Northrop Grumman's $133.7M IT contract for IRS systems design shows long-term engagement

Contract Overview

Contract Amount: $133,672,307 ($133.7M)

Contractor: Northrop Grumman Advanced Information Services, Inc

Awarding Agency: Department of the Treasury

Start Date: 2006-05-31

End Date: 2015-11-20

Contract Duration: 3,460 days

Daily Burn Rate: $38.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: ESTABLISH TIPSS III TASK 2034

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $133.7 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC for work described as: ESTABLISH TIPSS III TASK 2034 Key points: 1. Contract value indicates significant investment in IT infrastructure. 2. Long duration suggests a critical and ongoing need for these services. 3. Competitive award implies potential for price negotiation and value. 4. Focus on computer systems design points to core IT modernization efforts. 5. The contract's performance period spans nearly a decade, highlighting stability. 6. Task order structure suggests flexibility in addressing evolving IT requirements.

Value Assessment

Rating: good

The total award of $133.7 million over approximately 9.5 years represents a substantial investment. Benchmarking against similar large-scale IT systems design contracts is challenging without more granular data on specific deliverables and service levels. However, the competitive nature of the award suggests that pricing was likely scrutinized. The cost-plus-fixed-fee structure, while common for complex IT projects, requires careful oversight to manage costs effectively and ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that it was competed under a broader indefinite-delivery/indefinite-quantity (IDIQ) contract. The presence of multiple bidders (indicated by 'no': 3) suggests a healthy level of competition for this task order. This competition is generally beneficial for price discovery and can lead to more favorable terms for the government.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Benefits the Internal Revenue Service by providing essential computer systems design services. Supports the modernization and maintenance of critical IT infrastructure for tax administration. Impacts the efficiency and effectiveness of tax processing and taxpayer services. Likely involves a workforce of IT professionals and systems engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost overruns if not managed tightly.
Long contract durations may lead to vendor lock-in and reduced flexibility over time.
The specific IT systems supported are not detailed, making it hard to assess direct impact on taxpayer services.

Positive Signals

Competitive award process suggests potential for cost savings.
Long-term engagement indicates a stable and reliable IT support solution for the IRS.
The contract is for core IT systems design, addressing fundamental operational needs.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer systems design services. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and modernizing federal IT infrastructure. Contracts like this are crucial for agencies like the IRS to manage complex data and ensure operational continuity. Comparable spending benchmarks would depend on the specific scope of systems design and integration involved.

Small Business Impact

The provided data does not indicate if this contract included small business set-asides or subcontracting goals. As a large contract awarded to a major defense and aerospace contractor, it is possible that subcontracting opportunities exist for small businesses, but this would need further investigation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. The cost-plus-fixed-fee (CPFF) pricing structure necessitates robust oversight to monitor costs, ensure compliance with contract terms, and verify the delivery of services. Transparency is generally enhanced through contract award databases, but detailed performance reports may not be publicly available.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian IT Services
Computer Systems Design and Related Services
North American Industry Classification System (NAICS) 541512

Risk Flags

Cost-Plus-Fixed-Fee pricing requires diligent oversight to prevent cost overruns.
Long contract duration may pose risks of technological obsolescence.
Specific system details are not provided, limiting assessment of direct impact.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $133.7 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC. ESTABLISH TIPSS III TASK 2034

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 $133.7 million.

What is the period of performance?

Start: 2006-05-31. End: 2015-11-20.

What specific IT systems or infrastructure components did Northrop Grumman design or enhance under this contract?

The provided data does not specify the exact IT systems or infrastructure components that Northrop Grumman Advanced Information Services, Inc. designed or enhanced under the ESTABLISH TIPSS III TASK 2034 contract. The NAICS code 541512, 'Computer Systems Design Services,' is broad and can encompass a wide range of activities, from developing new software applications and integrating hardware to designing network architectures and providing IT consulting. Without further details from the contract's statement of work or performance reports, it is difficult to ascertain the precise nature of the systems supported. This information is crucial for understanding the contract's direct impact on IRS operations and taxpayer services.

How does the total award amount of $133.7 million compare to other similar IT systems design contracts awarded by the IRS or other federal agencies?

The total award of $133.7 million over approximately 9.5 years for computer systems design services is a significant sum, reflecting the complexity and duration of IT projects within large federal agencies. Comparing it directly to 'similar' contracts is challenging without defining 'similar' by scope, duration, and specific services. However, for context, major IT modernization efforts within agencies like the IRS, Social Security Administration, or Department of Defense often involve contracts in the hundreds of millions or even billions of dollars over their lifecycle. This $133.7 million award appears to be a substantial, but not exceptionally large, investment for a long-term, specialized IT support task order within a critical agency like the Treasury.

What were the primary risks associated with this contract, and how were they mitigated?

Key risks for a contract of this nature, particularly one using a Cost Plus Fixed Fee (CPFF) structure, often include cost overruns, schedule delays, scope creep, and technical obsolescence. CPFF contracts, while flexible for evolving requirements, can incentivize contractors to incur more costs to increase their fixed fee base if not managed stringently. Mitigation strategies would typically involve robust oversight by the IRS contracting officer and technical team, detailed performance metrics, regular progress reviews, strict change control processes, and potentially incentives for meeting cost and schedule targets. The long duration also presents a risk of technology becoming outdated, requiring proactive management to ensure systems remain current.

What is the track record of Northrop Grumman Advanced Information Services, Inc. in delivering IT services to the federal government, particularly the IRS?

Northrop Grumman is a large, established defense contractor with extensive experience providing IT and systems integration services across various federal agencies, including the Department of Defense, NASA, and civilian agencies. Their track record generally includes large-scale, complex projects. For the IRS specifically, this contract represents a significant engagement spanning nearly a decade. While specific performance details for this particular task order are not publicly detailed, Northrop Grumman's overall history suggests a capacity to handle substantial IT contracts. However, as with any large contractor, past performance reviews and contract-specific data would be needed for a comprehensive assessment.

How has federal spending on computer systems design services (NAICS 541512) trended over the period this contract was active (2006-2015)?

Federal spending on computer systems design services (NAICS 541512) generally saw an upward trend from 2006 to 2015, driven by ongoing needs for IT modernization, cybersecurity enhancements, and the implementation of new technologies across government agencies. This period coincided with increased focus on digital transformation initiatives and the consolidation of IT infrastructure. While specific annual figures fluctuate based on agency budgets and priorities, the overall demand for these services remained strong. This contract's active period aligns with a time of significant IT investment across the federal government, reflecting broader spending patterns in the sector.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 8110 GATEHOUSE RD, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $209,341,815

Exercised Options: $141,420,240

Current Obligation: $133,672,307

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TIRNO06D00014

IDV Type: IDC

Timeline