DoD's $38M FMS Support Contract for PMS 326 Awarded to Northrop Grumman

Contract Overview

Contract Amount: $38,213,628 ($38.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2007-07-19

End Date: 2011-07-18

Contract Duration: 1,460 days

Daily Burn Rate: $26.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS SUPPORT FOR PMS 326

Place of Performance

Location: WASHINGTON NAVY YARD, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20376

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $38.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FMS SUPPORT FOR PMS 326 Key points: 1. Contract value represents a significant investment in engineering services for naval programs. 2. The award was made under full and open competition, suggesting a robust bidding process. 3. The fixed-price contract type aims to control costs and provide predictability. 4. The contract duration of 1460 days (4 years) indicates a long-term need for these services. 5. Northrop Grumman's selection highlights its established role in defense contracting. 6. The contract is geographically concentrated in the District of Columbia.

Value Assessment

Rating: good

The contract's total value of approximately $38.2 million over four years suggests a substantial but potentially reasonable investment for specialized engineering support. Benchmarking against similar large-scale defense engineering contracts is necessary for a definitive value assessment. The firm-fixed-price structure is a positive indicator for cost control, assuming the scope was well-defined at award. Without specific performance metrics or detailed cost breakdowns, a precise value-for-money judgment is challenging, but the competitive award process provides a baseline for fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of two bids suggests a moderate level of competition for this specialized engineering service. While two bidders are better than one, a higher number of bids would typically lead to more aggressive pricing and potentially better value for the government. The specific details of the bidding process and evaluation criteria would further illuminate the effectiveness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. Even with two bidders, the process ensures that the government is not locked into a single provider, promoting a degree of price discovery.

Public Impact

The primary beneficiaries are the Department of the Navy and its Program Management Support (PMS) 326, receiving critical engineering services. Services delivered likely include technical analysis, program management support, and engineering expertise for naval systems. The geographic impact is concentrated in the District of Columbia, where the contractor is located and likely where key personnel will be based. The contract supports a specialized workforce of engineers and technical professionals within Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the scope of work expands beyond initial estimates under the fixed-price contract.
Dependence on a single contractor for critical engineering support could pose a risk if performance issues arise.
Limited competition (two bidders) might have resulted in a higher price than if more firms had participated.

Positive Signals

Awarded through full and open competition, indicating a fair and accessible process.
Firm-fixed-price contract type helps manage cost certainty for the government.
Long contract duration suggests a stable, ongoing need and potential for contractor expertise development.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader defense industrial base. The market for defense engineering services is characterized by high barriers to entry, specialized expertise requirements, and significant government spending. Northrop Grumman is a major player in this sector, competing for large, complex contracts. Spending in this category is often driven by modernization efforts, sustainment of existing platforms, and research and development for future capabilities.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, small businesses are unlikely to be direct prime contractors. However, Northrop Grumman, as a large prime contractor, may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the broader small business ecosystem. The extent of small business subcontracting would need further investigation.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting officers and program managers. The firm-fixed-price nature provides some inherent oversight by focusing on deliverables rather than cost reimbursement. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. Regular performance reviews and milestone tracking are standard oversight mechanisms.

Related Government Programs

Naval Ship Systems Engineering
Defense Engineering Services
Program Management Support Contracts
Department of Defense IT and Engineering Services

Risk Flags

Moderate Competition
Long-Term Contract Duration
Concentrated Geographic Performance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FMS SUPPORT FOR PMS 326

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 Navy).

What is the total obligated amount?

The obligated amount is $38.2 million.

What is the period of performance?

Start: 2007-07-19. End: 2011-07-18.

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

Northrop Grumman has a long and extensive history of performing large-scale engineering and support contracts for the Department of Defense across various platforms and services. They are a major defense contractor known for their capabilities in aerospace, defense, and information systems. Their portfolio includes work on naval systems, aircraft, and intelligence systems, often involving complex engineering, integration, and sustainment services. Analyzing their past performance on contracts with similar scope, duration, and value would provide context for their ability to successfully execute this FMS Support for PMS 326 contract. Key indicators would include on-time delivery, adherence to budget (where applicable), and quality of technical solutions provided in previous engagements.

How does the awarded price compare to industry benchmarks for similar engineering services?

Directly comparing the awarded price of $38.2 million to specific industry benchmarks for 'Engineering Services' (NAICS 541330) is challenging without more granular data on the specific services rendered under this contract. However, the average contract value within this NAICS code can provide a general reference point. Given that this is a large, multi-year contract awarded to a major defense contractor, it is likely positioned at the higher end of the spectrum for individual contract awards. The firm-fixed-price nature suggests the government sought to lock in costs. A more precise benchmark would involve comparing the estimated labor hours, skill mix, and overhead rates against industry standards for comparable defense engineering support roles, factoring in the specific program's complexity and security requirements.

What are the primary risks associated with this contract, and how are they being mitigated?

Primary risks include potential scope creep, contractor performance issues, and technological obsolescence. Scope creep is a risk in any long-term engineering contract; mitigation involves rigorous change control processes and clear definition of requirements at the outset. Contractor performance issues are mitigated through contract surveillance, performance metrics, and the potential for remedies outlined in the contract. Technological obsolescence is managed by ensuring the engineering services remain relevant to evolving naval technologies and by incorporating flexibility into the contract where possible. The firm-fixed-price structure itself acts as a mitigation for cost overruns, placing the financial risk on the contractor for defined scope.

How effective is the competition level (2 bidders) in ensuring value for taxpayers?

A competition level of two bidders is moderate. While it indicates that the contract was not a sole-source award and that some price discovery occurred, it is less ideal than a scenario with three or more bidders. With only two bidders, there is a higher risk that the government did not achieve the most competitive pricing possible. The government may have received a fair price, but the potential for greater savings or more innovative solutions from a wider field of competitors was likely limited. Taxpayers benefit from competition, and more bidders generally translate to better value. The specific details of the proposals and the evaluation process would offer further insight into the actual value achieved.

What is the historical spending trend for FMS SUPPORT FOR PMS 326 or similar naval engineering support contracts?

Analyzing historical spending for 'FMS SUPPORT FOR PMS 326' specifically requires access to detailed contract databases over multiple years. However, general trends in naval engineering support spending by the Department of Defense indicate a consistent and often increasing demand. This is driven by the need to maintain and modernize a large fleet of naval vessels, develop new platforms, and ensure the operational readiness of existing systems. Factors like geopolitical tensions, fleet size, and technological advancements influence these spending patterns. Contracts of this nature, supporting major programs like PMS 326, typically represent significant, multi-year commitments reflecting the long lifecycle of naval assets.

What are the implications of the 'Delivery Order' (aw) contract type for this award?

The 'Delivery Order' (aw) designation typically applies to indefinite-delivery, indefinite-quantity (IDIQ) contracts or similar vehicles where the government orders specific goods or services over a period. In this context, it suggests that while a contract was awarded to Northrop Grumman, the $38.2 million might represent the total potential value or the value of specific orders placed under a broader contract vehicle. This allows the government flexibility to order services as needed, up to a certain ceiling. For taxpayers, this means spending is tied to actual requirements, potentially avoiding over-procurement, but also requiring careful management to ensure the full value is utilized effectively and efficiently.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002407R3299

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $268,352,674

Exercised Options: $83,408,701

Current Obligation: $38,213,628

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4091

IDV Type: IDC

Timeline