Treasury's $33M Northrop Grumman contract for communication systems awarded under full and open competition

Contract Overview

Contract Amount: $32,982,144 ($33.0M)

Contractor: Northrop Grumman Advanced Information Services, Inc

Awarding Agency: Department of the Treasury

Start Date: 2004-10-01

End Date: 2010-09-27

Contract Duration: 2,187 days

Daily Burn Rate: $15.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

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 $33.0 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC for work described as: TREASURY COMMUNICATION SYSTEM (TCS) Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on established capabilities. 2. The contract duration of nearly six years suggests a long-term need for these communication services. 3. Firm Fixed Price contract type aims to control costs and provide predictability for the agency. 4. Awarded by the IRS, highlighting the critical role of secure communication for tax administration. 5. The contract value of $33M over its term represents a significant investment in IT infrastructure. 6. No small business set-aside was utilized, suggesting the scope or nature of services favored larger entities.

Value Assessment

Rating: fair

The contract value of approximately $33 million over almost six years averages to about $5.5 million annually. Benchmarking this against similar large-scale government communication system contracts is challenging without more specific service details. However, the firm fixed-price structure suggests an attempt to lock in costs. Without data on the specific services delivered and their market rates, a precise value-for-money assessment is difficult, but the duration and fixed price indicate a degree of cost control.

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 offers. The fact that it resulted in a single award to Northrop Grumman Advanced Information Services, Inc. could imply that while competition was open, only one offer met all the stringent requirements or was deemed the best value. The level of competition is not explicitly detailed beyond 'full and open,' making it hard to ascertain the number of bidders or the intensity of the bidding process.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it theoretically drives down prices through multiple bids. However, the ultimate benefit depends on the number of actual bidders and the specific evaluation criteria used.

Public Impact

Federal employees within the Department of the Treasury, particularly the IRS, are the primary beneficiaries, gaining access to a reliable communication system. The contract supports the delivery of essential communication infrastructure and services necessary for the agency's operations. The geographic impact is likely nationwide, supporting Treasury operations across various locations. Workforce implications may include the need for specialized IT and communication personnel to manage and maintain the system, potentially benefiting the IT sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the number of bidders in the 'full and open' competition makes it difficult to fully assess competitive pressure.
The absence of small business participation could limit opportunities for smaller, innovative firms in this contract's ecosystem.
The long contract duration might lead to vendor lock-in if not managed carefully with performance reviews.

Positive Signals

The use of 'full and open competition' suggests an effort to ensure a broad search for qualified vendors.
A 'firm fixed price' contract type is a positive signal for cost control and budget predictability.
The award to a well-established contractor like Northrop Grumman may indicate a focus on reliability and proven performance for critical systems.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on communication systems. The government's IT spending is a significant portion of its overall budget, with substantial investments made in maintaining and upgrading communication networks for various agencies. Comparable spending benchmarks would typically involve other large-scale network infrastructure or secure communication system procurements within federal agencies, often awarded to major defense or IT contractors.

Small Business Impact

This contract was not awarded as a small business set-aside, nor is there information indicating significant subcontracting opportunities for small businesses. This suggests that the scope and requirements of the Treasury Communication System likely favored large, established prime contractors with the capacity and expertise to handle such a comprehensive IT infrastructure project. The impact on the small business ecosystem is minimal for this specific award, as it did not prioritize small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's internal contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified services within the agreed budget. Transparency is generally facilitated through contract award databases, though specific performance metrics and oversight reports may not always be publicly available. The Inspector General for the Department of the Treasury would have jurisdiction over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

General Services Administration (GSA) IT Schedule contracts
Department of Defense (DoD) communication system procurements
Other agency-specific IT infrastructure upgrades
Federal Enterprise Architecture initiatives

Risk Flags

Potential for vendor lock-in due to long contract duration.
Cybersecurity risks inherent in critical communication infrastructure.
Risk of technological obsolescence over the contract's lifecycle.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $33.0 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 $33.0 million.

What is the period of performance?

Start: 2004-10-01. End: 2010-09-27.

What specific communication technologies or services were included in the Treasury Communication System (TCS) contract?

The provided data does not specify the exact communication technologies or services covered under the Treasury Communication System (TCS) contract awarded to Northrop Grumman. Typically, such contracts for large federal agencies involve a range of services including network infrastructure (routers, switches, cabling), telecommunications (voice, data, video conferencing), secure communication channels, potentially cloud-based communication solutions, and ongoing maintenance and support. The 'TCS' designation suggests a comprehensive system aimed at facilitating internal and external communications for the Department of the Treasury, likely encompassing secure data transmission and voice services critical for financial operations and tax administration.

How does the $33 million contract value compare to other similar federal communication system contracts?

Direct comparison of the $33 million contract value for the Treasury Communication System (TCS) is difficult without knowing the precise scope and duration of comparable contracts. However, $33 million over nearly six years (approximately $5.5 million annually) is a substantial but not extraordinary figure for a large federal agency's communication infrastructure. Major agencies like the Department of Defense or Homeland Security often award multi-billion dollar contracts for enterprise-wide communication networks. For a single agency like Treasury, this value suggests a significant, but perhaps not the absolute largest, investment in its communication capabilities, likely focused on core operational needs rather than a complete agency-wide overhaul.

What is Northrop Grumman's track record with similar government communication system contracts?

Northrop Grumman is a major defense contractor with extensive experience in providing complex IT and communication systems to various government agencies, including the Department of Defense and intelligence community. Their track record typically involves large-scale, secure, and mission-critical systems. While specific details of past performance on contracts directly analogous to the Treasury Communication System (TCS) are not provided here, Northrop Grumman is generally recognized for its capabilities in areas such as network engineering, cybersecurity, satellite communications, and command and control systems. Their history suggests they possess the technical expertise and capacity to manage significant government IT procurements.

What were the key performance indicators (KPIs) or service level agreements (SLAs) for this contract?

The provided data does not include specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for the Treasury Communication System (TCS) contract. In a firm fixed-price contract of this nature, SLAs would typically define metrics related to system uptime, network availability, data transmission speeds, response times for technical support, and security compliance. The Department of the Treasury would have established these to ensure the reliability, security, and performance of the communication services provided by Northrop Grumman, holding the contractor accountable for meeting these defined standards throughout the contract's duration.

Were there any identified risks or challenges associated with this contract during its performance period?

The available data does not detail specific risks or challenges encountered during the performance of the Treasury Communication System (TCS) contract. However, common risks in large IT communication system contracts include technological obsolescence, cybersecurity threats, integration issues with existing infrastructure, contractor performance deficiencies, and potential cost overruns (though mitigated by the fixed-price structure). Given the nearly six-year duration, managing evolving technology and maintaining robust security would have been ongoing considerations for both the Treasury and Northrop Grumman.

What was the historical spending trend for communication systems within the Department of the Treasury prior to this contract?

The provided data does not offer historical spending trends for communication systems within the Department of the Treasury before this specific $33 million contract. To assess historical spending, one would need to analyze previous contract awards for similar IT and communication services over several fiscal years. This would involve looking at spending patterns, the types of vendors awarded contracts, and the evolution of technology requirements. Understanding past investments would provide context for the scale and nature of the TCS contract and indicate whether it represented an increase, decrease, or continuation of previous spending levels.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $254,236,281

Exercised Options: $32,982,144

Current Obligation: $32,982,144

Parent Contract

Parent Award PIID: TIRNO95D00099

IDV Type: IDC

Timeline