Northrop Grumman awarded $58.8M for revised engineering design services by Defense Microelectronics Activity

Contract Overview

Contract Amount: $58,852,645 ($58.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-06-28

End Date: 2023-03-31

Contract Duration: 641 days

Daily Burn Rate: $91.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: ENGINEERING SERVICES - REVISED ENGINEERING DESIGN FOR CONSOLIDATED-NETWORKING AND IF/RCO DATA ANALYSIS REFINEMENT (RED-CIDAR

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35896

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $58.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES - REVISED ENGINEERING DESIGN FOR CONSOLIDATED-NETWORKING AND IF/RCO DATA ANALYSIS REFINEMENT (RED-CIDAR Key points: 1. Contract value of $58.8M for engineering services indicates a significant investment in specialized technical support. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process. 3. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risk of cost overruns if not managed closely. 4. The duration of 641 days (approx. 21 months) suggests a complex and potentially long-term project. 5. The specific nature of 'RED-CIDAR' implies a focus on advanced networking and data analysis within defense microelectronics. 6. The award to a single contractor, Northrop Grumman, highlights their specialized capabilities in this niche area.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the 'RED-CIDAR' project scope and deliverables. However, the $58.8 million award for engineering services over approximately two years suggests a substantial investment. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for complex projects, can lead to higher costs if not meticulously managed, potentially impacting overall value for money. Further analysis would require comparing the specific engineering tasks and outcomes to similar projects within the defense microelectronics sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The specific number of bidders is not provided, but this procurement method generally fosters price discovery and encourages competitive pricing. The open competition suggests that the Defense Microelectronics Activity sought the best value from the widest possible pool of contractors, which is a positive indicator for cost-effectiveness.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure services at the most advantageous price point, reducing the risk of overpayment compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are likely the Department of Defense and its various branches requiring advanced networking and data analysis capabilities. The services delivered are focused on engineering design refinement for consolidated networking and data analysis, crucial for modern defense systems. The geographic impact is primarily within the defense sector, with potential implications for national security infrastructure. Workforce implications may include specialized engineering roles and technical support within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type introduces potential for cost escalation if project scope or execution proves more complex than initially estimated.
Lack of specific details on performance metrics makes it difficult to assess the efficiency and effectiveness of the engineering services provided.
The specialized nature of the project may limit the pool of truly competitive bidders in future procurements, potentially leading to less competition.
Reliance on a single contractor for this specific project could create a dependency that might be exploited in future negotiations.

Positive Signals

Awarded through full and open competition, indicating a robust and fair bidding process.
Northrop Grumman is a well-established defense contractor with a track record in complex engineering and technology solutions.
The project addresses critical defense needs in networking and data analysis, suggesting strategic importance and potential for technological advancement.
The contract duration allows for thorough development and refinement of the engineering designs.

Sector Analysis

The defense microelectronics sector is a critical and highly specialized area within the broader defense industry, focusing on the design, development, and manufacturing of advanced electronic components and systems. This contract for engineering services fits within the broader IT and R&D sectors, supporting the modernization of defense communication and data processing capabilities. Spending in this niche area is often driven by the need for technological superiority and secure communication networks. Comparable spending benchmarks would typically involve other large-scale engineering and system integration contracts within the Department of Defense.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific benefits for the small business ecosystem stemming from a set-aside. The prime contractor, Northrop Grumman, is a large corporation, and any subcontracting opportunities would be at their discretion and likely focused on specialized capabilities that align with the project's needs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Defense Microelectronics Activity, as the awarding agency, is responsible for monitoring performance, costs, and compliance with contract terms. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is generally maintained through contract award databases, though specific project details and performance metrics may be sensitive.

Related Government Programs

Defense Communication Systems
Advanced Networking Technologies
Microelectronics Research and Development
Information Technology Services
Engineering Design Services
Data Analysis Platforms

Risk Flags

Cost Plus Fixed Fee contract type requires careful monitoring to prevent cost overruns.
Project scope definition and management are critical for success.
Potential for limited future competition due to specialized nature of the project.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES - REVISED ENGINEERING DESIGN FOR CONSOLIDATED-NETWORKING AND IF/RCO DATA ANALYSIS REFINEMENT (RED-CIDAR

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 Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $58.9 million.

What is the period of performance?

Start: 2021-06-28. End: 2023-03-31.

What is the specific nature of the 'RED-CIDAR' project and its objectives?

The 'RED-CIDAR' project, standing for REVISED ENGINEERING DESIGN FOR CONSOLIDATED-NETWORKING AND IF/RCO DATA ANALYSIS REFINEMENT, focuses on enhancing and refining engineering designs related to consolidated networking and data analysis within the defense microelectronics domain. Its primary objective is to improve the efficiency, security, and capability of defense communication and information processing systems. This likely involves updating existing network architectures, optimizing data flow, and refining analytical tools to better process and interpret complex data sets relevant to military operations. The specific 'IF/RCO' components suggest a focus on particular types of data or analysis, possibly related to intelligence, fusion, or command and control.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing structures for similar engineering services?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development or complex engineering projects where the scope is not fully defined at the outset, or where innovation is a key component. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from Fixed Price contracts, where the price is set regardless of costs incurred, offering more cost certainty to the buyer but potentially higher risk for the contractor. It also differs from Cost Plus Incentive Fee (CPIF) contracts, which include incentives for meeting cost or performance targets. For complex defense engineering, CPFF balances the need for flexibility with contractor incentive, but requires robust oversight to control costs and ensure value.

What are the potential risks associated with Northrop Grumman's performance on this contract?

Potential risks for Northrop Grumman on this contract include scope creep, where the project's requirements expand beyond the initial agreement, potentially leading to cost overruns under the CPFF structure. Technical challenges in refining advanced networking and data analysis for defense applications could also pose risks, impacting timelines and performance. Ensuring adequate security protocols for sensitive defense data is paramount and failure to do so could have severe consequences. Furthermore, managing the fixed fee effectively while delivering high-quality engineering services requires efficient project management and resource allocation to maintain profitability.

What is the historical spending pattern for engineering services by the Defense Microelectronics Activity?

Analyzing historical spending patterns for engineering services by the Defense Microelectronics Activity (DMA) requires access to detailed procurement data beyond this single award. However, it is reasonable to infer that the DMA, given its mission, would consistently require specialized engineering support for the development and refinement of microelectronic systems and related technologies. Spending would likely fluctuate based on specific program needs, technological advancements, and overall defense budget allocations. This $58.8 million award represents a significant, but potentially not atypical, investment for a project of this scope within the defense sector, suggesting a pattern of substantial funding for critical engineering initiatives.

How does the competition level for this contract impact its overall value for taxpayers?

The fact that this contract was awarded under 'full and open competition' is a positive indicator for taxpayer value. This means that the Defense Microelectronics Activity solicited bids from all responsible sources, allowing for a wide range of potential contractors to compete. While the exact number of bidders isn't specified, open competition generally drives down prices and encourages contractors to offer their best value propositions to win the award. This contrasts with sole-source or limited competition scenarios, which can lead to higher costs due to reduced market pressure. Therefore, the competitive nature of this procurement likely resulted in a more cost-effective outcome for taxpayers.

What are the implications of the contract being awarded to Northrop Grumman, a large defense contractor?

Awarding this contract to Northrop Grumman, a major defense contractor, implies that the Defense Microelectronics Activity sought a company with established expertise, significant resources, and a proven track record in complex engineering and defense technology. Large contractors often have the capacity to handle large-scale, high-risk projects and possess the necessary security clearances and infrastructure. However, it also means that smaller, innovative firms may have had less opportunity to compete directly for this specific award. The implications for taxpayers include the potential for reliable execution due to the contractor's experience, but also the possibility of less aggressive pricing compared to a more fragmented market.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

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: $58,852,645

Exercised Options: $58,852,645

Current Obligation: $58,852,645

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $10,943,639

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