Northrop Grumman awarded $53.5M for IRS contact center support, highlighting IT service needs
Contract Overview
Contract Amount: $53,518,936 ($53.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of the Treasury
Start Date: 2013-09-30
End Date: 2019-03-29
Contract Duration: 2,006 days
Daily Burn Rate: $26.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: IGF::CT::IGF JOINT OPERATIONS CENTER SUPPORT, PROVIDE WORLD CLASS SERVICE SUPPORT TO 28+ CONTACT CENTERS.
Place of Performance
Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706
State: Maryland Government Spending
Plain-Language Summary
Department of the Treasury obligated $53.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::CT::IGF JOINT OPERATIONS CENTER SUPPORT, PROVIDE WORLD CLASS SERVICE SUPPORT TO 28+ CONTACT CENTERS. Key points: 1. Contract value of $53.5M over six years indicates significant investment in IT support infrastructure. 2. Full and open competition suggests a robust market for contact center services. 3. Potential for cost overruns or performance issues exists given the long duration and complexity of supporting 28+ contact centers. 4. This contract aligns with the IRS's ongoing efforts to modernize and improve taxpayer services. 5. The firm-fixed-price structure aims to control costs, but requires careful monitoring of scope creep. 6. Northrop Grumman's extensive experience in government IT services positions them as a capable provider.
Value Assessment
Rating: good
The contract value of $53.5 million over approximately six years for supporting 28+ contact centers appears reasonable given the scope. Benchmarking against similar large-scale IT support contracts for federal agencies suggests that the per-year cost is within expected ranges for comprehensive service delivery. The firm-fixed-price contract type provides cost certainty, assuming the scope of work remains well-defined and managed.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This competitive process is designed to ensure fair pricing and access to a wide range of qualified contractors. The presence of two bidders suggests a healthy, though perhaps not intensely crowded, market for this type of specialized IT support.
Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging innovation among contractors.
Public Impact
Taxpayers benefit from improved efficiency and responsiveness of IRS contact centers. Essential services are delivered to taxpayers seeking assistance with tax-related inquiries. The contract supports IT infrastructure and personnel primarily located in Maryland. Workforce implications include employment opportunities for IT specialists and support staff within the contractor's organization.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for scope creep in a long-term, complex IT support contract.
- Reliance on a single large contractor for critical taxpayer support functions.
- Ensuring consistent service quality across 28+ diverse contact centers.
Positive Signals
- Awarded through full and open competition, suggesting market validation.
- Firm-fixed-price contract provides cost predictability.
- Contractor has significant experience in large-scale government IT projects.
Sector Analysis
This contract falls within the Information Technology sector, specifically focusing on IT services and support. The market for IT support services for federal agencies is substantial, with significant annual spending across various departments. This contract represents a portion of the IRS's overall IT budget, aimed at maintaining and enhancing critical taxpayer-facing operations. Comparable spending benchmarks for large-scale IT service contracts often run into tens or hundreds of millions of dollars.
Small Business Impact
This contract was awarded under full and open competition and does not appear to have a specific small business set-aside. While the prime contractor is a large entity, there may be opportunities for small businesses to participate as subcontractors, depending on Northrop Grumman's subcontracting plan. The impact on the small business ecosystem would depend on the extent to which they are integrated into the supply chain for this contract.
Oversight & Accountability
Oversight for this contract would typically be managed by the IRS contracting officer and program managers, ensuring adherence to the statement of work and performance standards. Accountability measures are built into the firm-fixed-price contract, with penalties or incentives potentially tied to performance metrics. Transparency is facilitated through contract award databases and reporting requirements, though specific operational details may be sensitive.
Related Government Programs
- IRS IT Modernization Programs
- Federal Contact Center Support Services
- Government IT Services Contracts
- Northrop Grumman Government Contracts
Risk Flags
- Long contract duration increases risk of scope creep and technological obsolescence.
- Reliance on a single contractor for critical taxpayer support functions.
- Ensuring consistent service quality across a large number of diverse contact centers.
- Data security and privacy risks associated with handling taxpayer information.
Tags
it-services, contact-center-support, irs, department-of-the-treasury, northrop-grumman-systems-corporation, firm-fixed-price, delivery-order, full-and-open-competition, maryland, it-outsourcing, taxpayer-services
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $53.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::CT::IGF JOINT OPERATIONS CENTER SUPPORT, PROVIDE WORLD CLASS SERVICE SUPPORT TO 28+ CONTACT CENTERS.
Who is the contractor on this award?
The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Internal Revenue Service).
What is the total obligated amount?
The obligated amount is $53.5 million.
What is the period of performance?
Start: 2013-09-30. End: 2019-03-29.
What is Northrop Grumman's track record with similar large-scale IT support contracts for federal agencies?
Northrop Grumman has a long and extensive history of providing IT support and systems integration services to various federal agencies, including the Department of Defense, NASA, and other civilian departments. They have managed complex programs involving large user bases, critical infrastructure, and significant budgets. Their experience often includes managing contact centers, cybersecurity, network operations, and enterprise IT solutions. While specific performance metrics for past contracts are not detailed here, their sustained presence as a major government contractor suggests a generally positive track record in delivering on complex IT requirements. However, like any large contractor, they may have faced challenges or scrutiny on specific projects, which would require deeper investigation into individual contract performance reports and IG audits.
How does the value of this contract compare to other IRS IT support contracts?
The $53.5 million value over approximately six years for this contract places it as a significant, but not unprecedented, IT support award for the IRS. The IRS manages a vast and complex IT infrastructure, and annual IT spending can reach into the billions. Contracts for enterprise IT services, system development, and large-scale support operations frequently fall within this range or exceed it. For instance, major system modernization efforts or enterprise-wide software implementations often command higher values. This particular contract focuses on contact center support, a critical but specific function. Therefore, while substantial, it represents a focused investment within the broader IRS IT landscape.
What are the primary risks associated with this contract for the IRS?
The primary risks associated with this contract include potential performance degradation if service levels are not consistently met across all 28+ contact centers, leading to taxpayer dissatisfaction. There's also a risk of cost overruns if the scope of work expands beyond the initial definition (scope creep), despite the firm-fixed-price structure. Contractor dependency is another risk; a long-term reliance on a single provider for critical functions can create vulnerabilities. Furthermore, ensuring data security and privacy for taxpayer information handled by the contact centers is paramount, and any breaches would have severe consequences. Finally, the long duration of the contract (nearly six years) increases the risk of technological obsolescence or changes in IRS requirements that the current contract may not adequately address without modification.
How effective is full and open competition in ensuring value for money in IT support contracts of this nature?
Full and open competition is generally considered the most effective method for ensuring value for money in IT support contracts. By allowing all responsible sources to submit bids, it fosters a competitive environment that drives down prices and encourages innovation. When multiple capable vendors vie for a contract, they are incentivized to offer their best pricing and most efficient solutions to win the award. This process allows the government to select the offer that provides the best overall value, considering not just price but also technical merit, past performance, and risk. In this case, with two bidders, the competition may have been less intense than if there were many more, but it still provided a basis for price discovery and selection of a qualified provider.
What are the historical spending patterns for IRS contact center support?
Historical spending patterns for IRS contact center support have likely shown a consistent need for significant investment due to the agency's role in taxpayer services. Over the years, the IRS has increasingly relied on technology to manage call volumes and provide information. Spending would have evolved from basic telephony and staffing to more sophisticated IT infrastructure, including CRM systems, automated call distribution (ACD), interactive voice response (IVR), and digital communication channels. The trend has been towards modernization and integration of these systems to improve efficiency and taxpayer experience. Contracts like this one, valued in the tens of millions, reflect the ongoing commitment to maintaining and upgrading these critical taxpayer-facing IT operations.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
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
Address: 4807 STONECROFT BLVD, CHANTILLY, VA, 20151
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $71,450,420
Exercised Options: $70,141,519
Current Obligation: $53,518,936
Actual Outlays: $13,449
Subaward Activity
Number of Subawards: 166
Total Subaward Amount: $207,666,124
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: TIRNO11D00027
IDV Type: IDC
Timeline
Start Date: 2013-09-30
Current End Date: 2019-03-29
Potential End Date: 2019-03-29 14:57:40
Last Modified: 2021-09-22
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