DoD's $220M R&D Contract with Northrop Grumman: A Deep Dive into Value and Competition
Contract Overview
Contract Amount: $21,980,894 ($22.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2007-04-20
End Date: 2014-09-29
Contract Duration: 2,719 days
Daily Burn Rate: $8.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: NEW START
Place of Performance
Location: REDONDO BEACH, LOS ANGELES County, CALIFORNIA, 90278
Plain-Language Summary
Department of Defense obligated $22.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NEW START Key points: 1. Significant investment in R&D, potentially driving technological advancement. 2. Sole awardee, raising questions about competitive pricing and alternatives. 3. Long duration suggests a complex, multi-year research effort. 4. High contract value warrants scrutiny of cost-effectiveness and outcomes.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure for R&D can lead to cost overruns if not managed tightly. Without a clear benchmark for similar R&D efforts, assessing value is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Despite being awarded under full and open competition, the single award to Northrop Grumman suggests potential market concentration or specific technical requirements. The pricing discovery mechanism relies heavily on the negotiation process for this specific contract.
Taxpayer Impact: Taxpayer funds are allocated to a single entity for R&D, emphasizing the need for robust oversight to ensure efficient use of resources and achievement of intended research goals.
Public Impact
Potential for groundbreaking technological advancements in defense. Long-term commitment of resources may impact funding for other critical areas. Contractor's performance will be crucial for realizing the intended benefits. Transparency in R&D outcomes is vital for public trust.
Waste & Efficiency Indicators
Waste Risk Score: 80 / 10
Warning Flags
- Lack of transparency on specific R&D deliverables.
- Potential for cost escalation in cost-plus contracts.
- Limited visibility into alternative solutions considered.
Positive Signals
- Awarded under full and open competition.
- Contractor is a major defense industry player.
- Focus on critical R&D for national security.
Sector Analysis
This contract falls under the Research and Development sector, specifically within physical, engineering, and life sciences. Spending in this area is crucial for maintaining technological superiority but requires careful management due to inherent uncertainties and long lead times.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large prime contractor. There is no indication of small business participation or subcontracting in the provided data, suggesting limited direct impact on small businesses for this specific award.
Oversight & Accountability
The Department of Defense, through the Defense Contract Management Agency, is responsible for oversight. The long duration and cost-plus nature of the contract necessitate rigorous monitoring of progress, costs, and adherence to research objectives to ensure accountability.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- High contract value.
- Cost-plus contract type.
- Long contract duration.
- Single award despite full and open competition.
- Lack of specific R&D outcome data.
- Potential for cost overruns.
Tags
research-and-development-in-the-physical, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $22.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. NEW START
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 $22.0 million.
What is the period of performance?
Start: 2007-04-20. End: 2014-09-29.
What specific technological advancements were pursued under this contract, and what was the return on investment for the $220 million expenditure?
The provided data does not detail the specific technological advancements pursued. Assessing the return on investment for R&D contracts is complex, often measured by long-term strategic benefits, new capabilities developed, or successful technology transitions rather than immediate financial returns. Further analysis of project reports and outcome assessments would be required.
Given the full and open competition, why was only one award made, and how was price competition ensured for this cost-plus fixed-fee contract?
While awarded under full and open competition, a single award may indicate highly specialized requirements or a limited number of capable bidders. Price competition in cost-plus contracts is typically achieved through negotiation of the fixed fee, establishment of cost ceilings, and performance incentives. The effectiveness of this price discovery depends on the thoroughness of the negotiation process and market research conducted.
What mechanisms were in place to manage cost risks and ensure the effectiveness of research outcomes for this multi-year, high-value contract?
Cost-plus-fixed-fee contracts inherently carry cost risks. Management mechanisms likely included detailed cost proposals, regular audits, performance metrics, and defined milestones. Effectiveness was likely assessed through technical reviews, prototype demonstrations, and eventual transition of developed technologies. The long duration underscores the need for continuous oversight and adaptive management.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: BASIC RESEARCH
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 1 SPACE PARK BLVD, REDONDO BEACH, CA, 90278
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $21,980,894
Exercised Options: $21,980,894
Current Obligation: $21,980,894
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2007-04-20
Current End Date: 2014-09-29
Potential End Date: 2014-09-29 00:00:00
Last Modified: 2023-09-29
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