Northrop Grumman's $30M+ contract for logistics consulting services awarded by DoD

Contract Overview

Contract Amount: $30,085,478 ($30.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-26

End Date: 2016-01-31

Contract Duration: 1,222 days

Daily Burn Rate: $24.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: JOINT DISTRIBUTION PROCESS ANALYSIS CENTER (JDPAC)

Place of Performance

Location: SCOTT AFB, SAINT CLAIR County, ILLINOIS, 62225

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $30.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: JOINT DISTRIBUTION PROCESS ANALYSIS CENTER (JDPAC) Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract duration of over 1000 days indicates a significant, long-term need for services. 3. Fixed-price contract type may offer cost certainty but could limit flexibility. 4. The North American Industry Classification System (NAICS) code 541614 points to specialized logistics consulting. 5. The contract was awarded as a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 6. The geographic location of the contractor (Illinois) may have implications for local economic impact.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the services rendered and the market rates for similar consulting engagements. The total award amount of over $30 million over approximately three years suggests a substantial investment. However, without comparable contract data or a breakdown of the services provided, it's difficult to definitively assess if this represents excellent value for money. The fixed-price nature of the contract provides some cost predictability for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. The presence of 3 bids suggests a moderate level of competition for this specific delivery order. While full and open competition is generally preferred for maximizing price discovery and ensuring fair access to government contracts, the number of bidders (3) might be considered on the lower side for a contract of this magnitude, potentially limiting the full benefits of robust competition.

Taxpayer Impact: A competitive bidding process, even with a moderate number of bidders, generally leads to better pricing for taxpayers compared to sole-source awards. This approach helps ensure that the government receives services at a fair market price.

Public Impact

The Department of Defense benefits from enhanced logistics and distribution process analysis. Improved efficiency in the distribution of goods and services is a key outcome. The contract supports the operational readiness and effectiveness of military supply chains. The workforce implications are primarily within Northrop Grumman's consulting and logistics analysis teams. The geographic impact is likely centered around the operational areas supported by USTRANSCOM, potentially global.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if the consulting services are not clearly defined.
Reliance on a single contractor for critical logistics analysis could pose a risk if performance falters.
The fixed-price nature might disincentivize cost-saving innovations by the contractor if not structured with performance incentives.

Positive Signals

Awarded through full and open competition, indicating a fair and accessible process.
The contract is a delivery order under a larger IDIQ, suggesting a pre-vetted contractor and streamlined process.
Fixed-price contract type provides budget certainty for the government.
The contractor, Northrop Grumman, is a large, established defense contractor with significant experience.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on logistics consulting. The market for defense logistics support is substantial, driven by the complex global operations of the military. Companies like Northrop Grumman are key players in this sector, offering specialized expertise in supply chain management, process optimization, and distribution analysis. Comparable spending benchmarks would typically involve other large-scale logistics support contracts awarded to major defense contractors.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a large contract awarded to a major defense contractor, the primary focus is likely on the prime contractor's capabilities. However, Northrop Grumman may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the small business ecosystem. Further analysis would be needed to determine the extent of small business subcontracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Transportation Command (USTRANSCOM) contracting office and program managers. Accountability measures are inherent in the contract's performance requirements and payment terms. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) contracts
USTRANSCOM support services
Military Sealift Command (MSC) contracts
Air Mobility Command (AMC) contracts
Logistics consulting services for federal agencies

Risk Flags

Contract duration is lengthy, requiring sustained oversight.
Fixed-price contract type may present cost overrun risks for the contractor or potential overpayment for the government if not managed carefully.
Competition level (3 bidders) could be considered moderate, potentially limiting optimal price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. JOINT DISTRIBUTION PROCESS ANALYSIS CENTER (JDPAC)

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 (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $30.1 million.

What is the period of performance?

Start: 2012-09-26. End: 2016-01-31.

What specific logistics and distribution process improvements were expected or achieved under this contract?

The contract, identified by NAICS code 541614 (Process, Physical Distribution, and Logistics Consulting Services), aimed to provide expert analysis and recommendations for optimizing the Joint Distribution Process Analysis Center (JDPAC). While the specific deliverables are not detailed in the provided data, typical engagements in this domain involve evaluating existing supply chain operations, identifying bottlenecks, recommending technological solutions, and improving the efficiency of physical distribution networks. The success of the contract would be measured by the extent to which these recommendations were implemented and led to quantifiable improvements in areas such as delivery times, cost reduction, inventory management, and overall operational readiness for the Department of Defense, particularly under USTRANSCOM's purview.

How does the $30 million award compare to other similar logistics consulting contracts awarded by the DoD?

The $30 million award to Northrop Grumman over approximately three years (September 2012 to January 2016) for logistics consulting services is a significant sum, reflecting the complexity and scale of defense logistics. To benchmark this, one would need to compare it against other contracts for similar services (NAICS 541614) awarded by the DoD or other federal agencies during the same period. Factors such as contract duration, specific services provided (e.g., strategic planning, system implementation, process re-engineering), and the number of bidders would be crucial for a fair comparison. Without access to a broader dataset of comparable contracts, it's difficult to definitively state whether this represents a high, low, or average value. However, given Northrop Grumman's status as a major defense contractor, the award suggests a substantial scope of work.

What are the key risks associated with a fixed-price contract of this nature and duration?

A fixed-price contract, especially one spanning over 1000 days (approximately 3.3 years) and valued at over $30 million, carries inherent risks for both the government and the contractor. For the government, the primary risk is that the fixed price may not accurately reflect the actual costs incurred by the contractor, potentially leading to overpayment if the contractor is highly efficient or underperformance if the contractor cuts corners to maintain profitability. Conversely, the contractor bears the risk of cost overruns; if the project's complexity is underestimated or unforeseen issues arise, their profit margins could be significantly eroded. For a consulting service contract, risks also include potential scope creep if requirements are not tightly managed, and the possibility that the contractor may lack the incentive to innovate or improve processes beyond the initially agreed-upon scope to maximize their profit within the fixed price.

What is Northrop Grumman's track record with similar large-scale logistics contracts for the DoD?

Northrop Grumman Systems Corporation is a well-established and major defense contractor with extensive experience in providing a wide array of services to the Department of Defense, including complex logistics, systems integration, and information technology solutions. Their track record with large-scale logistics contracts is substantial, encompassing areas such as supply chain management, maintenance, repair, and overhaul (MRO), and mission support. They have historically managed and executed numerous contracts for various branches of the military and defense agencies, often involving global operations and advanced technological integration. While specific performance details for this particular JDPAC contract are not provided, Northrop Grumman's overall profile suggests a capacity to handle significant, complex logistics analysis and support requirements for the DoD.

How has federal spending on logistics consulting services evolved over the period this contract was active (2012-2016)?

Federal spending on logistics consulting services, particularly within the Department of Defense, remained a significant area of expenditure during the period of this contract (FY2012-FY2016). This era coincided with ongoing military operations abroad and a continued focus on optimizing defense supply chains for efficiency and cost-effectiveness. While overall defense budgets saw fluctuations, the need for specialized expertise in logistics, process improvement, and distribution analysis remained consistent. Agencies like USTRANSCOM consistently require such services to manage complex global movements of personnel and materiel. Spending in this category is often influenced by strategic priorities, technological advancements in logistics, and efforts to streamline operations in response to fiscal pressures. Data from sources like the Federal Procurement Data System (FPDS) would show trends in contract awards for NAICS code 541614 and related categories during this timeframe.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 4807 STONECROFT BLVD, CHANTILLY, VA, 20151

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: $31,088,066

Exercised Options: $30,085,478

Current Obligation: $30,085,478

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS10F0162L

IDV Type: FSS

Timeline