DoD's $720M Contractor Logistics Support Contract with Northrop Grumman Faces Scrutiny for Lack of Competition
Contract Overview
Contract Amount: $720,221,615 ($720.2M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2014-10-01
End Date: 2021-12-31
Contract Duration: 2,648 days
Daily Burn Rate: $272.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF FY15-17 CONTRACTOR LOGISTICS SUPPORT&SERVICES (CLS&S) III
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $720.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF FY15-17 CONTRACTOR LOGISTICS SUPPORT&SERVICES (CLS&S) III Key points: 1. Significant spending on logistics support for aircraft parts. 2. Sole-source award to Northrop Grumman raises competition concerns. 3. Long contract duration (over 6 years) may limit flexibility. 4. Potential for cost overruns given the Cost Plus Fixed Fee structure.
Value Assessment
Rating: questionable
The contract's total value is substantial. Without competitive bidding, it's difficult to assess if the pricing represents fair market value. The Cost Plus Fixed Fee structure can incentivize cost increases.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these logistics and support services.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long-term nature of the contract could lock the DoD into potentially suboptimal pricing. Lack of transparency in pricing due to sole-source award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Established contractor with potential for reliable service delivery
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on manufacturing and support for aircraft parts. Spending benchmarks in this area are highly variable based on specific systems and support needs.
Small Business Impact
The data indicates that small businesses were not involved in this specific contract, as it was awarded to a large corporation and no small business set-aside was mentioned.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight to ensure costs are reasonable and performance meets expectations. The Defense Contract Management Agency is responsible for oversight.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Potential for cost overruns
- Limited transparency
- Long contract duration
- No small business participation
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $720.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF FY15-17 CONTRACTOR LOGISTICS SUPPORT&SERVICES (CLS&S) III
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 $720.2 million.
What is the period of performance?
Start: 2014-10-01. End: 2021-12-31.
What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?
The justification for a sole-source award typically involves factors such as unique capabilities, urgent needs, or the unavailability of other sources. Without specific documentation, it's impossible to determine the exact rationale. However, the absence of competition raises concerns about whether all avenues were explored to secure the best value for the government.
How does the Cost Plus Fixed Fee structure impact the potential for cost overruns and contractor incentive?
The Cost Plus Fixed Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a fixed fee. While the fee is fixed, the contractor has less incentive to control costs as their profit is not directly tied to cost savings. This can lead to higher overall expenditures for the government compared to fixed-price contracts.
What is the estimated taxpayer impact of awarding a $720 million contract without competition?
Estimating the precise taxpayer impact is challenging without a competitive baseline. However, studies consistently show that sole-source contracts can be significantly more expensive than competitively awarded ones, potentially ranging from 10% to 40% higher. This implies taxpayers could be overpaying by tens or even hundreds of millions of dollars on this contract.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
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 PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 92127
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $754,952,872
Exercised Options: $754,952,872
Current Obligation: $720,221,615
Actual Outlays: $34,409
Subaward Activity
Number of Subawards: 263
Total Subaward Amount: $940,501,751
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-10-01
Current End Date: 2021-12-31
Potential End Date: 2021-12-31 00:00:00
Last Modified: 2022-08-31
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