DoD's $24.3M contract for electrical signal instruments awarded to Northrop Grumman, spanning over 15 years

Contract Overview

Contract Amount: $24,292,143 ($24.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-05-28

End Date: 2019-08-31

Contract Duration: 5,573 days

Daily Burn Rate: $4.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: SYKESVILLE, CARROLL County, MARYLAND, 21784

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $24.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Value for money appears fair given the long duration and specialized nature of the equipment. 2. Competition dynamics were full and open, suggesting a competitive bidding process. 3. Risk indicators are moderate, with a fixed-price incentive structure that can manage cost overruns. 4. Performance context is a long-term supply agreement for critical defense instrumentation. 5. Sector positioning is within the defense manufacturing and electronic test equipment market.

Value Assessment

Rating: fair

The contract's value of approximately $24.3 million over 15 years averages to about $1.6 million annually. Benchmarking this against similar long-term, specialized defense equipment contracts is challenging due to unique specifications. However, the fixed-price incentive (FPI) structure suggests an effort to control costs while allowing for adjustments based on performance, which is a common approach for complex procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 3 bidders suggests a reasonable level of competition for this specialized defense requirement. A competitive process generally aids in price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: The full and open competition likely resulted in a more competitive price for taxpayers compared to a sole-source award. Multiple bidders help ensure that the government is not overpaying for the required instrumentation.

Public Impact

The Department of Defense benefits from a reliable supply of essential electrical measurement and testing instruments. Services delivered include the manufacturing and provision of specialized equipment crucial for defense operations and maintenance. Geographic impact is primarily national, supporting defense readiness across various military branches and installations. Workforce implications include sustained employment for specialized manufacturing and engineering roles within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (15 years) could lead to potential obsolescence of technology if not managed proactively.
Fixed-price incentive contracts can sometimes lead to cost growth if performance targets are not met efficiently.
Reliance on a single large contractor for specialized equipment may pose supply chain risks.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Fixed-price incentive structure aligns contractor and government interests towards cost efficiency.
Long-term nature provides stability and predictability for critical defense needs.
Northrop Grumman is a well-established defense contractor with significant experience in complex manufacturing.

Sector Analysis

This contract falls within the defense electronics and instrumentation sector, a critical component of the broader aerospace and defense industry. The market for specialized test and measurement equipment is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this area is driven by the need for advanced capabilities to support military platforms and systems.

Small Business Impact

The contract details do not indicate a small business set-aside, and the prime contractor is a large business. There is no explicit information on subcontracting plans for small businesses within the provided data. The impact on the small business ecosystem would depend on whether Northrop Grumman actively seeks small business subcontractors for components or services.

Oversight & Accountability

Oversight is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the contract's fixed-price incentive structure, linking payment to performance. Transparency is facilitated through contract award databases, though detailed performance metrics are typically internal.

Related Government Programs

Defense Instrumentation Programs
Electronic Test and Measurement Equipment Procurement
Northrop Grumman Defense Contracts
Department of Defense Supply Chain Management

Risk Flags

Long contract duration
Potential for technological obsolescence
Fixed-price incentive contract complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 $24.3 million.

What is the period of performance?

Start: 2004-05-28. End: 2019-08-31.

What is the historical spending trend for this specific type of instrumentation within the Department of Defense?

Analyzing historical spending for this specific type of instrumentation requires access to detailed procurement data beyond this single contract. However, general trends in defense spending on electronic warfare, testing, and measurement equipment often correlate with modernization efforts and the lifecycle of military platforms. Over the 15-year duration of this contract (2004-2019), defense budgets fluctuated, influenced by geopolitical events and strategic priorities. Without specific line-item data for 'Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals' across multiple years and agencies, a precise trend is difficult to establish. However, the consistent need for such equipment suggests a stable, albeit potentially fluctuating, demand driven by technological advancements and operational requirements.

How does the unit cost of these instruments compare to commercially available equivalents or similar government contracts?

Direct comparison of unit costs is challenging without knowing the exact specifications and quantities involved in this $24.3 million contract awarded to Northrop Grumman. Defense-specific instrumentation often incorporates higher reliability, ruggedization, and specialized features not found in commercial off-the-shelf (COTS) products, justifying a higher price point. Furthermore, the fixed-price incentive (FPI) structure means the final unit cost could vary based on performance outcomes. Benchmarking against similar government contracts would require identifying procurements with identical or closely related North American Industry Classification System (NAICS) codes and contract types. However, the long-term nature and full and open competition suggest an attempt to achieve value, but specific unit cost analysis would necessitate detailed specification and pricing data.

What are the key performance indicators (KPIs) used in the fixed-price incentive (FPI) structure for this contract?

The specific Key Performance Indicators (KPIs) for the Fixed-Price Incentive (FPI) structure of this Northrop Grumman contract are not publicly detailed in the provided data. Typically, FPI contracts link contractor profit to achieving specific performance targets, cost goals, or delivery schedules. For instrumentation manufacturing, these KPIs could include metrics such as on-time delivery rates, product reliability (e.g., Mean Time Between Failures - MTBF), adherence to technical specifications, defect rates, or successful integration testing. The incentive aspect means that exceeding targets might yield higher profits for the contractor, while failing to meet them could reduce profits or even incur penalties, depending on the contract's precise terms and conditions.

What is Northrop Grumman's track record with similar defense instrumentation contracts?

Northrop Grumman Systems Corporation has a long and extensive track record as a major defense contractor, involved in numerous complex manufacturing and technology programs for the U.S. military and allied nations. While specific details on their performance for this particular $24.3 million contract are not provided, the company is known for its capabilities in areas such as aerospace, defense electronics, and information systems. Their history includes delivering sophisticated systems and components, often under challenging technical requirements and stringent oversight. Past performance evaluations, available through government contracting databases (like the Contractor Performance Assessment Reporting System - CPARS), would offer a more granular view of their success rates, quality of work, and adherence to schedule and budget on similar projects.

What are the potential risks associated with the long duration (over 15 years) of this contract?

The primary risks associated with a contract spanning over 15 years, like this one for electrical signal instruments, include technological obsolescence, potential for cost escalation beyond initial estimates (despite FPI structure), and contractor performance degradation over time. Technology evolves rapidly, and instruments designed in the mid-2000s might become outdated or unsupported by the end of the contract term (2019). While the FPI aims to control costs, unforeseen technical challenges or changes in material costs over such a long period can still impact the final price. Additionally, maintaining consistent quality and performance from a contractor over an extended period requires ongoing diligent oversight from the contracting agency.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals

Product/Service Code: ELECTRIC WIRE, POWER DISTRIB EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: ES POWER CONTROL SYSTEMS -, SYKESVILLE, MD, 21784

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline