DoD's $60M Northrop Grumman contract awarded in 1999 for 2,133 days shows long-term defense investment

Contract Overview

Contract Amount: $59,961,813 ($60.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 1999-10-29

End Date: 2005-08-31

Contract Duration: 2,133 days

Daily Burn Rate: $28.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: SIERRA VISTA, COCHISE County, ARIZONA, 85635

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $60.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract duration of over 5 years suggests a significant, long-term need for the services or products provided. 2. Awarded as a sole-source contract, raising questions about potential cost efficiencies and market competition. 3. The Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns, requiring robust oversight. 4. The lack of competition may indicate a specialized capability or a limited number of qualified contractors. 5. Performance context is limited without specific details on the deliverables and their criticality to defense operations. 6. Sector positioning within Defense indicates a focus on national security and military readiness.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without knowing the specific services or products procured. However, a $60 million award over more than five years, especially under a sole-source, cost-plus contract, warrants scrutiny. The CPFF structure, while allowing for flexibility, can lead to higher costs if not managed tightly. Comparing this to similar long-term, sole-source defense procurements would be necessary to determine if the pricing was reasonable for the value delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This typically occurs when only one contractor possesses the necessary unique capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to drive down prices and may result in higher costs compared to a competitively bid contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are likely elements within the Department of Defense requiring the specific goods or services provided by Northrop Grumman. The contract supported national defense objectives and potentially advanced military technology or operational capabilities. Geographic impact is centered around the contractor's facilities in Arizona, where the contract was managed. Workforce implications include employment opportunities for skilled personnel at Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost escalation if not rigorously managed.
Long contract duration (over 5 years) increases the risk of scope creep and evolving requirements not aligning with initial pricing.
Lack of transparency regarding specific deliverables makes it difficult to assess true value for money.
Limited competition suggests potential barriers to entry for other capable firms, impacting market dynamism.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests procurement of critical or complex systems.
Long-term nature of the contract indicates a sustained and important requirement for the DoD.
The contract was managed by the Defense Contract Management Agency, implying established oversight processes.
The contract was awarded in 1999, suggesting it was part of a strategic, long-term defense planning effort.

Sector Analysis

This contract falls within the aerospace and defense sector, a critical industry for national security. The defense sector is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Spending in this sector is driven by government defense budgets and geopolitical factors. Comparable spending benchmarks would involve analyzing other large, long-term sole-source contracts for complex defense systems or services awarded to major prime contractors.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely that significant subcontracting opportunities were mandated or prioritized for small businesses, though some may have occurred organically. The impact on the small business ecosystem would be minimal unless Northrop Grumman actively pursued small business partners for specific components or services.

Oversight & Accountability

Oversight for this contract was likely managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures would be embedded in the contract terms, including reporting requirements and performance metrics. Transparency is often limited for sole-source defense contracts, but contract awards are generally published. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Procurement
Northrop Grumman Contracts
Sole Source Awards
Cost Plus Fixed Fee Contracts
Long Term Defense Contracts

Risk Flags

Sole Source Award
Cost-Plus Contract Type
Long Contract Duration
Lack of Competition
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $60.0 million.

What is the period of performance?

Start: 1999-10-29. End: 2005-08-31.

What specific defense systems or services did this $60 million contract procure from Northrop Grumman?

The provided data does not specify the exact defense systems or services procured under this contract. However, given the contractor (Northrop Grumman) and the agency (Department of Defense), it likely involved complex defense technology, aircraft components, electronic systems, or related support services. The duration of over five years suggests a substantial and ongoing requirement. Further investigation into contract line item numbers (CLINs) or associated documentation would be needed to identify the precise nature of the procurement.

How does the Cost Plus Fixed Fee (CPFF) structure of this contract potentially impact its final cost compared to other contract types?

The Cost Plus Fixed Fee (CPFF) contract type allows the contractor to recover all allowable costs incurred, plus a predetermined fixed fee representing profit. While it provides flexibility for uncertain project scopes, it carries a risk of cost overruns, as the contractor is incentivized to incur costs to ensure project completion, and the fee remains constant. If costs escalate significantly, the total expenditure for the government can be higher than with fixed-price contracts. Robust government oversight is crucial to control allowable costs and ensure the fixed fee remains reasonable for the work performed.

What are the implications of this contract being awarded as 'NOT COMPETED' for price discovery and taxpayer value?

Awarding a contract as 'NOT COMPETED' (sole-source) means that the government did not solicit bids from multiple potential suppliers. This significantly limits price discovery, as there is no competitive pressure to drive down prices. Without comparing offers, it is difficult to ascertain if the negotiated price represents fair market value. Taxpayers may bear a higher cost because the government cannot leverage competition to secure the best possible terms and pricing. This approach is typically justified only when a unique capability exists with a single provider.

Considering the contract's duration of 2,133 days (approx. 5.8 years), what risks are associated with long-term sole-source procurements?

Long-term sole-source procurements, like this one spanning nearly six years, present several risks. Firstly, the government is locked into a single provider, limiting flexibility if better technologies or more cost-effective solutions emerge elsewhere. Secondly, the lack of competition over an extended period can lead to complacency and potentially higher costs as the contractor faces no market pressure. Thirdly, requirements can evolve significantly over such a long period, potentially leading to scope creep and cost increases if not managed meticulously. Finally, there's a risk of vendor lock-in, making it difficult and costly to transition to a new provider later.

How does the management of this contract by the Defense Contract Management Agency (DCMA) typically ensure accountability?

The Defense Contract Management Agency (DCMA) plays a crucial role in overseeing contract performance. For a contract like this, DCMA would likely monitor contractor progress, ensure compliance with contract terms and conditions, verify costs incurred (especially for CPFF), and assess the quality of deliverables. Accountability is enforced through regular reporting, performance reviews, and the application of contractual remedies if performance issues arise. DCMA's presence helps ensure that the contractor meets its obligations and that taxpayer funds are used appropriately, although the effectiveness is highly dependent on the specific oversight intensity and the nature of the contract.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1 SPACE PARK BLVD, REDONDO BEACH, CA, 90278

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline