DoD's $81.8M BAMS-D contract to Northrop Grumman raises questions on value and competition

Contract Overview

Contract Amount: $81,823,865 ($81.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-06-03

End Date: 2023-04-10

Contract Duration: 676 days

Daily Burn Rate: $121.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: BAMS-D OPERATIONS & MAINTENANCE SUPPORT

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $81.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: BAMS-D OPERATIONS & MAINTENANCE SUPPORT Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize spending over efficiency. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The duration of the contract (676 days) suggests a long-term need for these services. 4. The 'All Other Professional, Scientific, and Technical Services' NAICS code indicates a broad scope of work. 5. The contract was awarded to a single, large defense contractor, potentially limiting opportunities for smaller firms. 6. The lack of a small business set-aside is noted.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the broad 'All Other Professional, Scientific, and Technical Services' NAICS code and the lack of publicly available detailed cost breakdowns. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain scope work, can lead to higher costs compared to fixed-price contracts if not managed diligently. Without comparable contracts for similar 'BAMS-D OPERATIONS & MAINTENANCE SUPPORT' services, it's difficult to definitively assess if the $81.8 million represents a fair price. The contractor's historical performance and the specific nature of the support provided would be key factors in a more thorough value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Systems Corporation, was solicited. This significantly limits the opportunity for competitive bidding. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), the lack of competition means that the government did not benefit from the price discovery that typically occurs when multiple companies vie for a contract. This can potentially lead to higher prices than might be achieved in a competitive environment.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the best possible price for these services, as there was no market pressure to drive down costs.

Public Impact

The Department of the Navy benefits from the continued operations and maintenance support for the BAMS-D system. This contract ensures the functionality and availability of critical systems for defense operations. The services provided likely support military readiness and national security objectives. The contract's impact on the workforce is primarily within Northrop Grumman, potentially involving technical and support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure may not incentivize cost savings.
Broad NAICS code makes specific performance assessment difficult.
Lack of transparency on specific services rendered.

Positive Signals

Contract awarded to an established defense contractor with likely relevant experience.
Contract duration suggests a sustained need and potential for stable support.
Fixed fee component provides some level of cost predictability for the government.

Sector Analysis

The defense sector, particularly IT and professional services, sees significant government spending. Contracts like this, supporting complex systems, are common. The 'All Other Professional, Scientific, and Technical Services' category (NAICS 541990) is broad and encompasses a wide range of specialized support. Benchmarking against similar large-scale, sole-source IT operations and maintenance contracts within the Department of Defense would be necessary for a comprehensive comparison, but such data is often not publicly detailed.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus was on the prime's capabilities. This could limit direct opportunities for small businesses to participate in this specific contract, although they may be involved further down the supply chain if Northrop Grumman chooses to subcontract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Inspector General (IG) reports related to Department of Defense contracts could potentially address issues of waste, fraud, or abuse. Transparency is limited by the sole-source nature and the broad service category, making detailed public oversight challenging without further disclosure from the agency.

Related Government Programs

Defense Operations and Maintenance
IT Support Services
Northrop Grumman Contracts
Department of the Navy Procurements
Sole-Source IT Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of detailed service scope
Broad NAICS code

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $81.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. BAMS-D 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 $81.8 million.

What is the period of performance?

Start: 2021-06-03. End: 2023-04-10.

What specific services are included under 'BAMS-D OPERATIONS & MAINTENANCE SUPPORT'?

The provided data does not detail the specific services encompassed by 'BAMS-D OPERATIONS & MAINTENANCE SUPPORT'. The NAICS code 541990, 'All Other Professional, Scientific, and Technical Services,' is very broad. Typically, such contracts involve maintaining, updating, and ensuring the operational readiness of a specific system or set of systems, which could include software maintenance, hardware support, network operations, cybersecurity, and technical assistance. Without further documentation from the Department of the Navy, the exact scope remains undefined in the public record.

What is the track record of Northrop Grumman Systems Corporation with similar DoD contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of performing complex technical and operational support services for the Department of Defense across various branches and agencies. They have extensive experience in areas such as aerospace, defense electronics, information systems, and shipbuilding. While specific performance metrics for this particular contract are not detailed, their general track record suggests they possess the technical capabilities and infrastructure to handle large-scale defense support operations. However, like any large contractor, they have been subject to various contract reviews and audits over the years, the details of which would require a deeper dive into specific contract histories and IG reports.

How does the $81.8 million cost compare to similar operations and maintenance contracts?

Directly comparing the $81.8 million cost is difficult without knowing the precise scope and duration of services provided under 'BAMS-D OPERATIONS & MAINTENANCE SUPPORT' and the specific system it supports. Operations and maintenance (O&M) contracts for complex defense systems can vary widely in cost. Factors such as the criticality of the system, the level of technical expertise required, cybersecurity demands, and the number of users or locations supported all influence pricing. Given the sole-source nature and the broad service category, this figure represents a significant investment, but its relative value compared to other O&M contracts would require a detailed apples-to-apples comparison of service scope, performance standards, and contract type.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract of this magnitude are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs than a competed contract as the government lacks the benefit of market-driven pricing. Secondly, the CPFF structure, while providing flexibility, carries inherent risks of cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee, which can sometimes disincentivize aggressive cost control if not managed rigorously by the government. This combination requires robust government oversight to ensure that costs remain reasonable and that the fixed fee adequately compensates the contractor for the effort without being excessive.

What is the historical spending trend for BAMS-D operations and maintenance, if available?

The provided data only includes details for one contract award from June 3, 2021, to April 10, 2023, totaling $81.8 million. This single data point does not provide enough information to establish a historical spending trend for BAMS-D operations and maintenance. To understand historical spending, one would need to examine contract awards for this service category over multiple fiscal years, identify any predecessor contracts, and analyze the total obligated amounts and spending patterns. Without this broader context, it's impossible to determine if the $81.8 million represents an increase, decrease, or stable level of spending for these services.

What oversight mechanisms are in place to ensure the effectiveness and efficiency of this contract?

Oversight for this contract would primarily be managed by the Department of the Navy's program and contracting officials. This typically involves establishing clear performance metrics and deliverables within the contract, conducting regular progress reviews, and potentially utilizing Contracting Officer's Representatives (CORs) to monitor day-to-day performance. For CPFF contracts, rigorous auditing of costs is crucial. Additionally, the Department of Defense's Inspector General (IG) may conduct audits or investigations into specific contracts or programs if concerns arise regarding waste, fraud, or abuse. However, the effectiveness of oversight is heavily dependent on the resources allocated and the diligence of the government personnel involved.

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: N0001920R0039

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $325,440,623

Exercised Options: $120,572,299

Current Obligation: $81,823,865

Subaward Activity

Number of Subawards: 47

Total Subaward Amount: $84,384,938

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline