DoD awards $384M+ for Engineering Services to Northrop Grumman, highlighting potential cost risks
Contract Overview
Contract Amount: $384,458,876 ($384.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2018-12-18
End Date: 2023-12-17
Contract Duration: 1,825 days
Daily Burn Rate: $210.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $384.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Significant contract value of over $384 million for engineering services. 2. Northrop Grumman Systems Corporation is the sole awardee, raising questions about competition. 3. The Cost Plus Fixed Fee contract type introduces inherent cost escalation risks. 4. The Engineering Services sector is critical for defense operations, but requires careful cost management.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type can lead to higher costs than fixed-price contracts if not managed diligently. Without a clear benchmark for similar CPFF engineering services contracts, assessing the value is difficult, but the large award size warrants scrutiny.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Although the contract was awarded under full and open competition, the specific awardee is Northrop Grumman Systems Corporation. The impact on price discovery is unclear without knowing the number of bids received and the pricing structures proposed.
Taxpayer Impact: The substantial value of this contract means taxpayers are funding significant engineering efforts. Effective oversight is crucial to ensure costs are reasonable and services are delivered efficiently to maximize taxpayer value.
Public Impact
Taxpayers are funding extensive engineering services for the Department of Defense. The duration of the contract (5 years) suggests a long-term need for these services. Potential for cost overruns exists due to the CPFF contract structure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type
- Large contract value
- No small business participation indicated
Positive Signals
- Awarded under full and open competition
- Long contract duration suggests critical need
Sector Analysis
Engineering services are vital for the Department of Defense, encompassing design, development, and testing of complex systems. Spending in this sector can vary widely based on technological advancements and defense priorities. Benchmarking requires comparison to similar specialized engineering contracts.
Small Business Impact
There is no indication of small business participation in this contract. This suggests that the prime contractor, Northrop Grumman, is handling the entirety of the engineering services, potentially missing opportunities to leverage specialized small business expertise and support economic diversity.
Oversight & Accountability
The contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for contract administration and oversight. However, the CPFF structure necessitates robust monitoring to control costs and ensure performance objectives are met effectively.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Cost Plus Fixed Fee contract type increases risk of cost overruns.
- Large contract value requires significant oversight.
- No small business participation noted.
- Lack of specific service details hinders value assessment.
- Potential for contractor to maximize costs to increase fee base.
Tags
engineering-services, department-of-defense, md, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $384.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES
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 $384.5 million.
What is the period of performance?
Start: 2018-12-18. End: 2023-12-17.
What specific engineering services are being procured, and how do they align with current defense priorities?
The contract is for general 'Engineering Services' (NAICS 541330). Without further details, it's difficult to ascertain the exact nature of these services. They likely support the development, integration, or sustainment of defense systems. Alignment with priorities would depend on the specific projects or platforms these services are intended for, which are not detailed in the provided data.
What measures are in place to control costs under the Cost Plus Fixed Fee structure?
Under a CPFF contract, the government pays the contractor's actual costs plus a fixed fee representing profit. Cost control relies heavily on the DCMA's oversight, including audits of incurred costs, negotiation of the fixed fee, and monitoring of performance against established milestones. Clear performance metrics and regular reviews are essential to prevent cost overruns.
How was the 'full and open competition' process structured to ensure fair pricing and maximum value?
While the award states 'full and open competition,' the specifics of the bidding process are not provided. Effective competition typically involves soliciting bids from multiple qualified sources, evaluating them based on defined criteria (technical approach, past performance, price), and selecting the best value offer. The absence of details on the number of bidders and the evaluation process makes it hard to confirm the extent of price discovery achieved.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: HQ072715R0001
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 1580A W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090
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: $389,110,964
Exercised Options: $389,110,964
Current Obligation: $384,458,876
Subaward Activity
Number of Subawards: 109
Total Subaward Amount: $12,157,034
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HQ072716D0004
IDV Type: IDC
Timeline
Start Date: 2018-12-18
Current End Date: 2023-12-17
Potential End Date: 2024-07-05 00:00:00
Last Modified: 2025-02-18
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