Naval Sea Systems Command awards $943.8M contract to Northrop Grumman for advanced technology development

Contract Overview

Contract Amount: $11,111,917 ($11.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2005-12-08

End Date: 2012-09-30

Contract Duration: 2,488 days

Daily Burn Rate: $4.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200605!061388!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C4202 !A!N! !N! ! !20051208!20081208!943821108!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!401 E HENDY AVE MS 33-3 !SUNNYVALE !CA!94086!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!+000000100000!N!N!000000000000!AZ13!RDTE/OTHER RESEARCH & DEVELOPMENT-ADV TECH DEV !S1 !SERVICES !000 !NOT DISCERNABLE !333611!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!U!2!002!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!Y! ! ! ! !1700!N00024!0001! !

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94088

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $11.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200605!061388!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C4202 !A!N! !N! ! !20051208!20081208!943821108!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!401 E HENDY AVE MS 33-3 !SUNNYVALE !CA!94086!77000!085!06!SUNNYVALE !SANT… Key points: 1. Contract awarded for research, development, testing, and evaluation (RDT&E) of advanced technologies. 2. Significant portion allocated to research and development, indicating investment in future capabilities. 3. Long contract duration of over 8 years suggests a complex, multi-phase project. 4. Awarded to a single, large defense contractor, potentially limiting broader industry innovation. 5. The contract's value places it among substantial RDT&E investments within the defense sector. 6. Focus on turbine technology development aligns with naval propulsion modernization efforts.

Value Assessment

Rating: fair

The contract value of $943.8 million for advanced technology development is substantial. Benchmarking this against similar RDT&E contracts is challenging due to the specific nature of 'advanced technology development.' However, the cost-plus-fixed-fee (CPFF) pricing structure can sometimes lead to cost overruns if not managed tightly. The long duration and the nature of R&D make direct value-for-money assessment difficult without more granular performance data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bids suggests a competitive environment, though the specifics of the competition (e.g., proposal quality, evaluation criteria) are not detailed here. A competitive process is generally expected to yield better pricing and innovation.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to vie for the contract, potentially driving down costs and improving the quality of the offered solutions.

Public Impact

The primary beneficiary is the U.S. Navy, which will receive advanced technological capabilities for its fleet. Services delivered include research, development, testing, and evaluation of advanced turbine technologies. The geographic impact is primarily within the United States, with Northrop Grumman's facility in Sunnyvale, CA, likely being a key location. Workforce implications include employment for highly skilled engineers, scientists, and technicians involved in R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to increase costs to maximize profit if not carefully monitored.
The long duration of the contract increases the risk of scope creep or evolving technological requirements.
Reliance on a single large contractor for critical R&D may limit future flexibility and innovation from smaller firms.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Northrop Grumman is a major defense contractor with a proven track record in complex systems development.
The contract focuses on RDT&E, indicating a commitment to advancing naval technology and maintaining a technological edge.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on advanced technology development for naval applications. The market for defense R&D is characterized by long development cycles, high costs, and significant government oversight. Comparable spending benchmarks would typically involve other large-scale RDT&E contracts awarded by the Department of Defense for next-generation platforms and systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as Northrop Grumman Systems Corporation is a large business. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The focus on advanced R&D by a prime large contractor may limit direct opportunities for small businesses unless they are part of Northrop Grumman's supply chain or R&D ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Naval Sea Systems Command (NAVSEA) and the Department of Defense's acquisition and RDT&E oversight bodies. Accountability measures would be tied to contract milestones, performance metrics, and adherence to the cost-plus-fixed-fee structure. Transparency is generally maintained through contract award databases and reporting requirements, though detailed R&D progress is often sensitive.

Related Government Programs

Naval Ship Systems Development
Advanced Propulsion Technology Research
Defense Research and Development Programs
Naval Aviation Technology Development
Advanced Manufacturing Technologies

Risk Flags

Potential for cost overruns due to CPFF structure.
Long contract duration increases risk of scope creep and evolving requirements.
Concentration of R&D work with a single large contractor.
Technical feasibility and performance risks inherent in advanced development.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200605!061388!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C4202 !A!N! !N! ! !20051208!20081208!943821108!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!401 E HENDY AVE MS 33-3 !SUNNYVALE !CA!94086!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!+000000100000!N!N!000000000000!AZ13!RDTE/OTHER RESEARCH & DEVELOPMENT-ADV TECH DEV !S1 !SERVICES !000 !NOT DISCERNABLE !333611!E! !3! ! ! ! ! !999

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 $11.1 million.

What is the period of performance?

Start: 2005-12-08. End: 2012-09-30.

What is Northrop Grumman's track record with similar Naval Sea Systems Command contracts?

Northrop Grumman Systems Corporation has a long and extensive history of contracting with the Naval Sea Systems Command (NAVSEA) and the broader Department of Defense. They are a major defense contractor involved in a wide array of programs, including shipbuilding, aircraft, and advanced systems development. Their track record typically includes large, complex RDT&E efforts, as well as production contracts. While specific performance metrics for past NAVSEA contracts are not detailed here, their sustained position as a prime contractor indicates a generally positive history of meeting technical requirements and managing large-scale projects, though like any large contractor, they may have faced challenges or scrutiny on specific programs.

How does the $943.8 million value compare to other advanced technology development contracts?

The $943.8 million contract value is substantial and falls within the upper tier of RDT&E awards. For context, major defense R&D programs, such as those for new aircraft platforms, missile systems, or advanced naval vessels, can range from hundreds of millions to billions of dollars. This specific contract's value suggests a significant investment in a particular area of advanced technology, likely related to propulsion or power systems given the mention of turbines. It is comparable to other large-scale, multi-year research initiatives aimed at achieving a technological leap rather than incremental improvements.

What are the primary risks associated with this type of RDT&E contract?

The primary risks associated with this Cost Plus Fixed Fee (CPFF) RDT&E contract include technical risk (the technology may not be developed as envisioned or may prove infeasible), cost risk (R&D is inherently uncertain, and costs could exceed projections despite the fixed fee element, impacting the contractor's profit), schedule risk (development timelines can slip due to unforeseen technical challenges), and program management risk (ensuring effective oversight and alignment with evolving naval requirements over a long period). There's also a risk of obsolescence if the technology developed is surpassed by emerging alternatives before deployment.

How effective is the CPFF contract type for advanced technology development?

The Cost Plus Fixed Fee (CPFF) contract type is often used for RDT&E efforts where the scope of work is not precisely defined at the outset, and innovation is paramount. It allows the contractor to incur allowable costs while earning a predetermined fixed fee. This structure incentivizes the contractor to control costs to maximize their profit margin, as the fee remains constant regardless of the final cost. However, it can also lead to less aggressive cost control compared to fixed-price contracts if not managed diligently, and requires robust government oversight to ensure costs are reasonable and allocable to the contract objectives.

What is the historical spending trend for turbine technology development within the Navy?

Historical spending trends for turbine technology development within the Navy have generally shown consistent investment, driven by the need for more efficient, powerful, and reliable propulsion systems for surface ships and submarines. This includes research into advanced gas turbines, hybrid systems, and potentially next-generation power generation technologies. While specific figures fluctuate year-to-year based on program priorities and budget allocations, the Navy has historically allocated significant portions of its RDT&E budget towards improving naval power and propulsion, recognizing its critical role in operational capability and platform performance.

What does the presence of only two bidders imply about the competition for this contract?

The fact that this contract, despite being awarded under full and open competition, resulted in only two bids suggests that the market for this specific type of advanced technology development may be concentrated among a few highly specialized and capable large defense contractors. This could be due to the complexity of the required technology, the significant R&D investment needed to prepare a competitive proposal, or the specific requirements of the solicitation. While two bidders still represent competition, it is less robust than if numerous firms had participated, potentially limiting the downward pressure on price and the breadth of innovative solutions considered.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Turbine and Turbine Generator Set Units Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 401 E HENDY AVE MS 33-3, SUNNYVALE, CA, 94086

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline