DoD Awards Northrop Grumman $45.8M for Engineering Services, Facing Potential Cost Overruns

Contract Overview

Contract Amount: $45,848,575 ($45.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2006-03-30

End Date: 2010-03-31

Contract Duration: 1,462 days

Daily Burn Rate: $31.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200606!SS2551!1700!N63394!PORT HUENEME DIVISION !N0017804D4091 !A!N! !Y!L601 ! !20060330!20070331!064683464!008255408!016435559!N!NORTHROP GRUMMAN DEFENSE MISSI!12011 SUNSET HILLS ROAD !RESTON !VA!20190!58296!111!06!PORT HUENEME !VENTURA !CALIFORNIA!+000000380000!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !5!B!M! !A!D!20090331!B! ! !A! !A!N!U!2!021!B! !Z!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! !1700!N63394!0001! !

Place of Performance

Location: PORT HUENEME CBC BASE, VENTURA County, CALIFORNIA, 93043

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $45.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200606!SS2551!1700!N63394!PORT HUENEME DIVISION !N0017804D4091 !A!N! !Y!L601 ! !20060330!20070331!064683464!008255408!016435559!N!NORTHROP GRUMMAN DEFENSE MISSI!12011 SUNSET HILLS ROAD !RESTON !VA!20190!58296!111!06!PORT HUENEME !VENTURA !CALIFORNIA!+000000380000!N!N!000000000000… Key points: 1. Contract awarded to Northrop Grumman for engineering services. 2. Significant contract value of $45.8 million. 3. Potential for cost overruns indicated by contract type and duration. 4. Sector is Defense, specifically engineering services.

Value Assessment

Rating: questionable

The contract is Cost Plus Fixed Fee, which can lead to cost overruns if not managed tightly. The duration of 1462 days (nearly 4 years) for a $45.8M award suggests potential for scope creep or unforeseen complexities impacting final cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific pricing mechanism (Cost Plus Fixed Fee) may not have fully optimized price discovery for the government.

Taxpayer Impact: While competition was present, the Cost Plus Fixed Fee structure carries inherent risk of higher-than-expected costs for taxpayers if not rigorously overseen.

Public Impact

Taxpayers may face higher costs due to the Cost Plus Fixed Fee contract type. The long duration of the contract raises questions about long-term needs and potential for evolving requirements. Defense spending on engineering services impacts the allocation of resources for military readiness and technological advancement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type
Long contract duration (1462 days)
Potential for cost overruns

Positive Signals

Full and open competition
Awarded to a major defense contractor

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of defense spending supporting research, development, and maintenance of military systems. Benchmarks for this sector vary widely based on specialization.

Small Business Impact

The data does not indicate any specific set-asides or participation goals for small businesses in this contract. Large defense contracts often involve prime contractors who may subcontract, but direct small business involvement is not specified.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), indicating established oversight mechanisms. However, the Cost Plus Fixed Fee structure necessitates vigilant monitoring to control costs and ensure value for money.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Cost Plus Fixed Fee contract type increases risk of cost overruns.
Long contract duration (1462 days) may lead to scope creep or changing requirements.
Lack of detail on specific services provided hinders full assessment of value.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200606!SS2551!1700!N63394!PORT HUENEME DIVISION !N0017804D4091 !A!N! !Y!L601 ! !20060330!20070331!064683464!008255408!016435559!N!NORTHROP GRUMMAN DEFENSE MISSI!12011 SUNSET HILLS ROAD !RESTON !VA!20190!58296!111!06!PORT HUENEME !VENTURA !CALIFORNIA!+000000380000!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !5!B!M! !A!D!20090331!B! ! !A! !A!N!U!2!021!B! !Z!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! !1700!N63394!0001! !

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 $45.8 million.

What is the period of performance?

Start: 2006-03-30. End: 2010-03-31.

What specific engineering services are being provided under this contract, and how do they align with current defense priorities?

The contract specifies 'ENGINEERING TECHNICAL SERVICES' under NAICS code 541330. While the exact nature of these services isn't detailed in the provided data, they likely encompass a broad range of technical support crucial for defense systems. This could include design, analysis, testing, and integration of various military platforms or technologies, aligning with the Department of Defense's ongoing need for advanced engineering capabilities.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this $45.8M award, and what mitigation strategies are in place?

The primary risk of a CPFF contract is the potential for cost overruns, as the contractor is reimbursed for allowable costs plus a fixed fee. If costs escalate beyond initial estimates, the government bears the burden. Mitigation strategies typically involve stringent cost monitoring, detailed audits, clear definition of allowable costs, and robust performance metrics to ensure efficiency and prevent unnecessary expenditures.

How does the $45.8M award for engineering services compare to typical spending in this category within the Department of Defense?

The $45.8 million award is a substantial sum, but within the context of the Department of Defense's multi-billion dollar annual budget, it represents a moderate investment in engineering services. Spending in this category can fluctuate significantly based on major acquisition programs, modernization efforts, and sustainment requirements for existing platforms. Benchmarking requires comparison against similar, specialized engineering support contracts.

Industry Classification

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

Solicitation ID: N0002405R3322

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4091

IDV Type: IDC

Timeline