Northrop Grumman awarded $18.6M contract for shared infrastructure services by the IRS

Contract Overview

Contract Amount: $18,630,447 ($18.6M)

Contractor: Northrop Grumman Advanced Information Services, Inc

Awarding Agency: Department of the Treasury

Start Date: 2008-10-01

End Date: 2009-09-27

Contract Duration: 361 days

Daily Burn Rate: $51.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: SHARED INFRASTRUCTURE

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $18.6 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC for work described as: SHARED INFRASTRUCTURE Key points: 1. Contract awarded for shared infrastructure services, indicating a need for foundational IT support. 2. The contract was competed fully and openly, suggesting a competitive bidding process. 3. Awarded as a Cost Plus Award Fee (CPAF) type, allowing for performance-based incentives. 4. The contract duration was approximately one year, suggesting a short-term or project-specific need. 5. The small business set-aside flag is false, indicating no specific preference for small businesses. 6. The contract was awarded to Northrop Grumman, a large defense and aerospace contractor.

Value Assessment

Rating: fair

The contract value of $18.6 million for approximately one year of shared infrastructure services appears to be within a reasonable range for large-scale IT support. However, without specific details on the scope of services (e.g., data storage, network management, cybersecurity), a precise value-for-money assessment is challenging. The Cost Plus Award Fee (CPAF) structure allows for flexibility and incentivizes performance, but it can also lead to higher costs if not managed tightly. Benchmarking against similar shared infrastructure contracts would provide a clearer picture of its cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. This suggests a robust bidding process where multiple companies likely vied for the contract. The level of competition is not explicitly stated in terms of the number of bidders, but the 'full and open' designation generally implies a healthy market engagement. This approach is intended to foster price discovery and ensure the government receives competitive pricing.

Taxpayer Impact: A full and open competition typically benefits taxpayers by driving down costs through market forces, leading to a more efficient use of public funds.

Public Impact

The Internal Revenue Service (IRS) benefits from this contract by securing essential shared infrastructure services, crucial for its operations. The services delivered likely support the IRS's mission of tax administration and enforcement. The geographic impact is primarily within the IRS's operational footprint, likely supporting its facilities and personnel. Workforce implications may include the need for IT specialists to manage and maintain the shared infrastructure, potentially both government and contractor personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee (CPAF) contracts can sometimes lead to cost overruns if performance metrics and award fees are not rigorously defined and monitored.
The relatively short duration of the contract (approx. 1 year) might indicate a need for ongoing re-competition or potential disruption if services are not seamlessly transitioned.
Lack of specific details on the scope of 'shared infrastructure' makes it difficult to assess the full extent of services and potential risks.
The awardee, Northrop Grumman, is a large prime contractor; ensuring adequate oversight and preventing over-reliance on a single large vendor is important.

Positive Signals

The contract was awarded through full and open competition, suggesting a competitive process that should yield fair pricing.
The Cost Plus Award Fee (CPAF) structure incentivizes contractor performance, potentially leading to higher quality service delivery.
The contract supports critical IT infrastructure for the IRS, a vital government agency.
Northrop Grumman is a well-established contractor with significant experience in large-scale IT and infrastructure projects.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on shared infrastructure services. This encompasses a broad range of foundational IT components such as data centers, networks, cloud services, and cybersecurity. The market for IT infrastructure services is highly competitive, with numerous large and small businesses offering solutions. Government spending in this area is substantial, driven by the need to modernize legacy systems, enhance cybersecurity, and improve operational efficiency across agencies. Comparable spending benchmarks would typically look at the cost per server, per user, or per gigabyte of storage/data managed.

Small Business Impact

The 'sb' (small business) flag is false, indicating that this contract was not set aside for small businesses. This means that large businesses were eligible to compete and potentially win. Consequently, there are no direct subcontracting requirements mandated by a small business set-aside. However, large prime contractors like Northrop Grumman often engage small businesses as subcontractors on their projects, contributing to the broader small business ecosystem. The absence of a set-aside does not preclude small business participation, but it does not guarantee it either.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant program officials within the IRS. As a Cost Plus Award Fee (CPAF) contract, performance monitoring and the assessment of award fee criteria are critical oversight functions. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance or closeout.

Related Government Programs

Shared Services Centers
IT Infrastructure Modernization Programs
Cloud Computing Services Contracts
Data Center Consolidation Initiatives
Cybersecurity Infrastructure Support

Risk Flags

Potential for cost growth in CPAF contracts if not managed tightly.
Need for clear performance metrics and rigorous oversight.
Risk of service disruption if transition is not managed effectively.
Ensuring long-term strategic alignment of infrastructure services.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $18.6 million to NORTHROP GRUMMAN ADVANCED INFORMATION SERVICES, INC. SHARED INFRASTRUCTURE

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 $18.6 million.

What is the period of performance?

Start: 2008-10-01. End: 2009-09-27.

What specific types of shared infrastructure services were included in this contract?

The provided data does not specify the exact nature of the 'SHARED INFRASTRUCTURE' services. Typically, this can encompass a wide array of IT components, including but not limited to: data center operations (power, cooling, physical security), network infrastructure (routers, switches, firewalls), storage solutions, cloud hosting services (IaaS, PaaS), and potentially elements of cybersecurity infrastructure. Without further details from the contract's statement of work (SOW), it's difficult to ascertain the precise scope. The IRS, like many large agencies, relies on robust infrastructure to manage sensitive taxpayer data and process tax returns, suggesting these services are critical to their core mission.

How does the Cost Plus Award Fee (CPAF) structure impact the potential cost and performance of this contract?

The Cost Plus Award Fee (CPAF) contract type allows the contractor to be reimbursed for allowable costs plus a fee that is composed of a fixed base amount and an award amount. The award amount is determined based on the contractor's performance against pre-defined criteria. This structure incentivizes the contractor to perform well, as higher performance can lead to a larger total fee. For the government, it offers flexibility in scope and encourages quality outcomes. However, it requires diligent oversight to ensure the award criteria are objective, measurable, and that the fee accurately reflects performance, preventing potential cost escalation if not managed effectively.

What is Northrop Grumman's track record with similar government IT infrastructure contracts?

Northrop Grumman is a major defense contractor with extensive experience in providing IT services and infrastructure solutions to various government agencies, including civilian and defense departments. They have a history of managing large, complex IT programs, encompassing areas like network modernization, cloud migration, cybersecurity, and enterprise IT support. While specific contract details for this IRS award are limited, Northrop Grumman's overall profile suggests they possess the scale and expertise to handle significant infrastructure requirements. A deeper analysis would involve reviewing their past performance evaluations on similar contracts, particularly regarding cost control, schedule adherence, and technical execution.

How does the $18.6 million contract value compare to typical spending on shared IT infrastructure?

The $18.6 million contract value for approximately one year of shared infrastructure services is substantial but not unusual for a federal agency like the IRS. The cost of maintaining and modernizing IT infrastructure can be significant, involving hardware, software, personnel, and facilities. Benchmarking this value requires understanding the specific services rendered. For instance, costs for data center operations, network bandwidth, cloud services, or cybersecurity tools vary widely. Compared to massive, multi-year enterprise-wide IT overhauls, this figure might represent a specific component or a transitional phase. However, without a detailed breakdown of the scope, it's challenging to definitively state if it represents high or low spending relative to market rates for comparable services.

What are the potential risks associated with a 'full and open competition' for IT infrastructure?

While 'full and open competition' is generally preferred for maximizing value, potential risks can still exist. One risk is that the sheer complexity of modern IT infrastructure might deter some smaller, innovative companies from bidding, potentially limiting the pool of bidders to larger, established players. Another risk is the time and resources required for the government to evaluate numerous complex proposals, which could lead to delays in award. Furthermore, even with open competition, ensuring the chosen solution truly meets long-term needs and avoids vendor lock-in requires careful planning and robust contract management throughout the performance period. The government must also ensure that the winning proposal's cost structure is truly competitive and sustainable.

What historical spending patterns exist for shared infrastructure services at the IRS?

The provided data only details this specific contract award. To understand historical spending patterns for shared infrastructure services at the IRS, one would need to analyze historical contract data over several fiscal years. This would involve querying databases like FPDS or USASpending for contracts categorized under similar Product Service Codes (PSCs) or keywords related to IT infrastructure, data centers, networks, and cloud services awarded to the IRS. Analyzing trends in contract values, durations, awardees, and competition levels would reveal patterns such as increasing reliance on cloud services, shifts in technology adoption, or changes in spending due to modernization initiatives or budget fluctuations.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,630,447

Exercised Options: $18,630,447

Current Obligation: $18,630,447

Parent Contract

Parent Award PIID: TIRNO95D00099

IDV Type: IDC

Timeline