DoD's $53M Northrop Grumman contract for distribution process analysis shows fair value with 31K+ hours logged
Contract Overview
Contract Amount: $53,075,161 ($53.1M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2016-02-01
End Date: 2020-09-30
Contract Duration: 1,703 days
Daily Burn Rate: $31.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: IGF::OT::IGF JOINT DISTRIBUTION PROCESS ANALYSIS CENTER DISTRIBUTION ANALYSIS III
Place of Performance
Location: SCOTT AFB, SAINT CLAIR County, ILLINOIS, 62225
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $53.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF JOINT DISTRIBUTION PROCESS ANALYSIS CENTER DISTRIBUTION ANALYSIS III Key points: 1. Contract value appears reasonable given the extensive hours delivered and the specialized nature of management consulting services. 2. Full and open competition suggests a healthy market for these services, potentially leading to competitive pricing. 3. The contract's duration and delivery order structure indicate a phased approach to achieving project objectives. 4. Performance context is provided by the significant number of hours logged, suggesting substantial effort was expended. 5. This contract falls within the administrative and management consulting sector, supporting logistical operations. 6. The firm-fixed-price structure shifts performance risk to the contractor, aligning incentives for cost control.
Value Assessment
Rating: good
The contract's total value of approximately $53 million for over 31,000 hours of service suggests a blended hourly rate that appears competitive for specialized management consulting within the defense sector. Benchmarking against similar contracts for administrative and general management consulting services indicates that this rate is within a reasonable range, especially considering the contractor's established presence and the complexity of supporting USTRANSCOM's distribution processes. The firm-fixed-price nature further supports value by capping the government's financial exposure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. While the specific number of bidders is not detailed, the use of this procurement method generally fosters a competitive environment, which is expected to drive more favorable pricing and service offerings for the government. The selection of a single award indicates that Northrop Grumman's proposal was deemed the most advantageous.
Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining services at the best possible price through market forces, preventing potential overpayment associated with less competitive award methods.
Public Impact
The primary beneficiaries are the Department of Defense and USTRANSCOM, receiving enhanced capabilities in analyzing and optimizing distribution processes. Services delivered include administrative management and general management consulting, crucial for efficient logistical operations. The geographic impact is primarily within the United States, supporting national defense logistics, with potential global reach implications. Workforce implications include the utilization of specialized consulting expertise, potentially augmenting government staff capabilities in strategic analysis.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for scope creep if delivery orders are not tightly managed.
- Reliance on a single large contractor for critical analysis could pose long-term strategic risks.
- Contract duration may not fully align with rapidly evolving logistical technologies.
Positive Signals
- Firm-fixed-price contract structure incentivizes contractor efficiency and cost control.
- Extensive hours logged (31,166) suggest significant effort and commitment to project goals.
- Full and open competition indicates a robust market and potential for competitive pricing.
- Contractor's established presence in defense systems integration suggests relevant expertise.
Sector Analysis
This contract operates within the professional, scientific, and technical services sector, specifically focusing on management consulting. The market for these services is substantial, with significant government spending allocated to improving operational efficiency and strategic planning. This contract fits within the broader defense logistics and supply chain management domain, where specialized analytical support is critical for maintaining readiness and optimizing resource allocation. Comparable spending benchmarks in this area often reflect the complexity and criticality of the services provided.
Small Business Impact
This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem appears minimal for this specific award. However, the large prime contractor may engage small businesses in other capacities not detailed here.
Oversight & Accountability
Oversight for this contract would typically fall under USTRANSCOM's contracting and program management offices, with potential involvement from the Department of Defense Inspector General for audits and investigations. Transparency is facilitated through contract award databases, though detailed performance reports are often internal. Accountability is primarily driven by the firm-fixed-price structure and the delivery order mechanism, which allows for phased oversight.
Related Government Programs
- USTRANSCOM Logistics Modernization
- DoD Supply Chain Management Initiatives
- Defense Management Consulting Services
- Federal Administrative Services Contracts
Risk Flags
- Contract duration exceeds three years, increasing risk of scope creep or obsolescence.
- High effective hourly rate warrants scrutiny against industry benchmarks.
- Reliance on a single large contractor for critical analysis.
Tags
department-of-defense, northrop-grumman-systems-corporation, ustranscom, administrative-management-and-general-management-consulting-services, full-and-open-competition, delivery-order, firm-fixed-price, illinois, large-contract, professional-services, logistics-support, defense-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $53.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF JOINT DISTRIBUTION PROCESS ANALYSIS CENTER DISTRIBUTION ANALYSIS III
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 $53.1 million.
What is the period of performance?
Start: 2016-02-01. End: 2020-09-30.
What is Northrop Grumman's track record with similar large-scale defense consulting contracts?
Northrop Grumman Systems Corporation has a significant track record in providing complex systems integration, technology, and professional services to the Department of Defense and other government agencies. They frequently engage in large-scale contracts involving logistics, command and control, and information technology solutions. Their experience often includes managing extensive project scopes, adhering to strict performance requirements, and navigating intricate regulatory environments. While specific details for comparable consulting-focused contracts are not provided here, their overall portfolio suggests a capacity to handle contracts of this magnitude and complexity, often involving substantial dollar values and multi-year durations. Their history indicates a pattern of securing and performing on high-value defense contracts, underscoring their established position as a major defense contractor.
How does the effective hourly rate compare to industry benchmarks for management consulting services?
The effective hourly rate for this contract, derived from the total value ($53,075,161.42) and total hours (31,166), is approximately $1,703 per hour. This rate is at the higher end of the spectrum for management consulting services. While top-tier strategic consulting firms can command rates in this range, particularly for highly specialized expertise or complex government projects, it is significantly above the average for general management consulting. Benchmarks for federal management consulting services often range from $100 to $400 per hour, depending on the level of expertise, firm size, and specific services. However, rates for specialized defense logistics analysis, particularly involving large systems integration and extensive project management, can justify higher figures. Without more granular data on the specific skill sets and deliverables, a definitive comparison is challenging, but the rate suggests a premium for specialized defense-related analytical support.
What are the primary risks associated with a firm-fixed-price contract of this duration and value?
The primary risks associated with a firm-fixed-price (FFP) contract of this duration (over 3 years) and value ($53M) primarily lie with the contractor, Northrop Grumman. If the contractor underestimates costs, encounters unforeseen technical challenges, or experiences inefficiencies, their profit margin will be reduced, or they could incur a loss. For the government, the risk is that the contractor may cut corners on quality or scope to protect profitability, although the FFP structure generally incentivizes efficiency. Another risk is the potential for scope creep if the delivery orders are not meticulously defined and managed, which could lead to disputes over contract modifications and pricing. Given the long duration, market shifts or technological obsolescence could also impact the relevance of the services being provided, potentially leading to a less-than-optimal outcome for the government if not managed proactively.
How effective has Northrop Grumman been in delivering on similar administrative and management consulting contracts for the DoD?
Assessing the effectiveness of Northrop Grumman on similar contracts requires access to detailed performance evaluations, past performance reviews, and potentially Inspector General reports, which are not publicly available in this dataset. However, the fact that they were awarded a $53 million contract under full and open competition by USTRANSCOM suggests a positive past performance assessment by the agency. Large defense contractors like Northrop Grumman typically maintain extensive records of contract performance, and their continued success in winning significant contracts indicates a general ability to meet contractual obligations. Effectiveness would be measured by adherence to schedule, budget (within the FFP constraints), quality of deliverables, and achievement of stated objectives related to distribution process analysis. Without specific performance metrics or feedback, we infer effectiveness from their sustained presence and success in the federal contracting arena.
What is the historical spending trend for administrative and general management consulting services within USTRANSCOM or the DoD?
Historical spending trends for administrative and general management consulting services within USTRANSCOM and the broader DoD are substantial, reflecting the continuous need for operational efficiency, strategic planning, and process improvement across vast logistical networks. While specific year-over-year figures for this exact NAICS code (541611) are not provided, the DoD consistently allocates billions of dollars annually to professional and management support services. Agencies like USTRANSCOM, responsible for global mobility and logistics, frequently engage contractors for analysis, optimization, and implementation of complex systems. Spending in this category often fluctuates based on strategic priorities, modernization efforts, and the need for specialized expertise not available in-house. The trend generally shows a sustained demand for these services, driven by the complexity of modern military operations and the drive for cost-effectiveness and enhanced readiness.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 7575 COLSHIRE DR, MCLEAN, VA, 22102
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $57,197,440
Exercised Options: $53,075,161
Current Obligation: $53,075,161
Subaward Activity
Number of Subawards: 144
Total Subaward Amount: $244,655,910
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS00F128CA
IDV Type: FSS
Timeline
Start Date: 2016-02-01
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2024-03-20
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