DoD's $72.8M Northrop Grumman Contract for Logistics Support Raises Questions on Competition and Value
Contract Overview
Contract Amount: $72,804,109 ($72.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2012-08-01
End Date: 2018-01-30
Contract Duration: 2,008 days
Daily Burn Rate: $36.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: CONTRACTOR LOGISTICS SUPPORT
Place of Performance
Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $72.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: CONTRACTOR LOGISTICS SUPPORT Key points: 1. Significant contract value of $72.8 million awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing and limited innovation. 3. Contract duration spans over five years, increasing long-term financial exposure. 4. Sector focus on navigation and guidance systems suggests critical defense applications.
Value Assessment
Rating: questionable
The contract's total value of $72.8 million for logistics support is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar services from other providers.
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 may lead to higher costs for taxpayers as there was no market pressure to offer competitive pricing.
Taxpayer Impact: The lack of competition on this $72.8 million contract means taxpayers may have paid a premium, as there was no incentive for the contractor to offer the lowest possible price.
Public Impact
Taxpayers may be overpaying for essential logistics support due to the absence of competitive bidding. The long-term nature of the contract could lock the government into potentially suboptimal pricing for years. Reliance on a single contractor for critical navigation system support could pose a risk if performance issues arise.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- Cost-plus contract type
- No small business participation
Positive Signals
- Essential defense system support
- Long-term contract provides stability
Sector Analysis
This contract falls within the IT and Defense sectors, specifically focusing on navigation and guidance systems. The benchmark for similar logistics support contracts in this specialized area is difficult to ascertain without competitive data, but large sole-source awards often warrant scrutiny.
Small Business Impact
The contract data indicates that small businesses were not involved in this award (sb: false). This represents a missed opportunity to support small businesses and potentially leverage their specialized capabilities or competitive pricing.
Oversight & Accountability
The award was managed by the Defense Contract Management Agency (DCMA), suggesting some level of oversight. However, the sole-source nature of the contract limits the effectiveness of competitive oversight in ensuring optimal pricing.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competitive bidding
- Sole-source award
- Cost-plus contract type may reduce cost control incentives
- No small business participation
- Long contract duration increases long-term financial exposure
Tags
search-detection-navigation-guidance-aer, department-of-defense, va, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $72.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. CONTRACTOR LOGISTICS 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 $72.8 million.
What is the period of performance?
Start: 2012-08-01. End: 2018-01-30.
What was the justification for awarding this contract on a sole-source basis, and were alternative solutions explored?
The justification for a sole-source award is crucial for understanding why competition was bypassed. Without this information, it's impossible to assess if the government adequately explored all options to ensure the best value. This could involve unique capabilities of the contractor, urgent needs, or a lack of viable alternatives, but these must be clearly documented and justified.
How does the cost-plus fixed fee structure impact the contractor's incentive to control costs on this $72.8M contract?
A Cost Plus Fixed Fee (CPFF) contract structure can create a potential conflict of interest regarding cost control. While the fixed fee provides some incentive for efficiency, the contractor is reimbursed for all allowable costs. This means the contractor has less financial risk associated with cost overruns compared to fixed-price contracts, potentially leading to less aggressive cost management.
What performance metrics and oversight mechanisms are in place to ensure the effectiveness and value of Northrop Grumman's logistics support?
Effective oversight requires clear performance metrics and robust monitoring. For this contract, it's essential to know if specific deliverables, response times, and quality standards are defined and tracked. Regular performance reviews and audits by the DCMA would be critical to ensure the contractor is meeting expectations and that the substantial taxpayer investment is yielding the intended results.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument 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 (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: $74,828,544
Exercised Options: $74,742,270
Current Obligation: $72,804,109
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-08-01
Current End Date: 2018-01-30
Potential End Date: 2018-01-30 00:00:00
Last Modified: 2021-07-13
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