DoD's $44.3M custom programming contract with Northrop Grumman awarded without competition

Contract Overview

Contract Amount: $44,335,430 ($44.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2005-02-07

End Date: 2007-01-31

Contract Duration: 723 days

Daily Burn Rate: $61.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $44.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract awarded on a cost-plus basis, potentially leading to higher final costs than fixed-price agreements. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. A long duration of 723 days suggests a significant scope of work or potential for contract modifications. 4. The contractor, Northrop Grumman, is a major defense contractor with extensive experience. 5. The contract falls under custom computer programming services, a critical area for defense operations. 6. Awarded by the Department of Defense, indicating a focus on national security requirements.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparison to similar custom programming services. The cost-plus award fee structure inherently carries more risk for the government in terms of final cost compared to fixed-price contracts. Without a competitive bidding process, it's difficult to ascertain if the pricing reflects market rates or if a more favorable price could have been achieved through competition. The total award amount of $44.3 million over its period of performance warrants scrutiny to ensure efficient use of taxpayer funds.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not open to competition from other potential vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances required for the specific service. The lack of competition limits the government's ability to leverage market forces to drive down costs and ensure the best possible value.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to offer the lowest price. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The primary beneficiary is the Department of Defense, which receives custom computer programming services essential for its operations. The services delivered likely support critical defense systems, enhancing operational capabilities and national security. The geographic impact is primarily within the United States, supporting defense infrastructure and personnel. Workforce implications include employment for skilled IT professionals within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus contract type can incentivize spending.
Long contract duration increases risk of cost overruns.
Sole-source award limits opportunities for other businesses.

Positive Signals

Awarded to a large, established defense contractor with proven capabilities.
Services are critical to defense operations, suggesting high strategic importance.
Contract managed by the Defense Contract Management Agency, indicating oversight.

Sector Analysis

This contract falls within the Information Technology 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 maintenance. This contract represents a portion of the Department of Defense's investment in specialized IT solutions to meet unique operational requirements. Comparable spending benchmarks would typically involve analyzing other sole-source or competed contracts for similar custom programming services within the defense or broader federal IT landscape.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Northrop Grumman, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is likely minimal, and opportunities for small businesses to participate in this specific contract are limited unless they are lower-tier subcontractors to the prime.

Oversight & Accountability

Oversight for this contract is provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contract compliance and performance. The contract type (Cost Plus Award Fee) implies performance metrics that, if met, could result in award fees, suggesting a level of performance-based oversight. Transparency regarding the specific details of the cost-plus expenditures and award fee determinations would be crucial for a comprehensive assessment of accountability.

Related Government Programs

Department of Defense IT Services
Custom Software Development Contracts
Northrop Grumman Federal Contracts
Sole-Source IT Procurements
Cost-Plus Contract Vehicles

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $44.3 million.

What is the period of performance?

Start: 2005-02-07. End: 2007-01-31.

What specific defense systems or capabilities does this custom programming contract support?

The provided data does not specify the exact defense systems or capabilities supported by this contract. However, given the contractor (Northrop Grumman) and the agency (Department of Defense), it is highly probable that the custom computer programming services relate to advanced military platforms, intelligence, surveillance, reconnaissance (ISR) systems, command and control (C2) systems, or other critical defense infrastructure. Northrop Grumman is a major player in areas like aerospace, defense electronics, and information systems, suggesting the contract could be for software development, integration, or enhancement of complex military technologies. Further investigation into contract line item numbers (CLINs) or attached statements of work would be necessary for precise details.

How does the cost-plus award fee structure compare to other contract types used by the DoD for similar services?

Cost-plus award fee (CPAF) contracts, like this one, are used when the exact costs are difficult to estimate upfront, often for research and development or complex services. The government pays the contractor's allowable costs plus a fee that is composed of a base amount and an award amount, which is earned based on meeting or exceeding performance objectives. This differs from fixed-price contracts, where the price is set regardless of the final cost, and cost-reimbursement contracts (like cost-plus-fixed-fee or cost-plus-incentive-fee) which have different fee structures. CPAF can incentivize good performance but also carries a risk of higher costs for the government compared to fixed-price options if performance targets are not clearly defined or if costs escalate unexpectedly. For custom programming, fixed-price contracts might be preferred for well-defined scopes, while CPAF is often chosen for more innovative or evolving requirements.

What is Northrop Grumman's track record with similar sole-source, cost-plus contracts within the Department of Defense?

Northrop Grumman, as a major defense contractor, has a long history of holding numerous sole-source and cost-plus contracts with the Department of Defense across various programs and service types. Their extensive experience in complex defense systems means they are often a preferred or sole provider for specialized needs. Analyzing their specific track record on similar sole-source CPAF contracts would involve reviewing past performance evaluations, any incurred cost overruns, and the success rates in achieving award fee criteria on previous engagements. Generally, large contractors like Northrop Grumman are expected to have robust internal controls and project management capabilities, but the nature of sole-source, cost-plus awards always warrants careful monitoring by the government to ensure value and prevent inefficiencies.

What are the potential risks associated with a sole-source award for custom computer programming services?

The primary risk associated with a sole-source award for custom computer programming services is the lack of competitive pressure, which can lead to higher prices than might be achieved in an open market. Without competing bids, the government may not be aware of the most cost-effective solutions or innovative approaches available from other vendors. There's also a risk of vendor lock-in, where the government becomes dependent on a single provider, potentially limiting future flexibility and negotiation power. Furthermore, without the vetting process of a competition, there's a slightly elevated risk that the chosen vendor might not be the absolute best fit in terms of long-term supportability or technological alignment, although this is mitigated by the contractor's established reputation.

How has DoD spending on custom computer programming services evolved over the past five years, and where does this contract fit?

DoD spending on custom computer programming services has generally remained substantial, driven by the continuous need to modernize legacy systems, develop new capabilities, and maintain cybersecurity. While specific figures fluctuate annually based on budget allocations and strategic priorities, the trend indicates a consistent demand for specialized IT expertise. This $44.3 million contract, awarded in 2005 and spanning over two years, represents a specific investment within that broader spending landscape. Its significance lies in its sole-source nature and cost-plus structure, which might reflect unique or urgent requirements. To understand its place, one would compare its value and contract type against the overall DoD IT budget and the proportion allocated to custom development versus off-the-shelf solutions or sustainment contracts during that period.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 12011 SUNSET HILLS ROAD, RESTON, VA, 11

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline