DoD's $54M CNDSPS Support contract awarded to Northrop Grumman shows fair value despite limited competition

Contract Overview

Contract Amount: $54,263,345 ($54.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2015-07-13

Contract Duration: 1,564 days

Daily Burn Rate: $34.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CNDSPS SUPPORT - TASK 1

Place of Performance

Location: QUANTICO, PRINCE WILLIAM County, VIRGINIA, 22134, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $54.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: CNDSPS SUPPORT - TASK 1 Key points: 1. The contract's value appears reasonable when benchmarked against similar IT services, though specific cost breakdowns are not publicly available. 2. Competition was full and open, but only one bid was received, potentially limiting price discovery. 3. The fixed-price contract structure shifts performance risk to the contractor. 4. This contract supported critical Navy IT infrastructure, contributing to overall defense readiness. 5. Northrop Grumman, a large defense contractor, was the sole awardee. 6. The contract duration was substantial, indicating a long-term need for these services.

Value Assessment

Rating: good

The total award amount of $54.3 million over approximately four years suggests a moderate annual spend. Benchmarking against similar custom computer programming services contracts within the Department of Defense indicates that the pricing is within a reasonable range. However, without detailed cost breakdowns or more granular performance metrics, a definitive assessment of 'excellent' value is challenging. The firm fixed-price nature of the contract implies that the contractor bears the risk of cost overruns, which can be a positive indicator of value if the contractor successfully manages costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is the preferred method for ensuring the widest possible access to potential offerors. However, only one bid was received from Northrop Grumman Systems Corporation. While the competition was technically open, the low number of bids suggests potential barriers to entry or a lack of market interest from other qualified vendors. This limited participation may have reduced the competitive pressure on pricing and innovation.

Taxpayer Impact: While full and open competition was utilized, the single bid received means taxpayers did not benefit from the full potential of competitive pricing that could have been achieved with multiple strong proposals.

Public Impact

The primary beneficiaries are the U.S. Navy and the Department of Defense, receiving essential computer programming services. The services delivered likely supported critical command and control, intelligence, or other defense-related IT systems. The geographic impact is primarily within the Department of Defense's operational footprint, likely supporting naval installations or deployed forces. The contract supported specialized IT roles, potentially impacting the workforce within the defense contracting sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition despite full and open solicitation could indicate market concentration or high barriers to entry for other firms.
Lack of detailed cost breakdowns makes it difficult to fully assess the efficiency and cost-effectiveness of the awarded price.
The long contract duration might lead to vendor lock-in if not managed carefully through subsequent competitive processes.

Positive Signals

The firm fixed-price contract structure effectively transfers cost overrun risk to the contractor.
Awarding to a large, established defense contractor like Northrop Grumman suggests a focus on reliability and proven capability.
The contract falls under the 'Custom Computer Programming Services' NAICS code, indicating a focus on specialized IT development and support.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically custom computer programming services. The IT services market for the federal government is substantial, with significant spending allocated to software development, system integration, and IT support. Contracts like this are crucial for maintaining and upgrading the complex technological infrastructure required by defense agencies. Benchmarking against similar IT services spending within the DoD reveals a competitive landscape, but also highlights the significant role of large, established contractors in fulfilling specialized needs.

Small Business Impact

This contract was not set aside for small businesses, and the awardee, Northrop Grumman Systems Corporation, is a large prime contractor. There is no explicit indication of small business subcontracting plans being a primary driver for this specific award. The impact on the small business ecosystem would likely be indirect, depending on whether Northrop Grumman utilizes small businesses for any subcontracting opportunities related to this task order.

Oversight & Accountability

As a Department of Defense contract, oversight is likely managed through the contracting officer's representative (COR) and program management offices within the Navy. The firm fixed-price nature provides some inherent oversight by requiring the contractor to meet defined deliverables within the agreed price. Transparency is generally limited for specific task orders of this nature, though contract award data is publicly available. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

DoD IT Modernization Programs
Navy Command and Control Systems
Custom Software Development Services
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Limited competition despite open solicitation
Lack of detailed cost transparency
Potential for contractor cost-cutting on FFP contracts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. CNDSPS SUPPORT - TASK 1

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $54.3 million.

What is the period of performance?

Start: 2011-04-01. End: 2015-07-13.

What is Northrop Grumman's track record with similar custom computer programming services contracts for the Department of Defense?

Northrop Grumman Systems Corporation has a long and extensive history of performing custom computer programming services and other IT-related work for the Department of Defense and various federal agencies. They are a major defense contractor with significant expertise in areas such as software development, systems integration, cybersecurity, and command and control systems. Their track record includes numerous large-scale contracts, often involving complex and mission-critical applications. While specific performance details for individual task orders are not always public, their sustained presence and continued awards in this domain suggest a generally positive performance history and capability to meet DoD requirements. However, like any large contractor, there may be instances of performance issues or disputes on specific contracts that are not widely publicized.

How does the $54.3 million award compare to other custom computer programming services contracts awarded by the Navy in the same period?

The $54.3 million award for CNDSPS support is a significant but not extraordinary amount for custom computer programming services within the Department of the Navy, especially considering the contract's duration of over four years. Annualized, this contract represents approximately $13.6 million per year. During the 2011-2015 period, the Navy and DoD awarded numerous IT services contracts, many of which were in the tens to hundreds of millions of dollars. Contracts for similar services, such as software development, system maintenance, and IT support for large platforms or enterprise systems, often fell within or exceeded this range. The key differentiator is the specific scope and criticality of the CNDSPS support. Without knowing the exact nature of CNDSPS, a direct comparison is difficult, but the value is consistent with substantial IT service requirements for a major military branch.

What are the primary risks associated with a firm fixed-price contract for custom computer programming services?

The primary risk associated with a firm fixed-price (FFP) contract for custom computer programming services lies with the contractor. If the scope of work is not clearly defined, or if unforeseen technical challenges arise during development, the contractor may incur costs exceeding the contract price. This can lead to reduced profit margins or even financial losses for the contractor. For the government, the risk is that the contractor might cut corners on quality or performance to stay within budget, or that the contractor may become less responsive if they are losing money. Additionally, if the initial price was set too high due to poor estimation or lack of competition, the government may overpay for the services rendered. Effective government oversight is crucial to ensure the contractor meets all requirements despite the FFP structure.

What does the 'Custom Computer Programming Services' NAICS code (541511) typically encompass in federal contracting?

The North American Industry Classification System (NAICS) code 541511, 'Custom Computer Programming Services,' encompasses establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer. This includes developing custom operating systems, application software, and computer systems software. It also covers services such as designing and analyzing custom computer systems and software, and providing services related to the integration of computer hardware and software. In the context of federal contracting, this code is used for a wide range of IT development needs, from creating bespoke applications for specific agency functions to developing complex software for defense systems, intelligence analysis, or administrative processes. It signifies a focus on tailored software solutions rather than off-the-shelf products.

Given the 'FULL AND OPEN COMPETITION' but only one bid, what are potential reasons for the lack of broader market participation?

Several factors could explain why a 'FULL AND OPEN COMPETITION' solicitation resulted in only one bid. Firstly, the technical requirements might have been highly specialized, requiring unique expertise or proprietary knowledge that only a few companies possess, such as Northrop Grumman. Secondly, the contract's value or duration might not have been attractive enough to warrant the significant investment required for multiple companies to prepare a competitive proposal, especially if the profit margins were perceived as low. Thirdly, there could be high barriers to entry, such as stringent security clearance requirements, specific facility clearances, or the need for extensive pre-existing relationships with the agency. Finally, the timing of the solicitation within the market cycle, or the presence of other competing opportunities for potential bidders, could also influence participation levels. It's also possible that the solicitation documents were complex or difficult to understand, deterring some potential offerors.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 7575 COLSHIRE DR, MC LEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $54,263,345

Exercised Options: $54,263,345

Current Obligation: $54,263,345

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $1,972,569

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F4506G

IDV Type: FSS

Timeline