as on-time delivery, budget adherence, and quality of work, would be crucial for a comprehensive assessment.

How does the $99.7 million award compare to other computer systems design contracts awarded by CMS or HHS in recent years?

The $99.7 million award over approximately five years represents a significant investment in computer systems design services for CMS. To benchmark this value, one would compare it to other contracts of similar scope and duration within the federal government, particularly those awarded by HHS agencies. For instance, contracts for enterprise resource planning (ERP) system development, data analytics platform design, or large-scale IT infrastructure overhauls could serve as comparators. The average cost per year for this contract is roughly $20 million. If similar contracts for comparable services are in the $15-25 million per year range, this award would be considered within the expected market parameters. However, if comparable contracts are significantly lower or higher, it might indicate unique aspects of this requirement or potential pricing anomalies.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude?

The primary risks associated with a CPAF contract of this magnitude ($99.7 million) revolve around cost control and performance definition. CPAF contracts reimburse the contractor for allowable costs plus a fee that is determined by performance against pre-defined criteria. The risk is that if these criteria are not sufficiently stringent, clearly defined, or if oversight is lax, the contractor may incur higher costs than necessary while still achieving the award fee. This can lead to cost overruns and potentially a less efficient use of taxpayer funds compared to fixed-price contracts. Effective risk mitigation requires meticulous performance metric development, continuous monitoring, and objective evaluation of contractor performance by the government.

What specific computer systems design services are being procured under this contract, and how do they align with CMS's strategic IT goals?

The contract specifies 'Computer Systems Design Services' (NAICS code 541512). This broad category typically encompasses a range of activities, including analyzing user needs, designing system architecture, developing software, integrating hardware and software components, and providing technical consulting. For CMS, these services are likely critical for maintaining and modernizing its vast IT infrastructure, which supports programs like Medicare and Medicaid. Strategic IT goals for CMS often include enhancing data security, improving interoperability between systems, enabling advanced analytics for healthcare insights, and ensuring the reliability and scalability of its platforms. The specific deliverables and design objectives under this contract would detail how these services directly contribute to achieving those goals.

What is the historical spending trend for computer systems design services at CMS, and how does this $99.7M award fit into that pattern?

Analyzing historical spending trends for computer systems design services at CMS is crucial for contextualizing this $99.7 million award. Without specific historical data, we can infer that CMS, as a large federal agency managing complex healthcare programs, likely has consistent and substantial needs for IT design and development services. Annual spending on such services can fluctuate based on major modernization initiatives, system upgrades, or new program implementations. A $99.7 million award over five years averages approximately $20 million annually. If CMS has historically spent in a similar range for these types of services, this award would be consistent. However, if historical spending has been significantly lower or higher, this contract might represent a shift in investment priorities or a response to a particularly large-scale project.

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

Solicitation ID: HHSM5002013RFP0016

Offers Received: 1

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: $114,317,568

Exercised Options: $99,733,194

Current Obligation: $99,733,194

Subaward Activity

Number of Subawards: 142

Total Subaward Amount: $102,939,262

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500200700014I

IDV Type: IDC

Timeline