DoD's $14.3M travel contract for contractor support awarded to Northrop Grumman raises value questions

Contract Overview

Contract Amount: $14,315,110 ($14.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2009-08-27

End Date: 2010-08-26

Contract Duration: 364 days

Daily Burn Rate: $39.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: TRAVEL PORTION OF INTERIM CONTRACTOR SUPPORT

Place of Performance

Location: BUFFALO, ERIE County, NEW YORK, 14221

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: TRAVEL PORTION OF INTERIM CONTRACTOR SUPPORT Key points: 1. The contract's value proposition is unclear due to the significant travel component within contractor support. 2. Competition was full and open, suggesting potential for price discovery, but the specific nature of support needs evaluation. 3. Risk indicators are moderate, primarily related to the cost-effectiveness of travel-heavy support services. 4. Performance context is limited to interim contractor support, suggesting a potentially temporary or transitional need. 5. The contract falls within the Defense sector, specifically supporting maintenance and repair operations. 6. The travel portion represents a substantial element, warranting scrutiny regarding necessity and efficiency.

Value Assessment

Rating: fair

The travel portion alone amounts to over $14.3 million, which is a significant expenditure for contractor support. Without detailed justification for the extensive travel, it is difficult to benchmark the value for money. Comparing this to similar contracts for contractor support services that minimize travel would be essential to assess if this represents a fair price for the services rendered. The necessity and efficiency of such a large travel component require further investigation to determine true value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating that multiple bidders were likely considered. While the competition level is positive, the specific nature of the 'interim contractor support' and the significant travel component might have influenced the bidding landscape. The extent to which the travel costs were factored into bids and how they were evaluated is crucial for understanding the price discovery achieved.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs. However, the substantial travel expenses in this contract warrant scrutiny to ensure that taxpayer funds are being used efficiently and that the travel is a necessary and cost-effective component of the support provided.

Public Impact

The primary beneficiaries are likely Department of Defense personnel and operations requiring specialized contractor support. Services delivered include interim contractor support, with a significant portion allocated to travel expenses. The geographic impact is not specified but likely relates to the locations where DoD operations require this support. Workforce implications may involve the deployment of specialized contractor personnel to various DoD sites.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High travel costs may indicate inefficiencies or a lack of localized expertise.
The 'interim' nature of the support could suggest a lack of long-term planning or a gap in organic capabilities.
The significant dollar amount for travel warrants detailed justification and oversight to prevent potential misuse.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process.
Contractor Northrop Grumman is a major defense contractor with a track record in complex support services.
The contract addresses a specific need for support, potentially filling a critical gap.

Sector Analysis

This contract falls within the broader Defense sector, specifically related to maintenance, repair, and operational support. The North American Industry Classification System (NAICS) code 811219 ('Other Electronic and Precision Equipment Repair and Maintenance') suggests a focus on specialized equipment. The market for defense contractor support services is substantial, with significant government spending allocated annually. Benchmarking this contract's travel component against industry standards for similar support roles is challenging without more granular data on the services provided and the necessity of the travel.

Small Business Impact

The contract does not indicate any specific small business set-aside provisions (ss: false, sb: false). Therefore, the primary contractor, Northrop Grumman Systems Corporation, is a large business. There is no direct information on subcontracting plans for small businesses within this specific contract award notice. The impact on the small business ecosystem is likely minimal unless subcontracting opportunities are pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures would be tied to the terms and conditions of the Time and Materials (PT: TIME AND MATERIALS) contract, requiring detailed reporting of labor hours and travel expenses. Transparency regarding the justification for the extensive travel and the specific services rendered would be key to assessing accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Contractor Support Services
Travel Expenses in Government Contracts
Interim Support Contracts
Maintenance and Repair Services

Risk Flags

High travel expenditure relative to contract type
Lack of detailed service description
Potential for cost overruns due to travel

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. TRAVEL PORTION OF INTERIM CONTRACTOR SUPPORT

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 $14.3 million.

What is the period of performance?

Start: 2009-08-27. End: 2010-08-26.

What is the specific nature of the 'interim contractor support' provided under this contract, and how does it necessitate such a high travel component?

The provided data is limited and does not detail the specific services rendered under the 'interim contractor support.' The high travel component (over $14.3 million) suggests that the support may involve on-site technical assistance, specialized maintenance, or deployment to various locations where DoD operations require expertise not readily available locally. Without further documentation, it is difficult to ascertain the precise activities that justify this extensive travel. It could range from deploying technicians for equipment repair to providing on-site training or consultation across multiple bases or operational theaters. The 'interim' designation implies a temporary need, which might explain why permanent local resources were not established, thus requiring travel.

How does the $14.3 million travel expenditure compare to the total contract value and typical travel costs for similar defense support contracts?

The $14.3 million travel expenditure represents the entirety of the awarded amount for this specific contract, indicating that the entire contract value is allocated to travel-related costs for contractor support. This is an unusual structure, as typically travel is a component of a larger service contract, not the sole focus. Without knowing the total value of the services being supported by this travel, a direct comparison is difficult. However, a contract solely for travel expenses, even for support, is exceptionally high. Standard defense support contracts often include travel, but it's usually a percentage of the overall service cost, not the entire contract value. This suggests the contract might be mischaracterized or represents a highly specialized, location-dependent support requirement where travel is the primary cost driver.

What are the potential risks associated with a contract where travel constitutes the entire awarded amount?

The primary risk is the potential for inflated costs and a lack of clear value for money. When travel is the sole component, there's a heightened risk of inefficient routing, unnecessary trips, or excessive per diem charges if not rigorously managed. It also raises questions about the core service being provided – is the contract truly for support, or is it a mechanism to fund travel for personnel who are then performing support duties? This structure can obscure the true cost of the underlying services and make it harder to assess performance against objectives. Furthermore, it could indicate a failure to establish local support capabilities, leading to recurring high travel costs over time.

Given the 'full and open competition' award type, were there specific evaluation criteria related to travel cost-effectiveness?

While the award was made under 'full and open competition,' the specific evaluation criteria are not detailed in the provided data. Typically, in such competitions, proposals are evaluated based on a combination of technical merit, past performance, and price. For a contract with a significant travel component, it would be expected that proposals would include detailed travel plans, cost breakdowns, and justifications for proposed travel. The government would likely evaluate these plans for reasonableness and cost-effectiveness. However, the fact that the entire contract value is travel suggests that the competition might have focused heavily on the ability to provide the necessary travel and associated support, rather than comparing different approaches to service delivery that might minimize travel.

What is Northrop Grumman's track record with similar travel-intensive support contracts for the Department of Defense?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in providing a wide range of support services to the Department of Defense. While specific data on their track record with 'travel-intensive' contracts is not provided here, they are known for managing complex logistics, personnel deployment, and technical support across numerous global locations. Their history suggests they possess the infrastructure and experience to manage significant travel requirements. However, the sheer scale of travel ($14.3 million) as the sole contract value is atypical and would warrant a review of their past performance specifically on contracts where travel was a dominant cost driver to assess efficiency and cost control.

How does this contract align with broader trends in defense spending on contractor support and travel?

Defense spending on contractor support services is a significant and ongoing trend, often used to fill capability gaps, provide specialized expertise, or augment military personnel. Travel is an inherent component of many such contracts, especially those requiring deployment to various operational theaters or remote locations. However, a contract where travel constitutes the entire awarded amount is unusual and may not represent a broader trend but rather a specific, perhaps unique, requirement. While overall defense spending on services and associated travel remains high, the structure of this particular contract warrants closer examination to understand if it reflects an emerging cost-saving strategy or an anomaly.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1740 WEHRLE DR, BUFFALO, NY, 14221

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $20,169,483

Exercised Options: $14,315,110

Current Obligation: $14,315,110

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline