DoD awards $53M task order for AKO Enterprise Services to Northrop Grumman, a significant IT services contract

Contract Overview

Contract Amount: $53,034,146 ($53.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2013-04-12

End Date: 2018-11-20

Contract Duration: 2,048 days

Daily Burn Rate: $25.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TASK ORDER FOR AKO ENTERPRISE SERVICES, ONE YEAR BASE WITH ONE YEAR OPTION.

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $53.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: TASK ORDER FOR AKO ENTERPRISE SERVICES, ONE YEAR BASE WITH ONE YEAR OPTION. Key points: 1. The contract value of $53 million over its period of performance suggests a substantial investment in IT infrastructure. 2. Competition dynamics for this task order are crucial for understanding price discovery and value for money. 3. The duration of the contract (2048 days) indicates a long-term need for these services. 4. Northrop Grumman's role as a major defense contractor positions them to deliver complex IT solutions. 5. The 'Computer Systems Design Services' NAICS code points to a focus on system integration and support. 6. The contract type 'Time and Materials' can introduce cost variability if not closely managed.

Value Assessment

Rating: fair

Benchmarking the value of this $53 million task order requires detailed comparison to similar IT enterprise services contracts within the Department of Defense. The 'Time and Materials' pricing structure, while flexible, can lead to higher costs if not managed with strict oversight and defined labor rates. Without specific performance metrics or a clear comparison to industry benchmarks for similar services, assessing the true value for money is challenging. The absence of a defined ceiling price in the provided data also raises questions about cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This task order was awarded under full and open competition, indicating that multiple bidders were likely considered. The number of bidders (4) suggests a moderate level of competition for this specific requirement. While full and open competition is generally preferred for maximizing choice and driving competitive pricing, the actual impact on price discovery depends on the specific bidding landscape and the government's evaluation criteria.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it theoretically leads to more competitive pricing and a wider range of solutions. The presence of four bidders suggests that the government had options, potentially securing a better price than in a sole-source scenario.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel who rely on the AKO enterprise services for their daily operations. The services delivered likely encompass a range of IT support, including system design, integration, maintenance, and potentially user support for the AKO platform. The geographic impact is primarily within the Department of Defense's operational areas, supporting military personnel and operations. Workforce implications include the potential for Northrop Grumman to utilize its own IT professionals and possibly engage subcontractors, impacting the IT labor market.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Time and Materials' contract type can lead to cost overruns if not meticulously managed and if labor rates are not competitive.
The long duration of the contract (2048 days) necessitates robust ongoing oversight to ensure continued relevance and value.
The specific details of the 'AKO Enterprise Services' are not fully elaborated, making it difficult to assess the full scope of work and potential risks.
The provided data lacks information on performance metrics, making it hard to gauge the contractor's effectiveness beyond contract completion.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that likely yielded a reasonable selection.
Northrop Grumman is a large, established defense contractor with a proven track record in complex IT systems, implying a high likelihood of successful execution.
The contract addresses a critical enterprise service (AKO), indicating its importance to the Department of Defense's operational capabilities.
The task order structure allows for focused execution on a specific set of services within a larger framework.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer systems design and related services. The IT services market for the federal government is substantial, with significant spending allocated to maintaining and upgrading complex systems. Comparable spending benchmarks would involve looking at other large-scale IT support contracts awarded by defense agencies, which often run into tens or hundreds of millions of dollars for enterprise-wide solutions.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no mention of a small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses. Consequently, the primary impact on the small business ecosystem would be through potential subcontracting opportunities, which are not detailed here. Without specific subcontracting plans, it's difficult to assess the extent to which small businesses might benefit from this award.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant Department of the Army contracting and program management offices. Accountability measures would be embedded in the contract terms, including performance standards and reporting requirements. Transparency is facilitated by the contract award being publicly available, but detailed operational oversight and Inspector General jurisdiction would depend on specific clauses and any ongoing audits or investigations related to the contract's performance and financial management.

Related Government Programs

Army Knowledge Online (AKO) Services
Defense Enterprise IT Services
IT Systems Integration and Support
Computer Systems Design Services Contracts
Northrop Grumman Defense Contracts

Risk Flags

Potential for cost overruns due to Time and Materials pricing structure.
Lack of specific performance metrics or KPIs in provided data.
Long contract duration requires sustained oversight.
Details on subcontracting and small business impact are limited.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. TASK ORDER FOR AKO ENTERPRISE SERVICES, ONE YEAR BASE WITH ONE YEAR OPTION.

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $53.0 million.

What is the period of performance?

Start: 2013-04-12. End: 2018-11-20.

What is the historical spending trend for AKO Enterprise Services or similar IT support contracts within the Department of the Army?

Analyzing historical spending for AKO Enterprise Services or comparable IT support contracts within the Department of the Army is crucial for understanding budget allocation and identifying potential trends. Without specific historical data for this exact task order or its predecessors, we can infer general patterns. The Department of Defense, including the Army, consistently allocates significant portions of its budget to IT infrastructure and services. Contracts for enterprise-level systems like AKO often span multiple years and can involve substantial recurring costs for maintenance, upgrades, and support. Historical data would reveal if spending has been consistent, increasing, or decreasing, and whether previous contracts of this nature were awarded through competitive or sole-source means. This context helps in evaluating whether the current $53 million award represents a typical investment or a deviation from past spending patterns, providing a baseline for assessing value and necessity.

How does the per-unit cost or labor rate for Northrop Grumman on this contract compare to industry benchmarks for similar IT enterprise services?

Assessing the per-unit cost or labor rate for Northrop Grumman on this $53 million task order against industry benchmarks is essential for determining value for money. Since this is a 'Time and Materials' contract, the primary cost drivers are labor hours and associated rates. To perform this comparison, one would need access to Northrop Grumman's specific labor categories and rates negotiated for this contract, as well as publicly available data on average rates for similar IT enterprise services from other large contractors or industry surveys. Benchmarking would involve comparing these rates against those for comparable roles (e.g., system architects, network engineers, cybersecurity analysts) in similar government contracts or the commercial sector, adjusted for geographic location and experience levels. A significant deviation from established benchmarks, either higher or lower, would warrant further investigation into the reasons behind it, such as unique skill requirements, contract complexity, or competitive pressures.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this task order, and how has Northrop Grumman performed against them?

Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) are critical for measuring the success and effectiveness of IT enterprise services contracts. For this task order concerning AKO Enterprise Services, typical KPIs might include system uptime, response times for user support, data security compliance, and successful implementation of system updates. SLAs would define the acceptable thresholds for these KPIs. Unfortunately, the provided data does not include specific KPIs or SLAs for this contract. To assess Northrop Grumman's performance, one would need to consult contract performance reports, quality assurance surveillance plans (QASPs), or any available performance evaluations. Without this information, it is impossible to definitively state how well the contractor has met the government's requirements beyond the basic completion of the task order's period of performance.

What is Northrop Grumman's track record with the Department of Defense for similar large-scale IT enterprise service contracts?

Northrop Grumman has a substantial and long-standing track record with the Department of Defense (DoD) across a wide array of complex programs, including significant IT and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems. They are a prime contractor on numerous large-scale contracts involving system design, integration, sustainment, and modernization for various military branches. Their experience often includes managing enterprise-level IT infrastructures, cybersecurity solutions, and mission-critical software development. When evaluating this specific task order, it's important to consider their broader performance history with the DoD. This includes examining past contract awards, any reported performance issues or successes, and their overall reputation for delivering complex technological solutions within budget and schedule constraints. A review of their past performance on similar contracts would provide context for their capability to execute the AKO Enterprise Services task order effectively.

What are the potential risks associated with a 'Time and Materials' contract for enterprise IT services, and how were they mitigated in this award?

Time and Materials (T&M) contracts, while offering flexibility, carry inherent risks, primarily related to cost control. The main risk is that costs can escalate beyond initial estimates if the scope of work is not well-defined or if labor hours are not efficiently utilized. For enterprise IT services, this could manifest as extended development times, unforeseen technical challenges requiring more labor, or less stringent oversight leading to inflated hours. To mitigate these risks, the government typically includes mechanisms such as a 'not-to-exceed' (NTE) ceiling price, detailed labor hour tracking, regular progress reviews, and strong contract administration. In this specific award, the data indicates a base period and an option period, suggesting a defined overall duration, but the absence of a specific NTE ceiling price in the provided snippet is a point of concern. Effective mitigation relies heavily on vigilant government oversight and clear communication with the contractor regarding expected effort and deliverables.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: W15QKN12RH006

Offers Received: 4

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 7575 COLSHIRE DR, MCLEAN, VA, 22102

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: $71,533,960

Exercised Options: $53,034,146

Current Obligation: $53,034,146

Subaward Activity

Number of Subawards: 265

Total Subaward Amount: $407,874,661

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q09BGD0056

IDV Type: GWAC

Timeline