DoD's $28M Engineering Support Services Contract Awarded to Northrop Grumman Without Competition

Contract Overview

Contract Amount: $27,953,355 ($28.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-08-10

End Date: 2023-11-09

Contract Duration: 821 days

Daily Burn Rate: $34.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SUPPORT SERVICES

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $28.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SUPPORT SERVICES Key points: 1. The contract's value of approximately $28 million over its period of performance suggests a significant investment in specialized engineering capabilities. 2. The sole-source award indicates a lack of competitive bidding, potentially limiting price discovery and value for money. 3. The 'Cost Plus Fixed Fee' contract type carries inherent risk of cost overruns, requiring robust oversight. 4. The duration of 821 days (approximately 2.25 years) points to a long-term need for these engineering services. 5. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, highlighting its specialized technical nature. 6. The award to a single large contractor, Northrop Grumman, raises questions about opportunities for smaller, specialized firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the services rendered and comparable market rates. However, the 'Cost Plus Fixed Fee' structure, combined with a sole-source award, presents a higher risk profile for ensuring optimal value for money compared to competitively bid fixed-price contracts. The contractor's established presence and the nature of the services may justify the cost, but the lack of competition prevents a direct comparison to assess pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when urgent circumstances preclude a full and open competition. The absence of multiple bidders means there was no direct price comparison or market pressure to drive down costs, potentially leading to a higher price than if it had been competed.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the lack of competitive bidding. The government did not benefit from the potential cost savings that often arise from a competitive procurement process.

Public Impact

The Department of the Navy benefits from specialized engineering support crucial for its advanced systems. This contract likely supports the development, maintenance, or enhancement of critical search, detection, navigation, and guidance systems. The services are geographically focused on Maryland (MD), indicating a concentration of defense engineering activities in that region. The contract supports highly skilled engineering jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential value for taxpayers.
Cost-plus contract type increases the risk of cost overruns.
Lack of transparency in the justification for sole-source award.
Potential for limited innovation due to absence of competitive pressure.
Concentration of significant federal spending with one large contractor.

Positive Signals

Award to a large, established defense contractor suggests access to specialized expertise.
Contract duration indicates a sustained need for critical engineering services.
Focus on advanced navigation and guidance systems aligns with strategic defense priorities.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on the manufacturing and support of advanced navigation and guidance systems. The market for such specialized engineering services is characterized by high barriers to entry due to technical expertise, security clearances, and intellectual property. Spending in this sub-sector is often driven by government defense procurement, with a few large prime contractors dominating the landscape. Comparable spending benchmarks would typically involve other contracts for similar system development and engineering support within the DoD.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. The award to a large prime contractor like Northrop Grumman suggests that opportunities for small businesses may be limited unless they are direct subcontractors to Northrop Grumman. Without specific subcontracting plans, the direct impact on the small business ecosystem for this particular award is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are essential to control costs and ensure deliverables are met. Transparency regarding the justification for the sole-source award and ongoing performance reports would be key accountability measures. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Naval Air Systems Command (NAVAIR) Engineering Services
Defense Advanced Research Projects Agency (DARPA) Research and Development
Air Force Life Cycle Management Center (AFLCMC) Support Contracts
Intelligence, Surveillance, and Reconnaissance (ISR) Systems Development

Risk Flags

Sole-source award justification requires thorough review.
Cost-plus contract type necessitates robust cost monitoring.
Potential for cost overruns due to CPFF structure.
Lack of competitive bidding may impact price efficiency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SUPPORT SERVICES

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $28.0 million.

What is the period of performance?

Start: 2021-08-10. End: 2023-11-09.

What specific engineering services are being provided under this contract, and how do they align with the Department of the Navy's strategic objectives?

The contract, identified by NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing), implies that the engineering support services are highly specialized and technical. These likely include design, development, testing, integration, and sustainment of complex systems related to naval aviation and maritime operations. Given the award to Northrop Grumman, a major defense contractor, these services are expected to support critical platforms and technologies that are integral to the Navy's mission readiness and future capabilities, such as advanced radar systems, sonar, navigation suites, or guidance control systems for aircraft and vessels.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The justification for a sole-source award typically stems from specific circumstances outlined in federal acquisition regulations (FAR). Common reasons include the existence of only one responsible source capable of providing the required services, a critical need for compatibility with existing systems where only one contractor can provide the necessary expertise, or in situations of urgent and compelling need where competition is not feasible. For this contract, the justification likely relates to Northrop Grumman's unique proprietary knowledge, specialized facilities, or essential integration capabilities with existing naval systems that cannot be replicated by other firms within the required timeframe or to the required standard.

How does the 'Cost Plus Fixed Fee' (CPFF) contract type compare to other contract types in terms of risk and value for money for the government?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex services where the scope of work is not precisely defined at the outset. It reimburses the contractor for allowable costs plus a fixed fee representing profit. While it allows flexibility for evolving requirements, it shifts a significant portion of the cost risk to the government, as the final cost is not predetermined. Compared to fixed-price contracts, CPFF generally offers less value for money for the government if costs escalate beyond initial estimates, as the government bears the brunt of cost overruns. Robust oversight and detailed cost tracking are crucial to mitigate this risk.

What is Northrop Grumman's track record with similar engineering support contracts for the Department of Defense?

Northrop Grumman is a major defense contractor with extensive experience in providing engineering, development, and sustainment services across various defense platforms. They have a long history of supporting complex systems for the Department of the Navy, including aircraft, naval vessels, and advanced sensor technologies. Their track record typically involves large-scale, high-value contracts requiring sophisticated engineering capabilities. While specific performance metrics for this particular contract are not detailed here, Northrop Grumman's overall performance on similar DoD contracts is generally characterized by their ability to handle technically challenging projects, though like any large contractor, they may have faced scrutiny on specific programs regarding cost or schedule.

How does the $27.95 million total contract value compare to historical spending on similar engineering support services by the Department of the Navy?

The $27.95 million total contract value represents a significant, but not extraordinary, investment for specialized engineering support within the defense sector. To provide a precise comparison, one would need to analyze historical spending data for similar NAICS codes (e.g., 334511, 541330 - Engineering Services) awarded by the Department of the Navy over comparable periods. However, given the nature of advanced systems development and sustainment, contracts in the tens of millions of dollars for specialized engineering support are common for major defense programs. The value is substantial enough to warrant scrutiny regarding its efficiency and necessity, especially given the sole-source, CPFF nature of this award.

Are there any specific performance risks associated with this contract, given its sole-source and CPFF nature?

Yes, there are inherent performance risks associated with this contract. The sole-source nature means there is no competitive pressure to drive innovation or efficiency, potentially leading to complacency or less-than-optimal solutions. The Cost Plus Fixed Fee structure, while providing flexibility, can disincentivize cost control by the contractor, as the government bears the risk of cost overruns. This necessitates stringent oversight from the Navy to ensure costs remain reasonable and that the fixed fee remains appropriate for the work performed. Performance risks also include potential schedule delays or quality issues if not managed proactively, as the contractor may not face the same level of urgency as they would in a competitive, fixed-price environment.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $32,444,132

Exercised Options: $28,023,903

Current Obligation: $27,953,355

Actual Outlays: $24,258,833

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $80,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785420G0032

IDV Type: BOA

Timeline