Northrop Grumman awarded $9.99B contract for R&D in physical, engineering, and life sciences

Contract Overview

Contract Amount: $9,998,833 ($10.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-04-23

End Date: 2023-08-29

Contract Duration: 7,067 days

Daily Burn Rate: $1.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $10.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract value represents a significant investment in advanced research and development. 2. The extensive contract duration suggests a long-term commitment to the research objectives. 3. The 'Cost Plus Fixed Fee' pricing structure carries inherent cost-overrun risks. 4. The 'Full and Open Competition After Exclusion of Sources' indicates a specific, limited competition. 5. The contract's focus on R&D aligns with strategic national priorities in science and technology. 6. The large dollar amount suggests a high degree of complexity and potential for innovation.

Value Assessment

Rating: fair

Benchmarking the value of this extensive R&D contract is challenging due to its specialized nature and long duration. The 'Cost Plus Fixed Fee' (CPFF) structure, while common for R&D, can lead to costs exceeding initial estimates if not closely managed. Without specific performance metrics or comparable contracts for similar scope and duration, a definitive value-for-money assessment is difficult. However, the significant investment implies a perceived critical need for the research outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, specific sources were identified and potentially limited. The presence of 4 bidders suggests a degree of competition, but the exclusion of other potential sources raises questions about the breadth of the competitive landscape. This approach may be justified if only a few entities possess the requisite specialized capabilities.

Taxpayer Impact: The limited competition may result in less aggressive pricing than a truly open competition, potentially increasing costs for taxpayers. However, if it ensures the selection of the most capable contractor for highly specialized R&D, it could lead to more effective and timely research outcomes.

Public Impact

The primary beneficiaries are likely government agencies requiring advanced scientific and technological solutions. The contract supports the development of new technologies and scientific understanding in physical, engineering, and life sciences. Geographic impact is likely concentrated around Northrop Grumman's research facilities, primarily in California. Workforce implications include highly skilled jobs in research, engineering, and scientific fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost overruns if not rigorously monitored.
Limited competition may reduce price discovery and potentially increase overall cost to the government.
The long duration of the contract increases the risk of scope creep or evolving research needs.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests access to significant expertise and resources.
The substantial investment indicates a high priority placed on the research and development objectives.
The contract's focus on R&D aligns with advancing technological capabilities and national security.

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 competitiveness. The market for such specialized R&D is often dominated by a few large, established aerospace and defense contractors due to the high barriers to entry, including intellectual property, specialized facilities, and skilled personnel. Comparable spending benchmarks are difficult to establish without knowing the specific R&D focus, but large-scale R&D contracts of this magnitude are typical for major defense and technology initiatives.

Small Business Impact

The contract data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside. This suggests that the primary awardee is a large corporation, and subcontracting opportunities for small businesses would depend on Northrop Grumman's internal procurement strategies. Without specific subcontracting plans or goals, the direct impact on the small business ecosystem is likely minimal, though indirect benefits could arise from innovation spurred by the contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the awarding agency (Department of Defense) through its contracting officers and program managers. The Defense Contract Management Agency (DCMA) likely plays a role in contract administration and performance monitoring. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is generally limited for classified or highly sensitive R&D projects, but contract award details and performance reports are usually available through official channels.

Related Government Programs

Advanced Technology Development Programs
Research, Development, Test, and Evaluation (RDT&E)
National Security Science and Technology Initiatives
Aerospace Research Contracts
Engineering Services Contracts

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition may impact price discovery.
Long contract duration increases risk of obsolescence and scope misalignment.
Absence of a specific Product/Service Code (PSC) hinders detailed spending analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 $10.0 million.

What is the period of performance?

Start: 2004-04-23. End: 2023-08-29.

What is Northrop Grumman's track record with similar large-scale R&D contracts?

Northrop Grumman has a long and extensive history of performing large-scale research and development contracts for the U.S. government, particularly within the defense and aerospace sectors. They are a prime contractor on numerous complex programs involving advanced technologies, systems integration, and scientific research. Their track record includes significant contributions to areas such as aerospace, defense systems, cybersecurity, and space exploration. While specific details of past R&D performance are often proprietary or classified, their sustained position as a major defense contractor indicates a generally successful history in delivering on complex R&D requirements. Performance metrics and past performance evaluations from previous contracts would be crucial for a comprehensive assessment.

How does the 'Cost Plus Fixed Fee' (CPFF) pricing structure compare to other R&D contract types in terms of value for money?

The Cost Plus Fixed Fee (CPFF) structure is common for R&D contracts where the scope of work is uncertain or subject to change, making it difficult to establish a firm fixed price upfront. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their profit margin, as the fee is fixed. However, it also carries a risk of cost overruns if the initial cost estimates are inaccurate or if unforeseen technical challenges arise. Compared to Firm Fixed Price (FFP) contracts, CPFF offers more flexibility for evolving R&D but potentially less cost certainty for the government. Other structures like Cost Plus Incentive Fee (CPIF) can offer better alignment of incentives by adjusting the fee based on performance targets.

What are the primary risks associated with a contract of this duration (7067 days)?

A contract duration of over 7000 days (approximately 19 years) presents several significant risks. Firstly, the risk of technological obsolescence is high; research conducted early in the contract may be outdated by the time the contract concludes. Secondly, the scope of work may become misaligned with evolving strategic priorities or emerging threats, leading to 'scope creep' or the need for costly modifications. Thirdly, maintaining consistent oversight and program management continuity over such a long period can be challenging due to personnel changes within both the government and the contractor organization. Finally, the longer the contract, the greater the potential for cumulative cost increases due to inflation, unforeseen challenges, and the sheer passage of time, impacting the overall value for money.

What does the '4' in 'no': 4 indicate regarding the competition?

The 'no': 4 notation, in the context of a contract awarded under 'Full and Open Competition After Exclusion of Sources,' typically indicates the number of proposals or bids received from potential offerors. In this case, it means that four distinct entities submitted proposals in response to the solicitation. While this number suggests a degree of competition, the preceding 'exclusion of sources' clause implies that the government may have identified a specific set of qualified sources or that certain potential competitors were intentionally excluded from the outset. Therefore, while four bidders participated, the overall breadth and intensity of the competition might be less than in a truly unrestricted 'full and open' competition.

How does the 'CALIFORNIA' location impact the contract's execution and oversight?

The contract's designation of 'CALIFORNIA' as the location (likely where Northrop Grumman's primary research facilities or a significant portion of the work will be performed) has several implications. It suggests that oversight activities, such as site visits, audits, and performance reviews, will likely be conducted by government representatives stationed in or traveling to California. This can incur travel costs for government personnel. Furthermore, it places the contract within the jurisdiction of specific Defense Contract Management Agency (DCMA) offices responsible for contract administration in that region. The concentration of work in one state may also imply a localized impact on the workforce and economy, drawing skilled labor from the California technology and aerospace ecosystem.

What is the significance of the 'psc' field being empty?

The 'psc' field, which typically stands for Product or Service Code, being empty is unusual for a contract of this magnitude. Product or Service Codes are standardized federal codes used to classify the goods or services being procured. An empty 'psc' field might indicate a data entry error, or it could suggest that the contract's scope is so unique or broadly defined (e.g., encompassing multiple R&D areas) that a single, appropriate PSC code could not be assigned. In R&D contracts, especially those involving fundamental research, the classification can sometimes be complex. However, the absence of a PSC code can hinder detailed analysis and categorization of federal spending across different product and service categories.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: BASIC RESEARCH

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

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

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline