DoD's $48.7M MQ-25 Concept Refinement Contract Awarded to Northrop Grumman Faces Scrutiny
Contract Overview
Contract Amount: $48,739,156 ($48.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2016-10-19
End Date: 2019-04-17
Contract Duration: 910 days
Daily Burn Rate: $53.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: IGF::OT::IGF MQ-25 CONCEPT REFINEMENT EFFORT
Place of Performance
Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245
Plain-Language Summary
Department of Defense obligated $48.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF MQ-25 CONCEPT REFINEMENT EFFORT Key points: 1. Significant investment in advanced drone technology development. 2. Sole-source award to Northrop Grumman raises competition concerns. 3. Contract duration and cost-plus structure warrant close monitoring for potential overruns. 4. Research and Development sector, specifically physical and engineering sciences, is the focus.
Value Assessment
Rating: questionable
The $48.7M contract awarded to Northrop Grumman is a Cost Plus Fixed Fee type. Without comparable contracts for similar concept refinement efforts, it is difficult to definitively assess its pricing against industry benchmarks. The fixed fee component provides some cost control, but the cost-plus nature allows for significant cost escalation.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Northrop Grumman. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers. The rationale for a sole-source award should be thoroughly documented and justified.
Taxpayer Impact: The absence of competition in this sole-source award may result in a higher overall cost to taxpayers than if multiple vendors had been considered.
Public Impact
Taxpayers may be paying a premium due to the lack of competitive bidding. The MQ-25 program's success hinges on effective concept refinement, impacting future defense capabilities. Oversight is crucial to ensure the fixed fee aligns with the value delivered and to prevent cost overruns.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
- Potential for cost overruns
Positive Signals
- Focus on advanced drone technology
- Contract awarded to established defense contractor
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. Spending in this area is critical for technological advancement but requires rigorous oversight to ensure efficient use of funds and alignment with strategic goals.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large defense contractor. There is no indication of small business participation in this specific award, which is common for large-scale R&D efforts of this nature.
Oversight & Accountability
The contract's sole-source nature and cost-plus structure necessitate robust oversight from the Defense Contract Management Agency to ensure cost reasonableness, performance, and adherence to contract terms. Regular reviews and audits are essential.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition.
- Cost-plus contract type carries risk of cost overruns.
- Lack of transparency in pricing due to no competition.
- Potential for inefficient use of taxpayer funds.
Tags
research-and-development-in-the-physical, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $48.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF MQ-25 CONCEPT REFINEMENT EFFORT
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 $48.7 million.
What is the period of performance?
Start: 2016-10-19. End: 2019-04-17.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Without specific documentation, it's presumed the government determined Northrop Grumman possessed the sole necessary expertise or technology for this MQ-25 concept refinement. However, exploring competitive avenues, even for specialized R&D, is generally preferred to ensure best value and price.
How will the government ensure cost control and prevent potential overruns given the Cost Plus Fixed Fee (CPFF) structure and the lack of competition?
Effective oversight by the Defense Contract Management Agency (DCMA) is paramount. This includes rigorous monitoring of Northrop Grumman's incurred costs, ensuring they are reasonable and allocable to the contract. The fixed fee provides a ceiling for the contractor's profit, but the 'cost' portion can still escalate. DCMA should conduct regular audits, performance reviews, and potentially implement cost-control incentives if feasible within the CPFF framework.
What are the key performance indicators (KPIs) for this concept refinement effort, and how will their achievement be measured to ensure effective R&D outcomes?
Key performance indicators for a concept refinement effort would likely focus on technical milestones, feasibility studies, prototype development (if applicable), and the successful demonstration of core functionalities for the MQ-25. Effectiveness will be measured by the clarity and viability of the refined concepts, the identification of technical risks and mitigation strategies, and the potential for these concepts to transition into subsequent development phases. Clear, measurable objectives are crucial.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001916R0036
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: ONE HORNET WAY, EL SEGUNDO, CA, 90245
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $48,739,156
Exercised Options: $48,739,156
Current Obligation: $48,739,156
Subaward Activity
Number of Subawards: 8
Total Subaward Amount: $1,515,238
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2016-10-19
Current End Date: 2019-04-17
Potential End Date: 2019-04-17 00:00:00
Last Modified: 2025-04-21
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