DoD's $17.4M IT O&M contract awarded to Northrop Grumman, raising questions about competition and value
Contract Overview
Contract Amount: $17,423,051 ($17.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2025-02-22
End Date: 2026-02-21
Contract Duration: 364 days
Daily Burn Rate: $47.9K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: OPERATION AND MAINTENANCE OF INFORMATION TECHNOLOGY EQUIPMENT
Place of Performance
Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $17.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: OPERATION AND MAINTENANCE OF INFORMATION TECHNOLOGY EQUIPMENT Key points: 1. Contract awarded on a sole-source basis, limiting competitive pressure on pricing. 2. Significant duration of 364 days suggests a need for stable, long-term IT support. 3. Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored. 4. Northrop Grumman's extensive experience in defense contracting likely influenced the sole-source award. 5. The contract falls under Engineering Services NAICS code, indicating a focus on technical expertise. 6. Virginia is the state of performance, suggesting a concentration of IT support within the region.
Value Assessment
Rating: questionable
Benchmarking the value of this $17.4 million IT Operation and Maintenance contract is challenging without more detailed cost breakdowns. The CPFF structure, while common for complex services, requires rigorous oversight to ensure cost efficiency. Comparing it to similar IT O&M contracts within the DoD would be necessary to assess if the fixed fee is reasonable for the scope of work. The lack of competition further complicates a direct value assessment, as market-driven pricing is absent.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source procurement. This means only one contractor, Northrop Grumman Systems Corporation, was solicited and awarded the contract. The rationale for this approach is not provided in the data, but it typically stems from unique capabilities, urgent needs, or a lack of viable alternatives. The absence of competition means there was no opportunity for price discovery through a bidding process.
Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the lack of competitive bidding. Without competing the requirement, the government cannot be assured it secured the most cost-effective solution available in the market.
Public Impact
The Department of Defense benefits from continuous operation and maintenance of critical IT equipment. This contract ensures the availability and functionality of essential information technology systems for military operations. The primary beneficiaries are the military personnel and units relying on these IT systems for their daily functions. The geographic impact is concentrated in Virginia, where the performance is expected to occur. Workforce implications may include the direct employment of IT professionals by Northrop Grumman to fulfill the contract requirements.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher costs for taxpayers.
- CPFF contract type requires strong oversight to prevent cost overruns.
- Limited transparency into the specific IT equipment and services covered.
- Sole-source award raises concerns about potential vendor lock-in.
Positive Signals
- Award to an experienced contractor like Northrop Grumman suggests a focus on reliability.
- Long-term contract duration indicates a recognized need for sustained IT support.
- Contract supports critical Department of Defense IT infrastructure.
Sector Analysis
This contract falls within the broader Information Technology (IT) services sector, specifically focusing on the operation and maintenance of IT equipment. The IT services market is vast and highly competitive, encompassing a wide range of services from software development to hardware maintenance. For IT O&M, spending benchmarks can vary significantly based on the complexity of the systems, the criticality of the equipment, and the level of support required. Government spending on IT O&M is substantial, reflecting the increasing reliance on technology across all federal agencies.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large corporation, Northrop Grumman, there are no direct subcontracting implications for small businesses mentioned. This contract does not appear to contribute to the small business ecosystem through set-asides or mandated subcontracting goals.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army, a component of the Department of Defense. As a Cost Plus Fixed Fee (CPFF) contract, rigorous financial oversight is crucial to monitor expenditures and ensure the fixed fee remains appropriate for the work performed. Transparency regarding the specific IT systems maintained and the performance metrics would be key accountability measures. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.
Related Government Programs
- Department of Defense IT Modernization Programs
- Federal Civilian IT Operations and Maintenance Contracts
- Defense Information Systems Agency (DISA) Contracts
- IT Services for National Security Agencies
Risk Flags
- Sole-source award lacks competitive pricing.
- CPFF contract type carries inherent cost overrun risk.
- Limited public information on specific services and performance metrics.
Tags
it-operation-and-maintenance, department-of-defense, northrop-grumman, sole-source, cost-plus-fixed-fee, engineering-services, virginia, it-services, defense-contracting, information-technology
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $17.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. OPERATION AND MAINTENANCE OF INFORMATION TECHNOLOGY EQUIPMENT
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 $17.4 million.
What is the period of performance?
Start: 2025-02-22. End: 2026-02-21.
What specific IT equipment and systems are covered under this Operation and Maintenance contract?
The provided data does not specify the exact IT equipment or systems covered under this $17.4 million contract. The description 'OPERATION AND MAINTENANCE OF INFORMATION TECHNOLOGY EQUIPMENT' is broad. Typically, such contracts encompass a range of hardware (servers, workstations, network devices, peripherals) and potentially associated software licenses and infrastructure. A detailed inventory of assets, maintenance schedules, and service level agreements would normally be part of the contract's statement of work, which is not included here. Understanding the specific systems is crucial for assessing the contract's true scope, risk, and value.
What is the historical spending pattern for IT Operation and Maintenance within the Department of the Army for similar services?
Historical spending data for similar IT Operation and Maintenance (O&M) services within the Department of the Army is not provided in this dataset. To establish a pattern, one would need to analyze past contracts for IT O&M, noting the contractors, durations, award types (competed vs. sole-source), and total values. Comparing the $17.4 million awarded to Northrop Grumman against this historical context would reveal if this award is consistent with previous spending levels, or if it represents an increase or decrease. Analyzing trends over several fiscal years would be necessary to identify any significant shifts in spending or contracting strategies for IT O&M.
What are the specific performance metrics and service level agreements (SLAs) associated with this contract?
The provided data does not include specific performance metrics or Service Level Agreements (SLAs) for this IT Operation and Maintenance contract. These are critical components of any service contract, defining the expected quality, availability, and responsiveness of the services provided. For IT O&M, SLAs might include uptime guarantees for systems, response times for technical support, or turnaround times for equipment repair. Without these details, it is difficult to objectively assess whether Northrop Grumman is meeting the required performance standards and delivering value for the $17.4 million investment. These metrics are typically detailed in the contract's Statement of Work.
What justification was provided for awarding this contract on a sole-source (not competed) basis?
The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. However, the specific justification for this determination is not provided. Common reasons for sole-source awards include the existence of only one responsible source capable of providing the required service, urgent and compelling needs that preclude full and open competition, or specific national security requirements. Without the official justification document (e.g., a Justification and Approval document), it is impossible to verify the validity of the sole-source determination and assess whether competition was genuinely not feasible or if it was simply bypassed.
How does the Cost Plus Fixed Fee (CPFF) structure of this contract influence risk and potential cost overruns?
The Cost Plus Fixed Fee (CPFF) contract structure means the contractor (Northrop Grumman) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts some of the cost risk to the government, as the contractor is incentivized to complete the work but not necessarily to minimize costs beyond what is necessary to achieve the fixed fee. If costs escalate significantly, the government bears the burden. Effective oversight, detailed cost tracking, and robust negotiation of the fixed fee are essential to mitigate the risk of cost overruns and ensure the government receives good value under a CPFF arrangement.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 13825 SUNRISE VALLEY DR, HERNDON, VA, 20171
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $17,423,051
Exercised Options: $17,423,051
Current Obligation: $17,423,051
Subaward Activity
Number of Subawards: 6
Total Subaward Amount: $3,288,922
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W911QY21D0003
IDV Type: IDC
Timeline
Start Date: 2025-02-22
Current End Date: 2026-02-21
Potential End Date: 2026-02-21 00:00:00
Last Modified: 2025-09-02
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