DoD's $15M contract for wired telecommunications services awarded to Northrop Grumman Information Technology Inc

Contract Overview

Contract Amount: $15,010,158 ($15.0M)

Contractor: Northrop Grumman Information Technology Inc

Awarding Agency: Department of Defense

Start Date: 2009-08-12

End Date: 2013-05-20

Contract Duration: 1,377 days

Daily Burn Rate: $10.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MIGRATED DATA VALUE UNKNOWN

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $15.0 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC for work described as: MIGRATED DATA VALUE UNKNOWN Key points: 1. Contract value of $15M over approximately 4.5 years suggests a moderate investment in telecommunications infrastructure. 2. Awarded under full and open competition, indicating a potentially competitive bidding process. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. The North American Industry Classification System (NAICS) code 517110 points to services related to wired telecommunications carriers. 5. The contract duration of 1377 days (approx. 3.77 years) is typical for telecommunications service agreements. 6. The presence of two bids suggests a limited but present level of competition. 7. The contract was awarded by the Department of Defense, a major consumer of telecommunications services.

Value Assessment

Rating: fair

Benchmarking the value of this $15M contract is challenging without specific service details or comparable contract data. However, the firm fixed-price structure is generally favorable for the government, as it caps potential cost overruns. The number of bids (2) suggests that while there was competition, it may not have been extensive enough to guarantee the absolute lowest price. Further analysis would require understanding the scope of services provided and comparing them to industry standards for similar telecommunications infrastructure and support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. With two bids received, the competition level was limited. While open competition is generally preferred for maximizing price discovery, a low number of bidders can sometimes indicate market concentration or specific technical requirements that limit the pool of qualified contractors. This could potentially lead to less aggressive pricing than if more competitors had participated.

Taxpayer Impact: The limited number of bidders in this full and open competition may have resulted in a higher price for taxpayers than if a broader range of companies had competed. However, the open nature of the competition still provides a baseline for price justification.

Public Impact

The Department of Defense benefits from enhanced wired telecommunications capabilities, crucial for its operational and administrative functions. Services likely include the provision, maintenance, and support of wired communication networks essential for secure and reliable data transmission. The geographic impact is primarily within Virginia, where the contract was administered, potentially supporting military bases or facilities in the region. The contract supports the telecommunications sector workforce, including engineers, technicians, and support staff involved in delivering these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) may have impacted price competitiveness.
Lack of detailed service scope makes value-for-money assessment difficult.
Contract duration could lead to vendor lock-in if not managed carefully.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor.
Awarded under full and open competition, allowing for broad market participation.
Contractor (Northrop Grumman) is a large, established defense contractor with significant experience.

Sector Analysis

The telecommunications services sector is vast, encompassing providers of wired and wireless communication infrastructure and services. This contract falls under the wired telecommunications carriers segment (NAICS 517110), which includes companies that build, operate, and maintain telecommunications networks. Government spending in this area is substantial, driven by the need for secure, reliable, and high-capacity communication systems for defense, intelligence, and civilian agencies. Comparable spending benchmarks would depend heavily on the specific services rendered, such as bandwidth provision, network maintenance, or infrastructure deployment.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of large-scale telecommunications infrastructure and services, it is likely that the prime contractor, Northrop Grumman, would subcontract portions of the work. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting agency (Department of Defense) through its contract administration offices, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the Firm Fixed Price contract terms, requiring the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases, although detailed performance metrics and financial breakdowns may not always be publicly available.

Related Government Programs

Defense Information Systems Agency (DISA) Telecommunications Services
General Services Administration (GSA) Federal Telecommunications Contracts
Department of Defense Network Modernization Programs

Risk Flags

Limited Competition
Potential for Technological Obsolescence
Vendor Lock-in Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.0 million to NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC. MIGRATED DATA VALUE UNKNOWN

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN INFORMATION TECHNOLOGY INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $15.0 million.

What is the period of performance?

Start: 2009-08-12. End: 2013-05-20.

What specific wired telecommunications services were included in this $15M contract?

The provided data indicates the contract falls under NAICS code 517110 (Wired Telecommunications Carriers) and was awarded to Northrop Grumman Information Technology Inc. by the Department of Defense. However, the specific services are not detailed. Typically, contracts under this NAICS code can encompass a wide range of services, including the provision of broadband internet access, dedicated data circuits, voice over IP (VoIP) services, private line services, and the installation and maintenance of associated network infrastructure. Without further documentation, it's impossible to ascertain the exact scope, such as whether it involved new infrastructure build-out, maintenance of existing systems, or a combination thereof. The contract value of $15 million over approximately 4.5 years suggests a significant, ongoing service provision rather than a one-time equipment purchase.

How does the number of bids (2) compare to typical competition levels for similar DoD telecommunications contracts?

For large-scale telecommunications contracts, especially those with specific technical requirements or security mandates like those of the Department of Defense, receiving only two bids under a full and open competition can be considered a moderate to low level of competition. While more than a sole-source award, it suggests that the pool of qualified and interested bidders may have been limited. Factors contributing to this could include the specialized nature of the services, stringent pre-qualification requirements, the geographic scope, or the contract's overall value and duration. Generally, agencies aim for a higher number of bids to ensure robust price discovery and maximize value for taxpayers. However, in highly specialized markets, two bids might represent the extent of viable competition.

What is the significance of the Firm Fixed Price (FFP) contract type in this context?

The Firm Fixed Price (FFP) contract type is significant because it places the majority of the cost risk on the contractor, Northrop Grumman Information Technology Inc. Under an FFP agreement, the contractor is obligated to perform the specified work for a predetermined price, regardless of their actual costs incurred. This structure incentivizes the contractor to manage their costs efficiently and effectively. For the government (Department of Defense), FFP provides cost certainty and predictability, making budgeting easier and protecting against unexpected cost increases. This is particularly beneficial for services where the scope of work is well-defined, as it appears to be for telecommunications services.

What is the potential impact of awarding a $15M telecommunications contract in Virginia?

Awarding a $15 million telecommunications contract in Virginia, administered by the Defense Contract Management Agency (DCMA), has several potential impacts. Economically, it injects funds into the local and regional economy through the contractor's spending on labor, materials, and potentially local services. It supports jobs within Northrop Grumman and potentially its subcontractors in the telecommunications field, including engineers, technicians, and support staff. For the Department of Defense, it ensures the provision or maintenance of critical communication infrastructure necessary for military operations, command and control, and administrative functions within the region. The presence of significant federal contracts can also influence the local business environment and attract specialized talent.

How does Northrop Grumman's track record influence the assessment of this contract?

Northrop Grumman is a major defense contractor with extensive experience in information technology, aerospace, and defense systems, including telecommunications. Their established track record suggests a high likelihood of technical capability and project execution proficiency. As a large, reputable company, they typically have robust internal processes for contract management, quality assurance, and compliance. This experience generally reduces the performance risk associated with the contract. However, the assessment of value-for-money still depends on the specific pricing negotiated and the competitive landscape, even with a capable contractor. Their size and experience might also influence their bidding strategy and cost structure compared to smaller competitors.

Are there any specific risks associated with a 1377-day contract duration for telecommunications services?

A contract duration of 1377 days (approximately 3.77 years) for telecommunications services presents several considerations. A primary risk is technological obsolescence; telecommunications technology evolves rapidly, and a contract spanning several years might lock the government into older or less efficient solutions if not structured with flexibility for upgrades or technology refreshes. Another risk is vendor lock-in, where the government becomes heavily reliant on a single provider, potentially diminishing future negotiating leverage. Cost escalation, despite the FFP nature, can occur if the contract includes provisions for adjustments or if the initial scope was underestimated. Finally, maintaining consistent service quality and performance over an extended period requires diligent oversight and performance management from the contracting agency.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

Product/Service Code: HARDWARE AND ABRASIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 7575 COLSHIRE DRIVE, MCLEAN, VA, 22102

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $17,777,526

Exercised Options: $15,010,158

Current Obligation: $15,010,158

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA877104D0004

IDV Type: IDC

Timeline