Air Force's $63M Dynamic Retasking Capability contract awarded to Northrop Grumman raises questions on competition and value

Contract Overview

Contract Amount: $63,157,457 ($63.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2011-05-31

End Date: 2014-09-08

Contract Duration: 1,196 days

Daily Burn Rate: $52.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: DYNAMIC RETASKING CAPABILITY (DRC)

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $63.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DYNAMIC RETASKING CAPABILITY (DRC) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Lack of competition suggests potential risks in contractor performance and innovation. 3. The contract's duration and cost-plus-fixed-fee structure warrant scrutiny for cost control. 4. Performance context is limited due to the absence of competitive benchmarks. 5. This contract falls within the IT services sector, specifically computer systems design. 6. No small business set-aside was applied, indicating limited direct impact on small businesses. 7. Oversight mechanisms are crucial given the sole-source nature and cost-plus structure.

Value Assessment

Rating: questionable

Benchmarking the value of this $63.16 million contract is challenging due to its sole-source award and lack of publicly available performance data. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D, can incentivize cost overruns if not rigorously managed. Without competitive bids, it's difficult to ascertain if Northrop Grumman's pricing reflects fair market value for the Dynamic Retasking Capability (DRC) services provided. The contract's duration of nearly 4 years also necessitates ongoing vigilance to ensure continued cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'not competed' justification, indicating a sole-source procurement. This means only one bidder, Northrop Grumman Systems Corporation, was solicited. The absence of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities), they inherently reduce transparency and price discovery.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without competing offers, the government cannot be assured it received the most cost-effective solution available in the market.

Public Impact

The primary beneficiary is the Department of the Air Force, which receives enhanced capabilities for dynamic retasking. Services delivered include computer systems design and development for the DRC. The geographic impact is primarily within the Department of Defense's operational theaters. Workforce implications include specialized IT and systems engineering roles at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially inflates costs.
Cost-plus-fixed-fee structure requires robust oversight to prevent cost overruns.
Lack of transparency in the procurement process hinders public accountability.
Absence of competitive benchmarks makes value assessment difficult.

Positive Signals

Awarded to a large, established defense contractor with significant experience.
Contract addresses a critical capability for modern military operations.
Fixed fee component provides some level of cost certainty for the contractor's effort.

Sector Analysis

This contract falls under the Information Technology (IT) services sector, specifically within computer systems design and related services. The market for such services is vast and highly competitive, with numerous firms capable of providing advanced system design. However, specialized capabilities like dynamic retasking, particularly for defense applications, may limit the pool of qualified contractors. Comparable spending benchmarks for similar complex defense IT systems are difficult to pinpoint without more specific details on the DRC's functionalities.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans specifically targeting small businesses in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Northrop Grumman voluntarily engages small businesses for specific components or services. The absence of a set-aside means opportunities for small businesses to compete for this specific contract were not pursued.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of cost, schedule, and performance is essential. Transparency is limited due to the non-competitive award. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Defense IT Modernization Programs
Command and Control Systems
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Air Force Acquisition Programs

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive benchmarking
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DYNAMIC RETASKING CAPABILITY (DRC)

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 $63.2 million.

What is the period of performance?

Start: 2011-05-31. End: 2014-09-08.

What specific capabilities does the Dynamic Retasking Capability (DRC) provide to the Air Force?

The Dynamic Retasking Capability (DRC) contract, awarded to Northrop Grumman Systems Corporation, likely pertains to systems that allow for the flexible and rapid reallocation of assets, such as aircraft or sensors, to meet evolving mission requirements. This could involve sophisticated software and hardware integration that enables real-time adjustments to operational plans based on changing intelligence or battlefield conditions. Such capabilities are crucial for maintaining situational awareness and operational agility in complex, modern warfare environments. The specific functionalities are not detailed in the provided data but generally aim to enhance responsiveness and efficiency in deploying and managing military resources.

Why was this contract awarded on a sole-source basis instead of being competed?

The data indicates this contract was awarded using a 'not competed' (CT: NOT COMPETED) justification, classifying it as sole-source. Sole-source awards are typically justified when only one responsible source is available or possesses the unique capability required for the acquisition. Reasons can include proprietary technology, urgent and compelling needs where competition is impractical, or specific government requirements that only one contractor can meet. Without further documentation from the agency (e.g., Justification and Approval document), the precise rationale for Northrop Grumman being the sole source for the DRC remains unspecified, but it implies a belief by the Air Force that competition was not feasible or advantageous in this instance.

How does the Cost Plus Fixed Fee (CPFF) contract type impact cost control and contractor incentives?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor (Northrop Grumman) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for research and development or complex services where the scope is not fully defined at the outset. While the fixed fee provides the contractor with a stable profit margin, it can reduce the incentive to control costs, as the government bears the risk of cost overruns. Effective cost control under CPFF relies heavily on robust government oversight, detailed cost accounting, and clear performance metrics to ensure the contractor remains efficient and avoids unnecessary expenditures.

What is the historical spending trend for Dynamic Retasking Capability or similar systems within the Air Force?

The provided data only details a single contract for the Dynamic Retasking Capability (DRC) valued at approximately $63.16 million, awarded to Northrop Grumman from May 2011 to September 2014. There is no information on historical spending trends for this specific capability or comparable systems within the Air Force. To assess historical spending, one would need to analyze broader contract databases for related programs, track spending over multiple fiscal years, and identify any recurring procurements or evolving investment strategies in retasking technologies. This single contract does not provide sufficient data to establish a trend.

What are the potential risks associated with a sole-source contract of this magnitude?

Sole-source contracts, especially those of significant value like this $63.16 million award, carry inherent risks. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process. It also reduces the government's leverage in negotiating terms and conditions. Furthermore, without the pressure of competition, there's a potential for complacency in contractor performance, innovation, and responsiveness. Oversight becomes paramount to mitigate these risks, ensuring the contractor delivers required capabilities effectively and efficiently, and that the pricing remains reasonable despite the absence of market checks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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: $137,320,820

Exercised Options: $129,142,376

Current Obligation: $63,157,457

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline