Northrop IT Contract Draws Scrutiny

0

A Pentagon audit found that a Northrop Grumman Corp. IT service contract worth as much as $375 million violated federal procurement regulations and should be canceled and re-bid.


The audit, prepared by the inspector general and released Thursday, said that the defense agency that awarded the contract, which was for IT services, assured “abnormally high profit rates” for Northrop.


The contract was awarded by the Defense Threat Reduction Agency, which researches technologies to help detect and neutralize weapons of mass destruction. Because of the way the contracts are awarded, the inspector general cannot force agencies to comply with its recommendations. James Tegnelia, the head of the defense agency, said he has no intentions of terminating the contract.


Assistant Inspector General for Contract Management Richard Jolliffe, the author of the audit, recommended that Tegnelia reconsider and develop a re-bid plan by Oct. 26. If Tegnelia refuses, Jolliffe can refer the issue to the Pentagon’s senior procurement officials. Northrop would not comment on the issue.


Jolliffe said the audit was triggered by an anonymous tip from a person familiar with the bid and the negotiations.


Jolliffe said in his audit that rather than issue new requests for bids, personnel within Tegnelia’s division “inappropriately” worked with Northrop “to correct proposal deficiencies and materially altered both the technical and cost elements of the initial proposal,” directly benefiting Northrop and preventing other firms from bidding for the work.


Northrop’s IT services sector, which was started early last year, has been one of the fastest growing portions of the defense contracting giant as it moves toward more civilian work as war spending slows.


Shares in Northrop were up 1.2 percent to $79.49 in afternoon trading Thursday. Shares have added 19 percent so far this year.

No posts to display