DoD's $11.16M contract for EURO HAWK CETS engineering services awarded to Northrop Grumman Systems Corporation

Contract Overview

Contract Amount: $11,157,930 ($11.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2007-11-19

End Date: 2014-12-31

Contract Duration: 2,599 days

Daily Burn Rate: $4.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: EURO HAWK CETS

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $11.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: EURO HAWK CETS Key points: 1. Contract awarded for engineering services related to the EURO HAWK CETS program. 2. Significant investment in advanced aerospace engineering capabilities. 3. Sole-source award raises questions about competition and potential cost efficiencies. 4. Contract duration of 2599 days indicates a long-term commitment to the project. 5. Focus on California suggests a concentration of specialized aerospace expertise. 6. Cost Plus Fixed Fee contract type may incentivize cost overruns if not closely managed.

Value Assessment

Rating: questionable

The total award amount of $11.16 million for engineering services is difficult to benchmark without specific deliverables. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex R&D, can lead to higher costs if the fixed fee is not carefully calibrated against the estimated costs and risks. Without comparable sole-source contracts for similar advanced aerospace systems, assessing the value-for-money is challenging. The lack of competition inherently limits the ability to determine if this price represents a fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. The absence of multiple bidders means that price discovery through competitive bidding was not utilized, potentially leading to a higher price than if multiple firms had competed.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing for taxpayers. This can result in higher overall program costs compared to competitively awarded contracts.

Public Impact

The primary beneficiaries are the Department of Defense and potentially its operational units requiring advanced aerospace capabilities. Services delivered include engineering support for the EURO HAWK CETS program. The geographic impact is concentrated in California, likely leveraging existing aerospace industry infrastructure and workforce. Workforce implications include the employment of specialized engineers and technical personnel within Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee structure requires rigorous oversight to control costs.
Long contract duration (2599 days) increases exposure to potential scope creep or evolving requirements.
Lack of detailed performance metrics in the provided data makes assessing effectiveness difficult.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests access to significant technical expertise.
Focus on advanced aerospace systems aligns with national defense priorities.
California location taps into a hub of aerospace innovation and talent.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting advanced aerospace and defense systems. The market for such specialized engineering is dominated by large defense contractors with extensive R&D capabilities and security clearances. Spending in this area is driven by the need for technological superiority and modernization of military assets. Comparable spending benchmarks are difficult to establish due to the unique nature of defense programs and the proprietary information involved.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely to have direct subcontracting opportunities specifically mandated for small businesses, although Northrop Grumman may engage small businesses as part of its broader supply chain. The absence of a small business set-aside means the direct economic impact on the small business ecosystem for this specific contract is minimal.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management office within the Department of the Air Force. Accountability measures would be defined in the contract's terms and conditions, including performance standards and payment schedules. Transparency is limited due to the sole-source nature and the classified or sensitive aspects of defense programs. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Unmanned Aerial Vehicle (UAV) Development
Aerospace Engineering Services
Defense Research and Development
Advanced Systems Integration

Risk Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Lack of detailed performance metrics hinders effectiveness assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. EURO HAWK CETS

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 $11.2 million.

What is the period of performance?

Start: 2007-11-19. End: 2014-12-31.

What specific engineering services were provided under this contract for the EURO HAWK CETS program?

The provided data does not specify the exact engineering services rendered under the EURO HAWK CETS contract. However, given the context of 'Engineering Services' (NAICS 541330) and the 'EURO HAWK CETS' program name, it likely encompassed design, development, testing, integration, and sustainment engineering activities. This could include systems engineering, software engineering, hardware engineering, aerodynamic analysis, and simulation development. The Cost Plus Fixed Fee (CPFF) contract type suggests a level of uncertainty in the scope or cost estimation, common in research and development phases where requirements may evolve. Further details would typically be found in the contract's Statement of Work (SOW).

How does the $11.16 million award compare to similar sole-source engineering contracts for advanced aerospace systems?

Benchmarking this $11.16 million award against similar sole-source engineering contracts for advanced aerospace systems is challenging without more specific details on the deliverables and the complexity of the EURO HAWK CETS program. Sole-source awards inherently lack direct price competition, making comparisons difficult. However, large-scale aerospace engineering efforts, especially those involving novel technologies or complex integration, can easily run into tens or hundreds of millions of dollars over their lifecycle. The duration of this contract (2599 days) suggests a substantial, multi-year effort. To assess value, one would need to compare the scope, technical challenges, and duration against other sole-source contracts awarded to similar large defense contractors for comparable system development.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for a program like EURO HAWK CETS?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, such as the one for the EURO HAWK CETS program, revolve around cost control and contractor incentives. For the government, the risk is that the contractor may not be sufficiently motivated to control costs, as the fee is fixed regardless of the final cost. This can lead to cost overruns if the initial cost estimates are inaccurate or if the contractor incurs unexpected expenses. The government bears the risk of the actual costs incurred. For the contractor, the risk lies in underestimating the costs, which could reduce their profit margin if the fixed fee is not adequate to cover unforeseen difficulties. Effective risk mitigation requires robust government oversight, detailed cost tracking, and clear definition of work requirements.

What is the historical spending pattern for the EURO HAWK CETS program or similar programs managed by the Department of the Air Force?

The provided data only includes a single contract award for the EURO HAWK CETS program. To understand historical spending patterns, one would need access to a broader dataset encompassing all contracts related to this program, including any previous awards, modifications, or related efforts. Without this broader context, it's impossible to discern trends, total program expenditure, or year-over-year spending fluctuations. Similarly, comparing it to 'similar programs' requires identifying comparable programs within the Air Force's portfolio and analyzing their funding histories. This single data point represents a specific engineering services component and does not reflect the entire program's financial trajectory.

What is Northrop Grumman Systems Corporation's track record with sole-source Cost Plus Fixed Fee contracts for defense programs?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in various contract types, including sole-source Cost Plus Fixed Fee (CPFF) arrangements. Their track record with such contracts is generally characterized by their ability to handle complex, large-scale defense programs requiring specialized engineering and technological expertise. However, like any large contractor, specific performance can vary by program. CPFF contracts, especially sole-source ones, necessitate strong government oversight to ensure cost efficiency and adherence to scope. Northrop Grumman's history includes numerous successful large-scale defense projects, but also instances where cost and schedule performance have been scrutinized, as is common in the defense industry. A detailed analysis would require examining specific program performance metrics and audit reports.

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 AVAILABLE FOR COMPETITION

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: 17066 GOLDENTOP RD., SAN DIEGO, CA, 92127

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $13,166,330

Exercised Options: $11,157,930

Current Obligation: $11,157,930

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline