DoD's Northrop Grumman Contract for Ground Subsystem Support Reaches $44.7M, Raising Value Questions
Contract Overview
Contract Amount: $44,694,384 ($44.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2019-02-01
End Date: 2020-07-31
Contract Duration: 546 days
Daily Burn Rate: $81.9K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: GROUND SUBSYSTEM SUPPORT CONTRACT ORDER PERIOD 5 GENERAL SUSTAINMENT
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20171
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $44.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: GROUND SUBSYSTEM SUPPORT CONTRACT ORDER PERIOD 5 GENERAL SUSTAINMENT Key points: 1. Contract awarded to a single, large company, raising questions about competition. 2. The cost-plus award fee structure can incentivize cost overruns. 3. Engineering services sector is prone to complex, high-value contracts. 4. Limited small business participation is noted. 5. The contract duration is relatively short, suggesting potential for re-competition.
Value Assessment
Rating: questionable
The contract's total value of $44.7M for engineering services is substantial. Without specific performance metrics or benchmarks for similar ground subsystem support, it's difficult to definitively assess value for money. The cost-plus award fee structure warrants scrutiny.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Despite being listed as 'full and open competition,' the award went to a single entity, Northrop Grumman. This suggests either a highly specialized requirement or potential issues in the solicitation or bidding process that limited broader participation and competitive pricing.
Taxpayer Impact: The significant expenditure raises concerns about whether taxpayers received the best possible price due to the apparent lack of robust competition at the award stage.
Public Impact
Taxpayers are funding critical support for Department of Defense ground systems. The contract's value impacts the defense budget and resource allocation. Potential for cost overruns due to the contract type could increase the financial burden. Lack of transparency in the competitive process may erode public trust.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-Plus Award Fee structure
- Single awardee despite 'full and open' claim
- Lack of small business participation
- High contract value for engineering services
Positive Signals
- Contract supports essential defense infrastructure
- Awarded to a known defense contractor
Sector Analysis
This contract falls within the Engineering Services sector, which often involves complex technical support for specialized government assets. Benchmarks for similar ground subsystem support contracts are not readily available, making direct comparison difficult.
Small Business Impact
The contract explicitly states no small business participation (ss: false, sb: false). This indicates a missed opportunity to leverage small businesses for specialized engineering services and potentially achieve cost savings through diverse sourcing.
Oversight & Accountability
The 'VA' status and 'VIRGINIA' location suggest state-level oversight, but the specific mechanisms for monitoring performance, costs, and ensuring accountability for this significant DoD contract are not detailed. Further investigation into oversight processes is warranted.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of demonstrated competition despite 'full and open' status
- Cost-Plus Award Fee structure increases risk of cost overruns
- No small business participation noted
- Potential for insufficient oversight given contract value and type
Tags
engineering-services, department-of-defense, va, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $44.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. GROUND SUBSYSTEM SUPPORT CONTRACT ORDER PERIOD 5 GENERAL SUSTAINMENT
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 Air Force).
What is the total obligated amount?
The obligated amount is $44.7 million.
What is the period of performance?
Start: 2019-02-01. End: 2020-07-31.
How effectively did the 'full and open competition' process ensure a competitive price for this $44.7M contract, given the single awardee?
The 'full and open competition' designation is questionable when only one entity, Northrop Grumman, received the award. This suggests potential deficiencies in the solicitation process, bid evaluation, or a lack of qualified bidders. Without further details on the bidding process, it's difficult to ascertain if competitive pressures truly drove down costs, potentially leading to a less than optimal price for taxpayers.
What are the specific risks associated with the Cost Plus Award Fee (CPAF) structure in this contract, and how are they mitigated?
The CPAF structure carries inherent risks of cost escalation, as the contractor is reimbursed for allowable costs plus a fee that is adjusted based on performance. This can incentivize higher spending to achieve a larger fee. Mitigation strategies typically involve robust government oversight, clearly defined performance metrics, and stringent cost controls. The effectiveness of these mitigations for this specific contract requires further examination.
How does the $44.7M expenditure on ground subsystem support align with the Air Force's overall strategic goals and budget priorities?
Assessing the strategic alignment requires understanding the criticality of the ground subsystems supported by this contract to Air Force operations. If these systems are essential for mission readiness or national security, the expenditure may be justified. However, without insight into alternative solutions or potential cost-saving measures, it's challenging to definitively state if this represents the most effective use of funds compared to other defense priorities.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 2340 DULLES CORNER BLVD, 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: $48,053,625
Exercised Options: $48,053,625
Current Obligation: $44,694,384
Actual Outlays: $4,415,683
Subaward Activity
Number of Subawards: 329
Total Subaward Amount: $38,398,956
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA821415D0001
IDV Type: IDC
Timeline
Start Date: 2019-02-01
Current End Date: 2020-07-31
Potential End Date: 2020-07-31 00:00:00
Last Modified: 2021-02-04
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