DARPA's $136M R&D contract with Northrop Grumman shows strong competition and fair value for advanced defense technology

Contract Overview

Contract Amount: $136,410,516 ($136.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2010-07-08

End Date: 2017-12-31

Contract Duration: 2,733 days

Daily Burn Rate: $49.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Official Description: DARPA RESEARCH PROJECT

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $136.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DARPA RESEARCH PROJECT Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Pricing appears reasonable when benchmarked against similar R&D efforts. 3. Northrop Grumman has a strong track record with complex defense projects. 4. The contract duration suggests a significant, long-term research and development effort. 5. This project aligns with DARPA's mission to foster groundbreaking technologies for national security. 6. The use of a Cost Plus Incentive Fee contract type suggests a focus on managing costs while incentivizing performance.

Value Assessment

Rating: good

The contract's total value of approximately $136 million over nearly seven years suggests a substantial investment in research and development. Benchmarking against similar large-scale R&D contracts awarded by DARPA and other defense agencies indicates that the overall price is within a reasonable range for the scope of work. The Cost Plus Incentive Fee (CPIF) structure, while potentially leading to higher final costs than fixed-price contracts, is appropriate for R&D where outcomes are uncertain and incentivizes the contractor to achieve specific performance targets efficiently. Without detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award process provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a 'full and open competition' solicitation, meaning all responsible sources were permitted to submit a bid. The presence of three bidders, as indicated by the 'no' field, suggests a healthy level of competition for this significant R&D effort. A competitive environment like this typically drives down prices and encourages innovation as contractors vie for the award. The fact that multiple entities were willing and able to compete implies that the requirements were clearly defined and the market had sufficient capacity.

Taxpayer Impact: Taxpayers benefit from a competitive process that likely resulted in a more favorable price than a sole-source award. The competition also encourages technological advancement, potentially leading to more effective defense capabilities in the long run.

Public Impact

The primary beneficiaries are the U.S. military and national security apparatus, which will gain access to advanced technologies developed under this contract. The contract supports cutting-edge research and development in physical, engineering, and life sciences, excluding biotechnology. The geographic impact is primarily within California, where Northrop Grumman's operations are based, but the ultimate benefits are national. This contract likely supports a highly skilled workforce of scientists, engineers, and technicians involved in advanced R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Incentive Fee (CPIF) contract type can lead to cost overruns if not managed diligently, as the government bears the cost of development plus an incentive fee.
The long duration of the contract (over 6 years) increases the risk of scope creep or evolving technological requirements that may not be fully captured in the initial award.
Reliance on a single large contractor, Northrop Grumman, for such a critical R&D project could pose risks if performance issues arise or if the contractor faces financial instability.

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 proven track record in complex R&D projects.
The contract's alignment with DARPA's mission suggests a focus on high-impact, potentially transformative technologies.
The use of CPIF incentivizes contractor performance towards specific goals, potentially leading to better outcomes.
The contract duration of over 6 years allows for in-depth research and development, crucial for complex technological advancements.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. The R&D sector is critical for maintaining technological superiority, particularly in defense. DARPA, as the awarding agency, consistently invests in high-risk, high-reward research to develop future military capabilities. Comparable spending in this area involves significant investments by various government agencies and private sector companies in areas like advanced materials, artificial intelligence, cyber technologies, and aerospace. The market size for defense R&D is substantial, driven by national security imperatives and the rapid pace of technological change.

Small Business Impact

This contract does not appear to have a specific small business set-aside, as indicated by 'sb': false. Given the large scale and specialized nature of the R&D work, it is likely that prime contractors like Northrop Grumman would engage subcontractors. However, without specific subcontracting plans or data, it's difficult to assess the direct impact on the small business ecosystem. Large defense contracts often include provisions for small business participation, but the extent of this contract's contribution would depend on Northrop Grumman's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and performance standards. DARPA, as the contracting agency, would also maintain program-level oversight. Transparency is generally maintained through contract awards databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

DARPA Research Projects
Northrop Grumman Defense Contracts
Department of Defense R&D Spending
Advanced Technology Development Contracts
Cost Plus Incentive Fee Contracts

Risk Flags

Long contract duration increases risk of scope creep and evolving requirements.
Cost Plus Incentive Fee (CPIF) structure requires diligent oversight to manage costs effectively.
Reliance on a single large contractor for complex R&D.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $136.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DARPA RESEARCH PROJECT

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 $136.4 million.

What is the period of performance?

Start: 2010-07-08. End: 2017-12-31.

What specific technological advancements or capabilities were the intended outcomes of this DARPA research contract?

While the provided data does not detail the specific technological advancements, DARPA's mission is to make pivotal investments in breakthrough technologies that can shape the future of national security. Contracts under NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences) often involve developing novel materials, advanced sensors, sophisticated algorithms for data analysis, new propulsion systems, or innovative communication technologies. The 'Northrop Grumman Systems Corporation' designation suggests a focus on complex engineering and systems integration. The Cost Plus Incentive Fee (CPIF) structure implies that the research aimed at achieving specific, measurable performance targets, the nature of which would be detailed in the contract's statement of work, which is not publicly available in this dataset.

How does the $136 million contract value compare to other similar R&D investments made by DARPA or the Department of Defense?

A contract value of approximately $136 million over nearly seven years is substantial, reflecting a significant investment in advanced research and development. DARPA's budget typically includes numerous large-scale R&D programs, and this figure is consistent with major initiatives aimed at developing next-generation technologies. For context, DARPA's annual budget often exceeds $3 billion, funding a portfolio of projects ranging from tens of millions to hundreds of millions of dollars. The Department of Defense as a whole invests tens of billions annually in R&D. Therefore, while significant, this contract represents one component within a much larger ecosystem of defense innovation funding, comparable to other major multi-year R&D efforts in areas like artificial intelligence, hypersonics, or quantum computing.

What are the key performance indicators (KPIs) or milestones associated with this contract, given its Cost Plus Incentive Fee (CPIF) structure?

The specific Key Performance Indicators (KPIs) and milestones for this contract are not detailed in the provided summary data. However, the Cost Plus Incentive Fee (CPIF) structure inherently implies that the contract includes defined performance goals or targets. These targets could relate to technical performance metrics (e.g., efficiency, speed, accuracy of a developed system), delivery schedules for prototypes or research findings, or adherence to specific research parameters. The 'incentive fee' component means that Northrop Grumman's profit is directly tied to achieving or exceeding these pre-defined objectives. DARPA would have established these KPIs in the contract's statement of work, and their achievement would trigger additional fee payments to the contractor, motivating them to deliver superior results within the R&D scope.

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

Northrop Grumman Systems Corporation is a major aerospace and defense contractor with extensive experience working with DARPA and the Department of Defense on large-scale, complex R&D projects. They have a history of developing advanced technologies across various domains, including aerospace, defense systems, and information technology. Their involvement in numerous high-value contracts suggests a strong capability in managing intricate research programs, meeting stringent technical requirements, and navigating the complexities of government contracting. While specific performance details for every contract are not always public, their continued selection for significant DARPA initiatives indicates a generally positive track record and a perceived ability to deliver on challenging R&D objectives.

What are the potential risks associated with a contract of this magnitude and duration, particularly concerning technological obsolescence or changing defense priorities?

Contracts of this magnitude and duration (over six years) inherently carry risks. One significant risk is technological obsolescence; the pace of innovation means that technologies developed at the beginning of the contract might be outdated by its end. Another risk involves changing defense priorities; shifts in geopolitical landscapes or strategic objectives could render the research outcomes less relevant or necessitate a pivot in the project's direction. Furthermore, the complexity of R&D means there's always a risk of encountering unforeseen technical challenges that could delay progress or increase costs. The CPIF structure attempts to mitigate some cost risks by incentivizing efficiency, but the fundamental uncertainty of R&D remains a core challenge.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: ONE HORNET WAY, EL SEGUNDO, CA, 90245

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $171,337,601

Exercised Options: $138,802,129

Current Obligation: $136,410,516

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline