DoD's $70M Enterprise Support Contract Awarded to Northrop Grumman Faces Scrutiny for Lack of Competition
Contract Overview
Contract Amount: $70,337,038 ($70.3M)
Contractor: Northrop Grumman Systems Corp
Awarding Agency: Department of Defense
Start Date: 2020-01-01
End Date: 2023-04-28
Contract Duration: 1,213 days
Daily Burn Rate: $58.0K/day
Competition Type: NOT COMPETED
Pricing Type: FIXED PRICE INCENTIVE
Sector: IT
Official Description: CY20-22 ENTERPRISE SUPPORT DELIVERY ORDER MODEL CONTRACT
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550
Plain-Language Summary
Department of Defense obligated $70.3 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY20-22 ENTERPRISE SUPPORT DELIVERY ORDER MODEL CONTRACT Key points: 1. Significant spending of $70.3M over three years on enterprise support. 2. Sole-source award to Northrop Grumman raises questions about competitive pricing. 3. Potential risks include inflated costs and limited innovation due to lack of competition. 4. The contract falls under the Aircraft Manufacturing sector, indicating specialized support needs.
Value Assessment
Rating: questionable
The contract's fixed-price incentive structure with a $57.9M benchmark suggests potential for cost overruns if not managed tightly. Without competitive bids, it's difficult to assess if the $70.3M awarded represents fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for the government compared to a competitive process.
Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for enterprise support services, as market forces are not driving cost efficiency.
Public Impact
Taxpayers may be overpaying for essential enterprise support services due to the absence of competitive bidding. The reliance on a single contractor could impact the agility and responsiveness of support functions. Future government procurements in this area might be influenced by this sole-source decision, potentially limiting options.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
Positive Signals
- Established contractor with relevant experience
Sector Analysis
The contract supports enterprise functions within the Aircraft Manufacturing sector. Spending benchmarks for similar IT support contracts in defense are highly variable, but a $70M sole-source award warrants careful review for efficiency.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corp and does not indicate any subcontracting opportunities for small businesses. The sole-source nature further limits the potential for small business involvement.
Oversight & Accountability
The 'NOT COMPETED' status suggests a potential gap in oversight regarding the justification for a sole-source award. Further review is needed to ensure the necessity and fairness of this procurement approach.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of competitive bidding
- Potential for inflated costs
- Limited innovation
- Reduced government leverage
- Oversight concerns regarding sole-source justification
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $70.3 million to NORTHROP GRUMMAN SYSTEMS CORP. CY20-22 ENTERPRISE SUPPORT DELIVERY ORDER MODEL CONTRACT
Who is the contractor on this award?
The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.
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 $70.3 million.
What is the period of performance?
Start: 2020-01-01. End: 2023-04-28.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The provided data indicates the contract was 'NOT COMPETED,' suggesting a sole-source award. A thorough review would require access to the contract file to understand the specific justification, such as unique capabilities or urgent need, and to confirm if any market research was conducted to explore competitive options before this determination was made.
How does the awarded price of $70.3M compare to industry benchmarks for similar enterprise support services, especially considering the fixed-price incentive structure?
Without specific details on the scope of 'enterprise support' and comparable market data for sole-source contracts, a precise benchmark is difficult. However, the fixed-price incentive structure with a $57.9M benchmark suggests a target cost. The government's actual expenditure of $70.3M indicates costs exceeded the target, raising questions about cost control and the initial pricing accuracy in a non-competitive environment.
What are the potential long-term implications for the Department of the Air Force's operational effectiveness and technological advancement due to this sole-source award?
A sole-source award can limit the infusion of new technologies and innovative solutions that might come from a competitive market. This could potentially hinder the Air Force's long-term operational effectiveness if the contractor does not proactively introduce advancements. It also reduces leverage for negotiating future upgrades or service enhancements.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 3520 E AVE M, PALMDALE, CA, 93550
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $117,318,411
Exercised Options: $72,315,279
Current Obligation: $70,337,038
Actual Outlays: $4,536,671
Subaward Activity
Number of Subawards: 34
Total Subaward Amount: $1,509,630
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA861614D6060
IDV Type: IDC
Timeline
Start Date: 2020-01-01
Current End Date: 2023-04-28
Potential End Date: 2023-04-28 00:00:00
Last Modified: 2023-09-25
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