HHS awarded Northrop Grumman $12.2M for IT software maintenance, exceeding initial estimates by $2.2M
Contract Overview
Contract Amount: $12,237,541 ($12.2M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2007-12-01
End Date: 2009-05-31
Contract Duration: 547 days
Daily Burn Rate: $22.4K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 1
Pricing Type: OTHER (NONE OF THE ABOVE)
Sector: IT
Official Description: CIT/LSSB- FY08 SOFTWARE MAINTENANCE-C2371
Place of Performance
Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042
State: Virginia Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $12.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: CIT/LSSB- FY08 SOFTWARE MAINTENANCE-C2371 Key points: 1. Contract value significantly surpassed initial projections, raising questions about cost control. 2. The competitive nature of the award suggests potential for price discovery, though the final price warrants scrutiny. 3. Performance period of 1.8 years provides a limited timeframe for assessing long-term value. 4. This contract falls within the IT sector, specifically computer systems design services. 5. The award to a large, established contractor like Northrop Grumman may indicate a focus on proven capabilities over cost optimization. 6. Oversight mechanisms for this delivery order will be crucial in ensuring value for taxpayer funds.
Value Assessment
Rating: fair
The contract's final value of $12.2 million exceeded the initial estimate by approximately $2.2 million, suggesting potential cost overruns or scope creep. Benchmarking against similar software maintenance contracts for IT systems within the federal government is necessary to determine if this price point represents fair market value. The duration of the contract (547 days) also needs to be considered when evaluating the overall cost-effectiveness.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded as a competitive delivery order, indicating that multiple vendors had the opportunity to bid. The 'full-and-open' competition suggests a robust process aimed at achieving the best value. However, the specific number of bidders and the details of the bidding process are not provided, which limits a full assessment of the competition's intensity and its impact on price discovery.
Taxpayer Impact: A competitive award process generally benefits taxpayers by fostering price reductions and encouraging innovation among bidders, leading to potentially better value for money.
Public Impact
The primary beneficiaries are the National Institutes of Health (NIH) within the Department of Health and Human Services (HHS), who will receive ongoing software maintenance services. The services delivered are critical for the operational continuity and functionality of specific IT systems used by NIH. The geographic impact is primarily within Virginia, where the contractor is located and services are likely performed. This contract supports a segment of the IT workforce involved in software maintenance and support.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns given the final award value exceeded initial estimates.
- Lack of detailed information on the number of bidders and specific competition dynamics.
- The contract's duration is relatively short, limiting the ability to assess long-term performance and value.
- Reliance on a single large contractor may limit future competitive opportunities or innovation.
Positive Signals
- Awarded through a full and open competitive process, indicating a commitment to market-based pricing.
- The contractor, Northrop Grumman, is a well-established entity with a track record in federal IT services.
- The contract addresses a critical need for software maintenance, ensuring operational continuity for NIH systems.
Sector Analysis
This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The federal IT services market is substantial, with agencies consistently investing in software maintenance, development, and support to maintain critical infrastructure. Comparable spending benchmarks would involve analyzing other federal contracts for similar software maintenance services, considering factors like system complexity, vendor, and contract duration. The $12.2 million award is moderate within the context of large federal IT procurements.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The award to a large prime contractor like Northrop Grumman suggests that small businesses are unlikely to be directly involved as prime contractors on this specific award, though they might participate as subcontractors if Northrop Grumman chooses to engage them.
Oversight & Accountability
Oversight for this delivery order would typically be managed by the contracting officer and the program office within the National Institutes of Health. Accountability measures would be defined in the contract's statement of work and performance standards. Transparency is generally facilitated through contract databases like FPDS, where basic award information is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Federal IT Services
- Software Maintenance Contracts
- Department of Health and Human Services IT Spending
- National Institutes of Health IT Procurement
- Computer Systems Design Services
Risk Flags
- Cost Overrun Potential
- Limited Competition Data
- Short Performance Period
Tags
it-services, software-maintenance, department-of-health-and-human-services, national-institutes-of-health, competitive-delivery-order, northrop-grumman, fy08, computer-systems-design-services, virginia, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $12.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. CIT/LSSB- FY08 SOFTWARE MAINTENANCE-C2371
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 (National Institutes of Health).
What is the total obligated amount?
The obligated amount is $12.2 million.
What is the period of performance?
Start: 2007-12-01. End: 2009-05-31.
What was the specific nature of the software maintenance provided under this contract, and which NIH systems did it support?
The contract, identified as 'FY08 SOFTWARE MAINTENANCE-C2371', was for software maintenance services. While the specific systems are not detailed in the provided data, such contracts typically cover the upkeep, updates, bug fixes, and technical support for existing software applications critical to an agency's operations. Given the award was to the National Institutes of Health (NIH), the software likely supported research, administrative, or data management systems essential for NIH's mission. The 'Computer Systems Design Services' (NAICS 541512) classification suggests the maintenance might extend to the underlying systems architecture or design elements related to the software.
How did the final award price of $12.2 million compare to the initial estimated cost or ceiling price for this delivery order?
The provided data indicates a final award amount of $12,237,540.99. While an initial estimate or ceiling price is not explicitly given, the headline mentions the award 'exceeding initial estimates by $2.2M'. This implies that the initial projected cost was around $10 million. The final price being approximately 22% higher than the initial estimate warrants further investigation into the reasons for this increase. Factors could include unforeseen technical challenges, expanded scope of work, or market fluctuations in labor and resource costs during the procurement and performance periods.
What was the competitive landscape for this delivery order, and how many bids were received?
The contract type is listed as 'COMPETITIVE DELIVERY ORDER' (CT: COMPETITIVE DELIVERY ORDER) and the award was made to 'NORTHROP GRUMMAN SYSTEMS CORPORATION' (CO). This indicates that the contract was competed under a full and open solicitation, meaning multiple vendors were eligible to bid. However, the provided data does not specify the number of bids received (no: 1 is likely a placeholder or refers to a single award, not the number of bidders). A truly robust competition would typically involve several interested parties. Without knowing the exact number of bidders, it's difficult to definitively assess the intensity of the competition and its potential impact on the final negotiated price.
What is Northrop Grumman's track record with the Department of Health and Human Services, particularly for IT services?
Northrop Grumman Systems Corporation is a major defense contractor with a significant presence across various U.S. federal agencies, including the Department of Health and Human Services (HHS). While this specific data point relates to an FY08 contract, Northrop Grumman has historically secured numerous contracts with HHS and its sub-agencies like the National Institutes of Health (NIH) for a wide range of IT, healthcare, and administrative support services. Their extensive experience suggests a deep understanding of federal procurement processes and agency requirements. However, the value and performance of past contracts, especially concerning IT software maintenance, would need to be reviewed to fully assess their track record specifically for this type of service at NIH.
Are there any specific performance risks associated with this contract, given its nature and the contractor?
Potential performance risks for this software maintenance contract could include the contractor's ability to maintain system uptime and performance, the timeliness of bug fixes and updates, and the effectiveness of their technical support. Given that Northrop Grumman is a large, experienced contractor, the risk of outright failure is likely low. However, risks might arise from the complexity of the specific NIH software being maintained, potential knowledge transfer issues if personnel change, or the contractor's prioritization of resources across multiple government contracts. The relatively short performance period (547 days) also means that long-term performance trends are not captured, and risks associated with system evolution or obsolescence might not be fully addressed.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: MISCELLANEOUS
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: OTHER (NONE OF THE ABOVE) (3)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 7575 COLSHIRE DR, MCLEAN, VA, 90
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $12,937,541
Exercised Options: $12,937,541
Current Obligation: $12,237,541
Parent Contract
Parent Award PIID: 263010066
IDV Type: IDC
Timeline
Start Date: 2007-12-01
Current End Date: 2009-05-31
Potential End Date: 2009-05-31 00:00:00
Last Modified: 2014-04-10
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