Treasury's $51M IT contract for data processing support awarded to Northrop Grumman shows fair value

Contract Overview

Contract Amount: $51,237,555 ($51.2M)

Contractor: Northrop Grumman Advanced Information Services, Inc

Awarding Agency: Department of the Treasury

Start Date: 2008-02-01

End Date: 2012-09-30

Contract Duration: 1,703 days

Daily Burn Rate: $30.1K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: TOTAL INFORMATION PROCESSING SUPPORT SYS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20006

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $51.2 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC for work described as: TOTAL INFORMATION PROCESSING SUPPORT SYS Key points: 1. The contract was competitively awarded, suggesting a reasonable price was negotiated. 2. Northrop Grumman's performance context is crucial for understanding value. 3. The IT sector is highly dynamic, requiring continuous assessment of technology relevance. 4. This contract falls within the Computer Systems Design Services category. 5. The fixed-price nature of the contract shifts performance risk to the contractor.

Value Assessment

Rating: fair

The total award of $51.2 million over approximately four years for IT support services appears within a reasonable range for similar government contracts. Benchmarking against other IT system design contracts of comparable scope and duration would provide a more precise value assessment. The firm-fixed-price contract type suggests that the contractor bears the risk of cost overruns, which can be a positive indicator of value if performance is met.

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 subject to full and open competition. The presence of two bidders suggests a moderate level of competition. While more bidders could potentially drive prices lower, two bidders still provide a basis for price comparison and negotiation.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers as it likely resulted in a more favorable price than a sole-source or limited competition scenario.

Public Impact

The Internal Revenue Service (IRS) benefits from enhanced information processing capabilities. Services delivered include computer systems design and related support. The geographic impact is primarily within the District of Columbia. This contract supports IT professionals and potentially impacts the broader federal IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if requirements are not clearly defined.
Risk of vendor lock-in if proprietary systems are used.
Dependence on a single contractor for critical IT functions.

Positive Signals

Firm-fixed-price contract incentivizes contractor efficiency.
Competitive award process suggests a market-driven price.
Long-term contract provides stability for IT operations.

Sector Analysis

This contract falls within the IT services sector, specifically Computer Systems Design Services. The federal IT market is substantial, with significant spending on systems integration, software development, and IT support. This contract represents a portion of the government's investment in maintaining and upgrading its internal information processing infrastructure, comparable to other agencies' spending on similar IT support functions.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a large business, and the direct impact on the small business ecosystem for this specific contract may be limited unless Northrop Grumman engages small businesses as subcontractors.

Oversight & Accountability

Oversight would typically be managed by the contracting officer and program managers within the IRS. Accountability measures are inherent in the firm-fixed-price contract, requiring delivery of specified services. Transparency is generally facilitated through contract award databases, though detailed performance metrics may not always be publicly available.

Related Government Programs

Federal Information Technology Acquisition Reform Act (FITARA)
IT Modernization Initiatives
IRS Technology Modernization Plan
Government-wide IT Services Contracts

Risk Flags

Contract Duration
Vendor Lock-in Potential
Performance Monitoring Gaps

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $51.2 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC. TOTAL INFORMATION PROCESSING SUPPORT SYS

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 $51.2 million.

What is the period of performance?

Start: 2008-02-01. End: 2012-09-30.

What is Northrop Grumman's track record with similar IT support contracts for federal agencies?

Northrop Grumman has a long history of providing IT and defense-related services to various federal agencies. Their track record with similar large-scale IT support contracts would need to be reviewed in detail, looking at past performance evaluations, any contract disputes, and their ability to meet technical and schedule requirements. Specific data on their performance for the IRS under this contract would be crucial for a comprehensive assessment. Generally, as a major defense contractor, they possess significant resources and experience, but individual contract performance can vary.

How does the $51.2 million total award compare to other IT support contracts of similar scope and duration?

Without specific details on the scope of 'TOTAL INFORMATION PROCESSING SUPPORT SYS' and the exact services rendered, a precise comparison is challenging. However, for a four-year contract involving comprehensive IT system design and support for a major agency like the IRS, $51.2 million is within a plausible range. Comparable contracts might include system integration, network management, or software development services for agencies of similar size. The average cost per year is approximately $12.8 million, which needs to be benchmarked against industry rates for similar services, considering the complexity and criticality of IRS systems.

What are the primary risks associated with this contract for the IRS?

Key risks include potential vendor lock-in if proprietary technologies are heavily utilized, making future transitions difficult or costly. There's also the risk of performance degradation if Northrop Grumman faces internal challenges or fails to adapt to evolving technological needs. Dependence on a single contractor for critical IT functions can pose a risk if the contractor's financial stability or strategic direction changes. Ensuring continuous alignment with IRS security protocols and data privacy regulations is also paramount.

How effective has Northrop Grumman been in delivering the specified IT support services under this contract?

Assessing effectiveness requires access to performance reports, user feedback, and key performance indicators (KPIs) established within the contract. Without this specific performance data, a definitive judgment cannot be made. However, the contract's completion suggests that services were delivered to a degree that met the IRS's requirements over its duration. A deeper analysis would involve reviewing any formal performance reviews or contract modifications that indicate issues or successes.

What have been the historical spending patterns for IT support services at the IRS, and how does this contract fit in?

Historical spending patterns for IT support at the IRS are likely substantial, given the agency's complex operational needs and vast data processing requirements. This $51.2 million contract represents a significant, but likely not isolated, investment in IT infrastructure over its four-year period. Understanding the IRS's overall IT budget and how funds are allocated across different service providers and projects would provide context. This contract appears to be a component of the IRS's ongoing efforts to maintain and potentially modernize its critical information systems.

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: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 8110 GATEHOUSE RD, FALLS CHURCH, VA, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $53,173,558

Exercised Options: $51,237,555

Current Obligation: $51,237,555

Parent Contract

Parent Award PIID: TIRNO06D00014

IDV Type: IDC

Timeline