Treasury Communication System contract awarded to Northrop Grumman for over $29 million

Contract Overview

Contract Amount: $29,120,609 ($29.1M)

Contractor: Northrop Grumman Advanced Information Services, Inc

Awarding Agency: Department of the Treasury

Start Date: 2001-11-07

End Date: 2002-09-30

Contract Duration: 327 days

Daily Burn Rate: $89.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TREASURY COMMUNICATION SYSTEM (TCS)

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $29.1 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC for work described as: TREASURY COMMUNICATION SYSTEM (TCS) Key points: 1. Contract awarded on a cost-plus-award-fee basis, allowing for flexibility but requiring close oversight. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. A short performance period of 327 days suggests a specific, potentially time-bound need. 4. The sole awardee, Northrop Grumman, is a large defense contractor with extensive experience. 5. The contract's value of approximately $29 million for less than a year of service warrants benchmarking against similar communication system deployments. 6. The absence of small business set-asides or subcontracting plans may limit broader economic participation.

Value Assessment

Rating: questionable

The contract's cost-plus-award-fee structure can lead to cost overruns if not managed diligently. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar government contracts for communication systems. The total award value of over $29 million for a duration of less than a year suggests a potentially high per-unit cost, though specific deliverables are not detailed. Further analysis would require understanding the scope of services and comparing them to industry standards for similar system implementations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency precludes a competitive process. The lack of competition means there was no opportunity for price negotiation through a bidding war, potentially leading to a higher price than if multiple vendors had vied for the contract. This also limits the government's ability to explore innovative solutions from a wider range of providers.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price for the services rendered. Without competitive pressure, the awarded contractor may not have had the incentive to offer the most cost-effective solution.

Public Impact

The primary beneficiary of this contract is the Department of the Treasury, specifically the Internal Revenue Service, for its communication infrastructure. The contract aims to provide essential communication system services, crucial for the agency's operations. The geographic impact is likely concentrated within the IRS's operational facilities, primarily in Virginia where the contractor is located. The contract supports the workforce of Northrop Grumman, contributing to employment within the IT and defense sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher cost to taxpayers.
Cost-plus-award-fee contracts can incentivize spending if not closely monitored.
Short contract duration might indicate a stop-gap solution or a project with a defined, limited scope, raising questions about long-term strategy.

Positive Signals

Awarded to a large, established contractor (Northrop Grumman) with significant experience in complex systems.
The contract supports critical communication infrastructure for a major federal agency (IRS).
The award fee component, if structured correctly, can incentivize performance and successful delivery.

Sector Analysis

The Treasury Communication System (TCS) contract falls within the Information Technology (IT) and Telecommunications sector. This sector is characterized by rapid technological advancements and significant government spending on maintaining and upgrading communication networks. The market includes large defense contractors and specialized IT service providers. Benchmarking this contract's value would involve comparing it to other government or commercial contracts for similar enterprise-level communication systems, considering factors like user base, system complexity, and service level agreements.

Small Business Impact

This contract does not appear to have included small business set-asides, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting plans. This suggests that the primary award went to a large business, and opportunities for small businesses to participate in fulfilling this contract may be limited unless Northrop Grumman voluntarily includes them in their supply chain. This could mean a missed opportunity to leverage the small business ecosystem for specialized services or to foster economic growth among smaller enterprises.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury and the Internal Revenue Service. As a cost-plus-award-fee contract, rigorous financial oversight and performance monitoring are crucial to ensure that costs are reasonable and that award fees are earned based on documented performance. Transparency would depend on the agency's reporting practices regarding contract performance and expenditures. The Inspector General for the Department of the Treasury would likely have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Federal Enterprise Architecture
Government Communication Networks
IRS IT Modernization Efforts
Department of the Treasury IT Services

Risk Flags

Sole-source award
Cost-plus-award-fee structure
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $29.1 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC. TREASURY COMMUNICATION SYSTEM (TCS)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $29.1 million.

What is the period of performance?

Start: 2001-11-07. End: 2002-09-30.

What specific communication system services were provided under this contract?

The provided data does not specify the exact nature of the 'Treasury Communication System (TCS)' services. However, given the contractor (Northrop Grumman) and the agency (IRS), it likely involved the design, implementation, maintenance, or upgrade of critical communication infrastructure. This could encompass voice, data, and potentially video communication systems, network security, and related support services essential for the IRS's vast operational needs. The 'COST PLUS AWARD FEE' (PT) contract type suggests that the scope might have been flexible or involved research and development components, with payment tied to both incurred costs and performance against defined objectives.

How does the $29 million cost compare to similar communication system contracts?

Direct comparison is challenging without knowing the specific services, duration, and scale of the TCS. However, $29 million for a contract lasting just over 10 months (November 2001 to September 2002) is substantial. For context, large-scale enterprise communication system deployments for federal agencies can range from tens to hundreds of millions of dollars over several years. A contract of this value for less than a year might indicate a high-complexity project, a critical upgrade, or potentially a less efficient pricing structure due to the sole-source award. Benchmarking would require detailed service scope and performance metrics from comparable contracts.

What are the risks associated with a sole-source, cost-plus-award-fee contract?

Sole-source contracts carry the inherent risk of higher costs due to the lack of competitive bidding, potentially leading to suboptimal value for taxpayers. Cost-plus-award-fee (CPAF) contracts, while offering flexibility, can incentivize contractors to increase costs to maximize their fee, especially if performance metrics are not clearly defined or rigorously monitored. The risk is that the government pays more than necessary without a clear demonstration of superior performance justifying the additional cost. Effective oversight, stringent performance metrics, and robust negotiation are critical to mitigate these risks.

What was Northrop Grumman's track record with the Treasury or IRS prior to this contract?

The provided data does not include historical contract information for Northrop Grumman with the Department of the Treasury or the IRS. However, Northrop Grumman is a major defense contractor with extensive experience in providing complex IT, aerospace, and defense systems to various government agencies. Their track record generally includes large, high-value contracts. Without specific prior performance data with the Treasury/IRS, it's difficult to assess their specific suitability or past performance on similar communication systems for these agencies. A deeper dive into federal procurement databases would be needed.

What is the historical spending trend for Treasury Communication Systems?

The provided data only covers a single contract for the Treasury Communication System (TCS) from 2001-2002. It does not provide historical spending trends. To understand spending patterns, one would need to analyze procurement data for 'communication systems' or related IT services awarded by the Department of the Treasury and its sub-agencies (like the IRS) over multiple fiscal years. This would involve identifying all relevant contracts, their values, durations, and the technologies deployed to discern trends in investment and technology adoption.

What does the 'VA' (Virginia) state code signify in this contract?

The 'st': 'VA' and 'sn': 'VIRGINIA' codes indicate that the place of performance or the primary location associated with this contract is Virginia. This often means the contractor's facility where the work is performed is located in Virginia, or that the services are delivered to a Treasury/IRS facility within the state. For federal contracts, location data can be important for understanding geographic distribution of federal spending, economic impact on specific states, and logistical considerations.

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: Titan II Inc. (UEI: 016435559)

Address: 8100 GATEHOUSE RD, FALLS CHURCH, VA, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $29,120,609

Exercised Options: $29,120,609

Current Obligation: $29,120,609

Parent Contract

Parent Award PIID: TIRNO95D00099

IDV Type: IDC

Timeline