Northrop Grumman received $19.4M for engineering services, awarded without competition by the Air Force
Contract Overview
Contract Amount: $19,370,830 ($19.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2009-09-25
End Date: 2011-09-30
Contract Duration: 735 days
Daily Burn Rate: $26.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST NO FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $19.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded on a cost-no-fee basis, suggesting focus on service delivery over profit margin. 2. The contract was not competed, raising questions about potential price efficiencies. 3. Duration of 735 days indicates a medium-term engagement for engineering support. 4. The award was made by the Department of the Air Force, a major defense spender. 5. The North American Industry Classification System (NAICS) code 541330 points to specialized engineering services. 6. The contract was awarded in Illinois, indicating a specific geographic focus for the services.
Value Assessment
Rating: questionable
The contract's cost-no-fee structure makes direct value-for-money assessment difficult without further details on the scope of work and actual costs incurred. Benchmarking is challenging due to the lack of competition and the specific nature of engineering services. Without comparable contracts or market rates for similar specialized engineering support, it's hard to definitively state if the price was optimal.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.
Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also bypasses opportunities to discover innovative solutions or cost savings that might emerge from a competitive bidding process.
Public Impact
The primary beneficiaries are likely the Department of the Air Force, receiving specialized engineering expertise. Services delivered would pertain to engineering support, potentially for aircraft, systems, or infrastructure. The geographic impact is centered in Illinois, where the contractor is located. Workforce implications would involve engineers and technical staff employed by Northrop Grumman.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may have resulted in a higher price than a competed contract.
- Cost-no-fee structure can sometimes lead to less stringent cost control by the contractor.
- Limited transparency into the specific engineering tasks performed and their necessity.
Positive Signals
- Northrop Grumman is a well-established defense contractor with significant engineering capabilities.
- The contract was awarded by a major military branch, suggesting a critical need for the services.
- The cost-no-fee structure, while opaque, might indicate a focus on mission accomplishment.
Sector Analysis
This contract falls within the broader aerospace and defense sector, specifically focusing on engineering services. The market for defense engineering services is substantial, driven by the continuous need for research, development, and sustainment of complex military systems. Comparable spending benchmarks would typically involve other large-scale engineering support contracts awarded to major defense primes for similar system development or maintenance.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Northrop Grumman voluntarily engages small businesses as subcontractors.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the performance of engineering services against the contract's objectives. Transparency is limited due to the sole-source nature and cost-no-fee structure, making public scrutiny of specific expenditures challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Defense Engineering Services
- Air Force Systems Support
- Aerospace Engineering Contracts
- Northrop Grumman Defense Contracts
Risk Flags
- Lack of Competition
- Cost-Plus Contract Type (implied by Cost No Fee)
- Potential for Price Inflation
Tags
defense, department-of-defense, department-of-the-air-force, engineering-services, northrop-grumman, sole-source, cost-no-fee, illinois, medium-value, naics-541330
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $19.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES
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 $19.4 million.
What is the period of performance?
Start: 2009-09-25. End: 2011-09-30.
What specific engineering services were provided under this contract?
The provided data indicates the contract was for 'ENGINEERING SERVICES' under NAICS code 541330. However, the specific nature of these services is not detailed. Given the awardee (Northrop Grumman) and the awarding agency (Department of the Air Force), these services likely pertained to complex defense systems, such as aircraft, missile systems, or related aerospace technologies. This could encompass design, analysis, testing, integration, or sustainment engineering. Without access to the contract statement of work, a precise description remains elusive.
How does the $19.4 million contract value compare to similar engineering services contracts awarded by the Air Force?
Comparing the $19.4 million value requires context regarding the contract's duration and scope. This contract lasted 735 days (approximately 2 years). For specialized engineering services, this value is moderate. Larger, more complex programs involving system development or sustainment could easily reach hundreds of millions or billions of dollars. However, for specific, focused engineering support tasks, $19.4 million over two years represents a significant investment. Benchmarking against other sole-source, cost-no-fee engineering contracts awarded by the Air Force for similar durations would provide a more precise comparison, but such data is not readily available.
What are the risks associated with a sole-source, cost-no-fee contract for engineering services?
Sole-source contracts inherently carry risks related to price inflation, as there is no competitive pressure to ensure the best value. The government cannot be certain it obtained the lowest possible price. The cost-no-fee structure, while intended to focus on performance, can also pose risks. It might disincentivize the contractor from rigorous cost management if profit is not directly tied to cost savings. Furthermore, without a competitive process, there's a reduced opportunity to discover innovative approaches or technologies that other firms might offer. Oversight becomes critical to ensure the services are necessary, efficiently performed, and that costs, though reimbursed, are reasonable.
What is Northrop Grumman's track record with the Department of Defense for engineering services?
Northrop Grumman Systems Corporation is a major defense contractor with an extensive history of performing engineering services for the Department of Defense across various branches, including the Air Force. They are involved in numerous large-scale programs related to aerospace, defense electronics, and information systems. Their track record generally includes the delivery of complex technological solutions and engineering support for advanced military platforms. While specific performance metrics for individual contracts vary, their sustained presence and significant contract awards indicate a generally accepted capability to meet DoD's demanding engineering requirements.
How has spending on engineering services by the Department of the Air Force trended historically?
Spending on engineering services by the Department of the Air Force has historically been substantial, reflecting the complexity and continuous evolution of air and space capabilities. While precise historical trends for 'engineering services' as a distinct category can fluctuate based on budget allocations and program lifecycles, the overall trend indicates consistent, high-level investment. Major modernization efforts, research and development initiatives, and sustainment programs for aircraft, satellites, and command-and-control systems all drive demand for engineering expertise. Spending often peaks during periods of significant technological advancement or major platform development.
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: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST NO FEE (S)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 600 HICKS RD, ROLLING MEADOWS, IL, 90
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $19,370,830
Exercised Options: $19,370,830
Current Obligation: $19,370,830
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2009-09-25
Current End Date: 2011-09-30
Potential End Date: 2011-09-30 00:00:00
Last Modified: 2011-10-13
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