DoD's $34.9M Operations & Maintenance contract awarded to Northrop Grumman raises questions on competition and value
Contract Overview
Contract Amount: $34,936,793 ($34.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2009-04-07
End Date: 2012-01-10
Contract Duration: 1,008 days
Daily Burn Rate: $34.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: OPERATIONS&MAINTENANCE SUPPORT
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $34.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: OPERATIONS&MAINTENANCE SUPPORT Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. The cost-plus-fixed-fee structure may incentivize cost escalation rather than efficiency. 3. Limited public data on performance metrics makes it difficult to assess value for money. 4. The contract duration of over 3 years suggests a long-term need for these services. 5. The specific services provided under 'All Other Professional, Scientific, and Technical Services' are not clearly defined. 6. The contract's value is moderate within the context of large federal IT and defense spending.
Value Assessment
Rating: questionable
Benchmarking the value of this $34.9 million contract is challenging due to the lack of competitive bidding and detailed performance data. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain scope work, can lead to higher overall costs compared to fixed-price contracts if not managed rigorously. Without comparable sole-source contracts or detailed cost breakdowns, it's difficult to definitively assess if the pricing is fair. The absence of a competitive process means there's no market validation of the price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a 'NOT COMPETED' basis, indicating a sole-source procurement. This means the Department of the Navy did not solicit offers from multiple potential contractors. Reasons for sole-source awards can include the uniqueness of the service, the contractor's specialized capabilities, or urgent needs. However, the lack of competition prevents a robust price discovery process and limits the government's ability to secure the best possible pricing through market forces.
Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from competitive bidding, potentially leading to higher expenditures for the same services.
Public Impact
The Department of the Navy benefits from sustained operations and maintenance support for its systems. The contract supports professional, scientific, and technical services essential for military readiness. The geographic impact is primarily within California, where the contractor is located. Workforce implications include employment for personnel at Northrop Grumman in California.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs for taxpayers.
- Cost-plus-fixed-fee structure offers limited incentive for contractor cost efficiency.
- Opaque service definition hinders performance and value assessment.
- Limited transparency on contractor performance metrics.
Positive Signals
- Northrop Grumman is a large, established defense contractor with significant experience.
- The contract addresses essential operations and maintenance needs for the Navy.
- The contract was awarded to a single, known entity, potentially ensuring continuity of service.
Sector Analysis
This contract falls under the 'All Other Professional, Scientific, and Technical Services' category (NAICS 541990), a broad sector encompassing a wide range of specialized support. Within the defense industry, such services are critical for maintaining complex systems, conducting research, and providing technical expertise. The total federal spending in this sector is substantial, with significant portions allocated to defense agencies. Benchmarking against similar O&M contracts is difficult without more specific service details, but the $34.9 million value is moderate for a multi-year defense contract.
Small Business Impact
This contract was not awarded to a small business, nor does it appear to have specific small business set-aside provisions. Northrop Grumman is a large prime contractor. There is no information provided regarding subcontracting plans or actual subcontracting to small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though large prime contractors often engage small businesses in their supply chains.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of the Navy. Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and adherence to contract terms is crucial. Transparency is limited by the lack of public reporting on performance metrics and detailed cost breakdowns. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Department of Defense Operations and Maintenance
- Navy IT and Technical Services
- Professional, Scientific, and Technical Services Contracts
- Sole-Source Defense Procurements
Risk Flags
- Sole-source award limits competition.
- Cost-plus-fixed-fee pricing may not incentivize cost efficiency.
- Lack of detailed performance data hinders value assessment.
- Broad service category lacks specificity.
Tags
defense, department-of-defense, department-of-the-navy, northrop-grumman-systems-corporation, operations-maintenance, professional-scientific-technical-services, sole-source, cost-plus-fixed-fee, definitive-contract, california, moderate-value
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $34.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. OPERATIONS&MAINTENANCE SUPPORT
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 $34.9 million.
What is the period of performance?
Start: 2009-04-07. End: 2012-01-10.
What specific operations and maintenance services does Northrop Grumman provide under this contract?
The contract falls under NAICS code 541990, 'All Other Professional, Scientific, and Technical Services.' This is a very broad category, and the specific services provided are not detailed in the available data. Typically, such services for Operations & Maintenance (O&M) in a defense context could include system maintenance, technical support, logistics, specialized engineering services, or program management support. Without further documentation or contract specifics, the exact nature of the work remains undefined, making it difficult to assess its necessity or effectiveness.
How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar services?
Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, as is common in research and development or complex system integration. However, CPFF contracts provide less incentive for cost control compared to fixed-price contracts, as the contractor is reimbursed for costs incurred. For O&M services where the scope is more predictable, fixed-price or cost-plus-incentive-fee contracts might offer better value by aligning contractor incentives with government cost-saving goals. The $34.9M value over approximately 3 years suggests a substantial ongoing service requirement where efficiency could be prioritized.
What are the potential risks associated with awarding a $34.9M contract on a sole-source basis?
The primary risk of a sole-source award is the lack of competition, which can lead to inflated prices and reduced innovation. Without competing bids, the government cannot be assured it is receiving the best value or the most competitive pricing available in the market. This can result in taxpayers paying more than necessary for the services rendered. Additionally, sole-source awards can create vendor lock-in, making it difficult to switch to more cost-effective providers in the future. It also limits opportunities for new or smaller businesses to enter the market and compete for government contracts.
What performance metrics are used to evaluate Northrop Grumman's success under this contract?
The provided data does not include specific performance metrics or evaluation criteria for this contract. For a contract of this nature and value, typical performance metrics might include system uptime, response times for technical support, successful completion of maintenance tasks, adherence to schedules, and quality of deliverables. The absence of publicly available performance data makes it challenging to independently assess the contractor's effectiveness and the overall value delivered to the Department of the Navy. Robust oversight would require clear, measurable performance standards and regular reporting.
How does this contract's spending compare to other similar 'All Other Professional, Scientific, and Technical Services' contracts within the Department of Defense?
Comparing this $34.9 million contract to others within the broad NAICS 541990 category is difficult without more specific service details. However, within the Department of Defense, spending on professional, scientific, and technical services is extensive, often running into billions of dollars annually across various sub-categories. This particular contract represents a moderate investment for a multi-year period. Larger contracts in this sector might involve major system development, large-scale research initiatives, or extensive cybersecurity services. Smaller contracts could focus on niche consulting or specialized technical support. The sole-source nature and CPFF structure are key differentiating factors that influence its comparability.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001908R0034
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 92127
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $39,666,996
Exercised Options: $39,666,996
Current Obligation: $34,936,793
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-04-07
Current End Date: 2012-01-10
Potential End Date: 2012-01-10 00:00:00
Last Modified: 2016-03-21
More Contracts from Northrop Grumman Systems Corporation
- 200506!000026!5700!fa8214!oo-Alc/Pkme/Lmke !F4261098C0001 !A!N! !Y! !p01502!20041213!20050701!001563738!004179453!016435559!n!northrop Grumman Space & Missi!888 S 2000 E !clearfield !ut!84015!13850!011!49!clearfield !davis !utah !-000001960000!n!n!000000000000!l014!tech REP Svcs/Guided Missiles !A2 !missile and Space Systems !302 !minuteman III GRP !541330!E! !3! ! !C! ! !20200930!B! ! !A! !a!n!l!2!002!b! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! — $10.0B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-7) — $8.5B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-2) — $5.4B (Department of Defense)
- First DDT and E, Ares I-X, and Flight Tests. First Stage Will BE a Five Segment, Solid Rocket Booster Derived From the Space Shuttle Program (SSP) Solid Rocket Booster (srb)/Reusable Solid Rocket Motor (rsrm). the Contractor Shall Furnish the Necessary Management, Engineering, Labor, Facilities, Tools, Equipment, and Materials Required for First Stage Development, Qualification, Certification and Acceptance Program. Activities Include: Redesign and Testing of the Motor to Incorporate the Fifth Segment and Production of Five Full Scale Ground Static Test Motors: TWO Development Motors (dms)-And Three Qualification Motors (QMS); Structural Test Article (STA), Ground Vibration Test Motors (gvtms) and Other Development Testing; Redesign of the Avionics, Deceleration, Separation, and Flight Termination System (FTS) Subsystems; Ares I-X: Simulated Ares I Outer Mold Line/Mass Properties Using Modified Srb/Rsrm; and Three Flight Test Vehicles. TAS::80 0124::TAS — $4.4B (National Aeronautics and Space Administration)
- Federal Contract — $4.4B (Department of Defense)
View all Northrop Grumman Systems Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)