Northrop Grumman takes on IDIQs

Northrop Grumman Data Systems and Services Division reached a milestone recently when the company landed its 15th indefinite-delivery indefinite-quantity contract. The win pushes the company further into the professional services market from its base in systems integration.

The General Services Administration two weeks ago awarded Northrop Grumman DSSD a Schedule B/C pact for ADP integration services. With that pact the Herndon Va.-based unit of Northrop Grumman Corp. has seven prime contracts and eight subcontracts under the IDIQ umbrella the bulk of which were awarded in the past 12 months.

The IDIQ inundation has changed the face of business at Northrop Grumman DSSD. Until recently the company had been best known for traditional integration deals such as its $100 million Service Center Recognition/Image Processing System (SCRIPS) pact with the Internal Revenue Service. Now Northrop Grumman DSSD finds much of its business in services-oriented IDIQ contracts.

"The IDIQ business is here to stay " said Herb Anderson vice president and general manager of Northrop Grumman DSSD. "It's the way the government is going to do business. There are not a lot of SCRIPS-type systems integration jobs anymore."

The company's deals include prime contracts on the National Institutes of Health's Chief Information Officer Solutions and Partners pact and the Transportation Department's Information Technology Omnibus Procurement. Subcontracts include supporting roles on the Defense Information Systems Agency's Defense Enterprise Integration Services II and Joint Interoperability and Engineering Organization Systems Engineering pacts.

Like most other integrators Northrop Grumman DSSD has seen the pipeline of large-scale integration projects dwindle. Instead much of an integrator's new business is to be mined in multiple-award IDIQ services programs.

High Growth Rate

Charles Billingsley director of electronic government services at Input Inc. said professional services is growing faster than systems integration in the federal market. He said professional services is growing at a compound annual rate of about 7 percent through 2001 while systems integration is growing at 4.7 percent. And within systems integration professional services is the fastest-growing component expected to grow at a 6.8 percent clip.

"I think you are going to find a lot of people leaning toward professional services " Billingsley said. "That's where the money is and where the growth is."

Accordingly Northrop Grumman DSSD has been making organizational adjustments to "support the way the government is changing " Anderson said. For one the company has established a Professional Services directorate which is tasked with marketing and executing IDIQ task orders across all of the company's contracts. The company has also appointed an IDIQ marketing manager for additional help in corralling IDIQ business.

The Navy's Information Technology Support Services is one piece of business Northrop Grumman DSSD is targeting. The Naval Information Systems Management Command is conducting the program through the GSA schedule and plans to award multiple blanket purchase agreements.

The company however continues to stalk more traditional integration proj-ects including the data capture component of the Census Bureau's Census 2000. That pact is slated for a spring award.

In terms of current integration contracts Northrop Grumman DSSD's SCRIPS pact is moving into its fourth year. The pact remains one of the few fielded projects under the IRS' Tax Systems Modernization. The IRS last year canceled the $1.3 billion Document Proc-essing System.

Between its integration and IDIQ contracts Northrop Grumman DSSD aims to become a $1 billion player by 2002. The division currently generates about $400 million in business with external clients. (The division also provides internal information technology support for Northrop Grumman.) Anderson said the company plans to meet its "very aggressive" growth plans by expanding its existing business base forging strategic alliances and in some cases seeking acquisitions.