Northrop Grumman awarded $31.3M R&D contract by Air Force for physical, engineering, and life sciences research

Contract Overview

Contract Amount: $31,386,726 ($31.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2012-01-26

End Date: 2022-11-30

Contract Duration: 3,961 days

Daily Burn Rate: $7.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: SIREN

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $31.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SIREN Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Long contract duration of over 10 years suggests a sustained research effort. 3. Cost-plus-fixed-fee structure may incentivize cost overruns. 4. Research area is critical for national security and technological advancement. 5. Significant contract value indicates a substantial investment in R&D. 6. Contractor has a strong track record in defense and aerospace.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging due to its specialized nature and sole-source award. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs compared to fixed-price contracts if not managed diligently. Without competitive bids, it's difficult to ascertain if the fixed fee represents optimal value for the government. The total award amount of $31.3 million over a decade suggests a significant investment, but its true value-for-money depends heavily on the successful outcomes of the research.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Air Force did not conduct a competitive bidding process. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. While this can ensure access to specialized expertise, it bypasses the price competition that could potentially drive down costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from a competitive bidding environment.

Public Impact

The primary beneficiary is the Department of the Air Force, which gains access to advanced research capabilities. The contract supports research and development in physical, engineering, and life sciences, potentially leading to technological breakthroughs. The geographic impact is primarily in Illinois, where Northrop Grumman Systems Corporation is located. The contract supports a highly skilled workforce in specialized scientific and engineering fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure can lead to cost escalations.
Long contract duration requires sustained oversight.
Lack of transparency in sole-source justification.

Positive Signals

Contractor is a leading aerospace and defense company with extensive R&D experience.
Research area is critical for national security and technological advancement.
Long-term commitment indicates strategic importance of the research.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for innovation and national security. The market for such specialized R&D is often dominated by a few large, experienced defense contractors. Benchmarking is difficult as R&D contracts are highly specific, but the value indicates a significant investment in advancing scientific and technological capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of advanced R&D often requires specialized facilities and expertise typically found in larger corporations. Therefore, the direct impact on the small business ecosystem is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and long duration, robust oversight is crucial to ensure the contractor meets performance milestones and manages costs effectively. Transparency may be limited due to the sole-source justification, but performance reviews and financial audits are standard accountability measures.

Related Government Programs

Advanced Technology Development
Aerospace Research
Engineering Services
Scientific Research Services

Risk Flags

Sole-source award limits competition.
Cost-plus-fixed-fee contract type carries inherent cost risk.
Long contract duration requires sustained oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SIREN

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 $31.4 million.

What is the period of performance?

Start: 2012-01-26. End: 2022-11-30.

What specific research objectives are outlined in this contract, and how do they align with current Air Force priorities?

The contract is broadly categorized under 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. Specific research objectives are not detailed in the provided data but are typically defined in the contract's Statement of Work (SOW). These objectives would align with the Air Force's strategic goals, potentially focusing on areas like advanced materials, propulsion systems, sensor technology, cyber capabilities, or human performance enhancement. The long duration suggests a focus on foundational or developmental research rather than immediate application. A review of the SOW and related Air Force strategic documents would be necessary for a precise alignment.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar R&D efforts, and what are the associated risks?

The CPFF structure is common for R&D contracts where the scope of work is not fully defined at the outset, allowing for flexibility as research progresses. Unlike fixed-price contracts, CPFF shifts some cost risk to the government. The contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. Risks include potential cost overruns if the contractor does not manage expenses efficiently, as the government bears the burden of actual costs. However, it also incentivizes the contractor to complete the work, as the fee is fixed. For highly uncertain R&D, it can be more appropriate than fixed-price, but requires diligent government oversight of costs and progress.

What is Northrop Grumman Systems Corporation's track record with similar sole-source R&D contracts awarded by the Department of Defense?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in research and development across various domains, including aerospace, defense, and technology. They have a long history of securing large, complex R&D contracts, many of which are sole-source due to their specialized capabilities and proprietary technologies. While specific data on their sole-source R&D contract history with the DoD isn't provided here, their overall performance and reputation suggest a strong capability to execute such agreements. Past performance reviews and contract close-out data would offer a more detailed assessment of their track record on similar sole-source R&D efforts.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overcharging?

In sole-source procurements, the government relies on various mechanisms to ensure fair pricing. This often involves conducting a 'should-cost' analysis, where the government estimates the reasonable cost of performing the contract. They may also request detailed cost proposals from the contractor, which are then scrutinized by government cost analysts. Price negotiation is critical, and the government may use historical pricing data, market research, and comparisons to similar services to establish a fair and reasonable price. For CPFF contracts, oversight of allowable costs is paramount, with audits and reviews to ensure expenditures are justified and necessary for contract performance.

How has spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category by the Department of Defense evolved over the past five years?

Spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category by the Department of Defense (DoD) has generally seen fluctuations driven by evolving national security priorities, technological advancements, and budget allocations. While specific figures for this exact NAICS code (541712) over the last five years require detailed database queries, the DoD consistently invests billions annually in R&D across various scientific and engineering disciplines. Trends often show increased investment in areas like artificial intelligence, cybersecurity, advanced materials, hypersonics, and biotechnology, reflecting a strategic focus on maintaining technological superiority. Budgetary pressures and shifts in geopolitical landscapes can also influence spending levels year-over-year.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D 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: 600 HICKS RD, ROLLING MEADOWS, IL, 60008

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,692,996

Exercised Options: $31,692,996

Current Obligation: $31,386,726

Actual Outlays: $671,193

Subaward Activity

Number of Subawards: 237

Total Subaward Amount: $28,024,141

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline