DoD's $60.9M Contract for Installation Design with Northrop Grumman Raises Questions on Competition and Value
Contract Overview
Contract Amount: $60,941,118 ($60.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2017-02-21
End Date: 2022-03-30
Contract Duration: 1,863 days
Daily Burn Rate: $32.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: PRELIMINARY INSTALLATION DESIGN
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $60.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PRELIMINARY INSTALLATION DESIGN Key points: 1. Significant contract value awarded to a single large business. 2. Lack of competition raises concerns about price discovery and potential overpayment. 3. The cost-plus-fixed-fee structure may incentivize cost escalation. 4. Sector context suggests potential for innovation and efficiency gains not fully realized.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a definitive value assessment difficult. The obligated amount of $60.9M over 1863 days suggests a high per-diem cost, warranting closer scrutiny of the fixed fee and indirect cost rates.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to achieve the best possible price.
Taxpayer Impact: The absence of competition likely resulted in a higher price than could have been achieved through a competitive bidding process, impacting taxpayer funds.
Public Impact
Taxpayers may have overpaid due to the lack of competitive bidding. The long duration of the contract could indicate a critical, long-term need, but the pricing mechanism needs verification. Potential for cost overruns exists with the Cost Plus Fixed Fee contract type.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus-fixed-fee contract type
- No small business participation indicated
Positive Signals
- Awarded to a known defense contractor
- Long-term contract duration suggests sustained need
Sector Analysis
This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is often characterized by high R&D costs and specialized manufacturing, but competitive pricing remains crucial.
Small Business Impact
The data indicates no small business participation in this contract. Given the significant value, opportunities for subcontracting to small businesses were likely missed, limiting their access to federal dollars.
Oversight & Accountability
The sole-source nature of this award warrants increased oversight to ensure costs are reasonable and the fixed fee is justified. Transparency in the negotiation process and cost justification is essential for accountability.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost-plus-fixed-fee contract type
- No small business participation
- Potential for cost overruns
- Limited transparency on pricing justification
Tags
search-detection-navigation-guidance-aer, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $60.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PRELIMINARY INSTALLATION DESIGN
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 $60.9 million.
What is the period of performance?
Start: 2017-02-21. End: 2022-03-30.
What was the justification for awarding this contract sole-source, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without further details, it's difficult to assess if all avenues for competition were exhausted. A thorough review of the acquisition strategy documentation is needed to understand the rationale and ensure taxpayer value was prioritized.
How were the fixed fee and indirect cost rates determined for this Cost Plus Fixed Fee contract to ensure reasonableness?
Determining the fixed fee and indirect cost rates for a CPFF contract involves negotiation based on historical data, projected costs, and the contractor's performance risk. The government should have performed a detailed cost analysis and potentially used benchmarking data. Verification of the negotiation process and the reasonableness of the fee structure is critical to prevent overpayment.
What performance metrics or deliverables were established to ensure the effective execution of the preliminary installation design?
Effective execution of a preliminary installation design contract relies on clearly defined deliverables, milestones, and quality standards. The contract should outline specific technical requirements, review processes, and acceptance criteria. Monitoring progress against these metrics and ensuring the final design meets the Navy's operational needs are key indicators of effectiveness.
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: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001916R0072
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 92127
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $70,721,537
Exercised Options: $61,707,018
Current Obligation: $60,941,118
Actual Outlays: $2,927,603
Subaward Activity
Number of Subawards: 235
Total Subaward Amount: $330,517,061
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-02-21
Current End Date: 2022-03-30
Potential End Date: 2022-03-30 00:00:00
Last Modified: 2024-09-17
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