DoD awards Northrop Grumman $93.3M for C-RAM engineering, facing potential cost overruns and limited competition

Contract Overview

Contract Amount: $93,297,254 ($93.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-05-31

End Date: 2020-10-31

Contract Duration: 519 days

Daily Burn Rate: $179.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES: OCONUS LEGACY AND CURRENT C-RAM CAPABILITY INTEGRATED DATA ANALYSIS AND REFRESH (OL-CCCIDAR)

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $93.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES: OCONUS LEGACY AND CURRENT C-RAM CAPABILITY INTEGRATED DATA ANALYSIS AND REFRESH (OL-CCCIDAR) Key points: 1. Contract value of $93.3M for engineering services related to C-RAM capabilities. 2. Awarded to Northrop Grumman Systems Corporation, a major defense contractor. 3. Contract duration of 519 days, indicating a medium-term project. 4. Utilizes a Cost Plus Fixed Fee (CPFF) pricing structure, which can increase costs if not managed carefully. 5. Competition was full and open, but only one bid was received. 6. No small business set-aside was applied. 7. The contract is for OCONUS (Outside Continental United States) operations, potentially increasing logistical complexity and cost.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee (CPFF) structure carries inherent risk for cost overruns, especially in complex OCONUS environments. While the total value is substantial, without detailed cost breakdowns or performance metrics, a precise value-for-money assessment is challenging. Benchmarking against similar C-RAM engineering support contracts is difficult due to the specialized nature of the work and OCONUS deployment. The fixed fee component provides some cost certainty for the contractor's profit, but the overall cost to the government remains variable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for price discovery. However, only one bid was received from Northrop Grumman Systems Corporation. This limited number of bidders, despite the open competition, raises questions about the attractiveness of the opportunity or potential barriers to entry for other qualified firms. A single bidder scenario can reduce competitive pressure and potentially lead to less favorable pricing for the government.

Taxpayer Impact: A single bid in a full and open competition suggests that taxpayers may not have benefited from the full spectrum of competitive pricing that open competition is designed to achieve.

Public Impact

The primary beneficiaries are the Department of Defense units operating in OCONUS locations requiring Counter-Rocket, Artillery, and Mortar (C-RAM) capabilities. Services delivered include integrated data analysis, refresh, and engineering support for legacy and current C-RAM systems. Geographic impact is focused on OCONUS operational theaters, enhancing force protection. Workforce implications include specialized engineering and technical support personnel, likely including personnel deployed OCONUS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

CPFF contract type can lead to cost overruns if not closely monitored.
Only one bid received under full and open competition may indicate reduced price competition.
OCONUS operations introduce logistical and security risks.
The contract is for legacy systems, which may present integration challenges and higher maintenance costs.

Positive Signals

Awarded under full and open competition, theoretically allowing any qualified vendor to bid.
Northrop Grumman is an established defense contractor with significant experience in complex systems.
The contract addresses critical force protection capabilities (C-RAM).

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. The market for defense engineering services, particularly those related to advanced threat detection and protection like C-RAM, is highly specialized and dominated by a few large prime contractors. Spending in this niche is driven by geopolitical threats and the need for continuous technological upgrades in military hardware. Comparable spending benchmarks are difficult to ascertain without more specific details on the C-RAM system and the scope of engineering services required.

Small Business Impact

This contract did not include a small business set-aside, and the prime contractor, Northrop Grumman Systems Corporation, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large defense contracts often involve a tiered subcontracting structure where small businesses may participate.

Oversight & Accountability

Oversight is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for contract administration. The CPFF structure necessitates rigorous oversight of costs incurred by the contractor to ensure reasonableness and allowability. Transparency is generally limited for specific defense contracts of this nature, with details on performance and cost breakdowns often classified or proprietary. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

C-RAM Systems Procurement
Missile Defense Programs
O&M for Defense Systems
Foreign Military Sales Support
Defense Engineering Services

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition (one bid) may impact price.
OCONUS operations introduce security and logistical risks.
Integration challenges between legacy and current systems.
Dependence on a single contractor for critical support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $93.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES: OCONUS LEGACY AND CURRENT C-RAM CAPABILITY INTEGRATED DATA ANALYSIS AND REFRESH (OL-CCCIDAR)

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 $93.3 million.

What is the period of performance?

Start: 2019-05-31. End: 2020-10-31.

What is Northrop Grumman's track record with similar C-RAM or air defense engineering contracts?

Northrop Grumman has a substantial track record in defense contracting, including work on various air and missile defense systems. While specific details on their C-RAM engineering support contracts are not publicly itemized in this data, the company is a major player in integrated air and missile defense (IAMD) technologies. Their experience spans radar systems, command and control, and interceptor technologies, which are all components relevant to C-RAM capabilities. Past performance reviews and contract awards databases would provide a more granular understanding of their success rates, cost performance, and adherence to schedule on comparable projects. Given their size and scope, it's likely they have executed numerous complex engineering efforts for the DoD, though the specific nuances of this OL-CCCIDAR contract would require deeper investigation into their portfolio.

How does the $93.3M contract value compare to other C-RAM engineering support contracts?

Direct comparison of the $93.3M contract value for C-RAM engineering services is challenging without access to a broader database of similar, publicly disclosed contracts. The value is significant, reflecting the complexity and critical nature of integrated air and missile defense systems, especially in OCONUS deployments. However, the specific scope of 'integrated data analysis and refresh' for both legacy and current capabilities makes it unique. Larger contracts might involve procurement of entire C-RAM systems, while smaller ones could focus on specific component upgrades or software maintenance. The Cost Plus Fixed Fee (CPFF) structure also means the final cost could fluctuate. To benchmark effectively, one would need to compare contracts with similar service scopes, system types, geographic locations, and contract types.

What are the primary risks associated with this contract, beyond cost overruns?

Beyond potential cost overruns inherent in the CPFF structure, several risks are associated with this contract. Firstly, the OCONUS deployment introduces significant logistical, security, and geopolitical risks. Operating in potentially unstable regions requires robust security protocols and contingency planning. Secondly, integrating 'legacy and current' C-RAM capabilities suggests potential challenges with interoperability, obsolescence management, and the complexity of maintaining disparate systems. Thirdly, the fact that only one bid was received under full and open competition raises concerns about the availability of qualified contractors and potential future sole-source situations if follow-on work is needed. Finally, the effectiveness of the C-RAM systems themselves, and the engineering support's ability to maintain or improve that effectiveness against evolving threats, represents a critical performance risk.

How effective are C-RAM systems in protecting against rocket, artillery, and mortar threats?

C-RAM systems are designed to detect, track, and intercept incoming rockets, artillery shells, and mortar rounds. Their effectiveness is generally considered high against these specific threats, particularly in defending fixed or semi-fixed sites like military bases or embassies. Systems like the Phalanx CIWS (adapted for ground use) or specialized C-RAM platforms have demonstrated success in downing threats. However, effectiveness can be influenced by factors such as the type and volume of incoming fire, the system's engagement envelope (range and altitude), reaction time, and the sophistication of the targeting data provided. Continuous engineering support, data analysis, and system refreshes, as stipulated in this contract, are crucial for maintaining and enhancing this effectiveness against evolving threats and ensuring optimal performance in diverse operational environments.

What is the historical spending trend for C-RAM related engineering services within the DoD?

Historical spending on C-RAM related engineering services within the DoD has likely seen fluctuations tied to geopolitical events and the perceived threat landscape. As threats from rockets, artillery, and mortars persist in various operational theaters, sustained investment in detection, protection, and engineering support is necessary. While specific figures for 'C-RAM engineering services' are not readily available as a distinct category in public budget documents, spending is often aggregated under broader categories like 'Missile Defense,' 'Air and Missile Defense Systems,' or 'Combat Support Systems.' The trend generally reflects a commitment to force protection, with significant investments made over the past two decades, particularly following deployments in Iraq and Afghanistan. The $93.3M awarded here represents a single data point within potentially larger, ongoing budgetary allocations for such critical capabilities.

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: $93,492,888

Exercised Options: $93,492,888

Current Obligation: $93,297,254

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