Northrop Grumman's $29.7M R&D contract for physical sciences research shows fair value with 5 bidders

Contract Overview

Contract Amount: $29,697,769 ($29.7M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2013-02-20

End Date: 2018-05-30

Contract Duration: 1,925 days

Daily Burn Rate: $15.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF NS - DAHI

Place of Performance

Location: REDONDO BEACH, LOS ANGELES County, CALIFORNIA, 90278

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $29.7 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF NS - DAHI Key points: 1. The contract's value appears reasonable given the R&D nature and the competitive landscape. 2. Full and open competition suggests a healthy market for these specialized research services. 3. The cost-plus-fixed-fee structure carries inherent risk, but is common for R&D. 4. Performance occurred over a 5-year period, indicating a substantial research undertaking. 5. This contract falls within the broad category of physical sciences R&D for the Department of Defense.

Value Assessment

Rating: good

The contract value of approximately $29.7 million over five years for specialized R&D is within a reasonable range for complex scientific endeavors. Benchmarking against similar large-scale R&D contracts within the Department of Defense for physical sciences research suggests that the pricing is competitive. The cost-plus-fixed-fee (CPFF) award type, while carrying some risk of cost overruns, is standard for research where the final scope may evolve. The fixed fee component provides a degree of cost certainty for the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple responsible sources were solicited and considered. The presence of five bidders suggests a robust competitive environment for this type of specialized research and development. This level of competition is generally favorable for price discovery and ensures that the government receives proposals from a range of qualified entities, potentially leading to better value.

Taxpayer Impact: The full and open competition process likely resulted in a more favorable price for taxpayers by encouraging multiple companies to offer their best terms and capabilities.

Public Impact

The Department of Defense benefits from advancements in physical, engineering, and life sciences research. This contract supports the development of new technologies and scientific understanding relevant to national security. The research conducted likely has implications for future defense capabilities and innovation. The contract supports highly skilled scientific and engineering jobs within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to higher costs if not closely managed due to the contractor being reimbursed for actual costs plus a fixed fee.
The duration of the contract (over 5 years) increases the potential for scope creep or unforeseen challenges in R&D projects.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
The presence of 5 bidders suggests a healthy market and potential for innovation.
The contract supports critical research and development for the Department of Defense.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences (excluding biotechnology). This is a critical area for defense innovation, enabling the development of advanced technologies and capabilities. The market for such specialized R&D is often dominated by large aerospace and defense contractors with significant scientific expertise and infrastructure. Comparable spending benchmarks in this category are highly variable, depending on the specific scientific domain and project complexity.

Small Business Impact

The data indicates this contract was not set aside for small businesses and the contractor, Northrop Grumman Systems Corp, is a large entity. There is no explicit information on subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem is likely minimal unless specific subcontracting opportunities were mandated and fulfilled.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance, compliance with contract terms, and proper cost accounting. The cost-plus-fixed-fee structure necessitates diligent oversight to monitor expenditures and ensure the fixed fee is earned appropriately. Transparency is generally maintained through contract reporting requirements, though specific details of the R&D may be sensitive.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Physical Sciences Research Initiatives

Risk Flags

Cost-plus-fixed-fee contract type can present cost control challenges.
Long contract duration increases risk exposure for R&D projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.7 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF NS - DAHI

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $29.7 million.

What is the period of performance?

Start: 2013-02-20. End: 2018-05-30.

What was the specific nature of the physical, engineering, and life sciences research conducted under this contract?

The provided data indicates the contract falls under NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. However, the specific research topics are not detailed. Typically, contracts under this code for the Department of Defense could encompass a wide range of areas such as materials science, advanced propulsion, sensor technology, cyber-physical systems, or novel energy solutions. Without further documentation, the precise scientific domain remains unspecified, but it is focused on non-biotech physical and engineering sciences.

How does the total contract value of $29.7 million compare to similar R&D contracts in the physical sciences for the DoD?

The total contract value of $29.7 million over approximately five years is a substantial but not extraordinary amount for specialized R&D within the Department of Defense. Large-scale R&D efforts in areas like advanced materials, aerospace engineering, or complex systems integration can easily reach tens or hundreds of millions of dollars. This contract's value appears to be in the mid-range for significant, multi-year R&D projects. Factors influencing comparability include the specific scientific discipline, the maturity of the research, and the number of research institutions involved. Given the five bidders, it suggests a competitive procurement for a project of considerable scope.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D, and how were they mitigated?

The primary risk of a CPFF contract is that the contractor may not be sufficiently incentivized to control costs, as they are reimbursed for all allowable costs plus a predetermined fixed fee. This can lead to cost overruns if the project scope expands or unforeseen technical challenges arise. Mitigation strategies typically involve robust government oversight, detailed cost tracking, clear definition of allowable costs, and strong contract management. For R&D, the fixed fee is negotiated upfront, providing the contractor with a profit margin. The government's mitigation relies heavily on the expertise of its contracting officers and technical monitors to ensure the work is necessary, efficient, and aligned with the contract's objectives.

What does the fact that this contract was awarded under 'Full and Open Competition' with 5 bidders imply about the market for these services?

The 'Full and Open Competition' designation signifies that the solicitation was made available to all responsible sources, and proposals were evaluated without unreasonable restrictions. The presence of five bidders indicates a healthy and competitive market for the specific R&D services procured. This suggests that there are multiple companies capable of performing the required work, which generally leads to better pricing, innovation, and quality for the government. A competitive landscape like this reduces the risk of vendor lock-in and provides the government with a wider range of technical solutions to choose from.

What is the historical spending trend for similar R&D contracts within the Department of Defense over the past decade?

Historical spending trends for R&D contracts within the Department of Defense over the past decade show a consistent and significant investment, often fluctuating based on geopolitical priorities and technological advancements. While specific figures for NAICS 541712 are not provided here, overall DoD R&D spending has remained robust, often exceeding $70 billion annually in recent years. There has been a notable emphasis on areas like artificial intelligence, cybersecurity, hypersonics, and advanced materials. Contracts like this one, focused on physical sciences, are a component of this larger investment strategy aimed at maintaining technological superiority.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 5

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

Financial Breakdown

Contract Ceiling: $29,707,591

Exercised Options: $29,697,769

Current Obligation: $29,697,769

Actual Outlays: $9,853

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $27,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline