Northrop Grumman awarded $46.4M contract for ISM DESIGN (PDR) by the Department of the Navy

Contract Overview

Contract Amount: $46,386,250 ($46.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2015-11-30

End Date: 2026-03-31

Contract Duration: 3,774 days

Daily Burn Rate: $12.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ISM DESIGN (PDR)

Place of Performance

Location: CHARLOTTESVILLE, ALBEMARLE County, VIRGINIA, 22901

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $46.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ISM DESIGN (PDR) Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Incentive Fee (CPIF), which can incentivize cost control but also carries inherent risk. 3. The contract duration is substantial at 3774 days, indicating a long-term need for these services. 4. The base award amount is $46.4 million, with potential for adjustments based on incentive clauses. 5. The contractor, Northrop Grumman Systems Corporation, is a major defense contractor with extensive experience. 6. The North American Industry Classification System (NAICS) code 334511 points to the manufacturing of search, detection, navigation, guidance, aeronautical, and nautical systems. 7. The contract is managed by the Department of the Navy, a significant component of the Department of Defense.

Value Assessment

Rating: fair

The contract's value of $46.4 million over nearly 10 years requires careful benchmarking against similar system design and development contracts. As a Cost Plus Incentive Fee (CPIF) contract, the final cost is subject to performance incentives, making a direct comparison difficult without knowing the achieved incentives. The base award suggests a significant investment in specialized system design, but the ultimate value for money will depend on the contractor's ability to meet performance targets efficiently and the actual final cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a degree of competition, though the specific details of the bidding process and the nature of the proposals are not provided. A competitive process is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a more competitive environment, which can lead to lower prices and better value for the government's investment.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense requiring advanced search, detection, navigation, guidance, and related systems. The contract delivers services related to the design and development of sophisticated systems crucial for military operations. The geographic impact is likely concentrated around the contractor's facilities and the operational areas where these systems will be deployed, primarily within the United States. This contract supports a highly specialized segment of the defense industrial workforce, including engineers, designers, and technical specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee (CPIF) contracts can lead to cost overruns if not managed rigorously, as the contractor is reimbursed for costs plus a fee that can increase with performance.
The long duration of the contract (over 10 years) increases the risk of scope creep, changing technological requirements, and potential inefficiencies over time.
The lack of specific details on the 'ISM DESIGN (PDR)' makes it difficult to assess the technical complexity and associated risks.
The base award amount is substantial, and without clear performance metrics, it's challenging to gauge the efficiency of spending.
The contract is a definitive contract, which implies a commitment to a specific set of terms and conditions, potentially limiting flexibility if circumstances change significantly.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process and potential for competitive pricing.
The contractor, Northrop Grumman, is a well-established defense industry leader with a proven track record in complex systems development.
The contract is managed by the Department of the Navy, an experienced agency in procuring advanced defense technologies.
The CPIF structure, while carrying risks, is designed to incentivize the contractor to meet specific performance objectives.
The NAICS code indicates a focus on critical defense systems, aligning with national security priorities.

Sector Analysis

This contract falls within the defense electronics and systems manufacturing sector, specifically related to navigation and guidance systems. The market for such specialized defense components is dominated by a few large, established aerospace and defense contractors. Spending in this sector is driven by evolving military requirements, technological advancements, and geopolitical factors. Comparable spending benchmarks would involve analyzing other contracts for similar system design and development efforts within the Department of Defense and other allied nations.

Small Business Impact

The data indicates that small business participation (SB/SDB) is not a primary focus of this specific contract, as 'ss' and 'sb' are listed as false. This suggests that the prime contract is not set aside for small businesses, and there is no explicit indication of mandatory subcontracting goals for small businesses within the provided data. While large prime contractors often engage small businesses as subcontractors, the absence of specific set-aside provisions means that direct opportunities for small businesses to compete for the prime contract are limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Incentive Fee (CPIF) contract, rigorous financial and performance oversight is crucial to ensure costs are reasonable and performance targets are met. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, and abuse. Transparency is typically managed through contract reporting mechanisms and public contract databases, though detailed operational specifics may remain classified or proprietary.

Related Government Programs

Defense System Development Contracts
Naval Aviation Systems Procurement
Search and Detection Systems
Guidance and Navigation Technology
Aerospace Manufacturing Contracts

Risk Flags

Potential for cost overruns due to CPIF structure.
Long contract duration may lead to scope creep or obsolescence.
Lack of specific technical details for 'ISM DESIGN (PDR)' hinders risk assessment.
Limited visibility into competition dynamics beyond the number of bidders.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ISM DESIGN (PDR)

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 $46.4 million.

What is the period of performance?

Start: 2015-11-30. End: 2026-03-31.

What is the historical spending pattern for ISM DESIGN (PDR) or similar systems by the Department of the Navy?

Analyzing historical spending for 'ISM DESIGN (PDR)' specifically is challenging without a more precise contract or program identifier. However, the Department of the Navy consistently invests heavily in advanced systems for search, detection, navigation, and guidance. Over the past decade, spending in these categories has fluctuated based on modernization priorities and geopolitical needs. For instance, investments in electronic warfare, radar systems, and integrated navigation suites have been significant. The base award of $46.4 million for this contract suggests a substantial, multi-year commitment, aligning with the typical lifecycle costs for developing and refining complex defense technologies. Without access to detailed historical contract databases filtered by specific system types or program names, a precise historical spending pattern for this exact 'ISM DESIGN (PDR)' cannot be definitively established, but it falls within a category of significant and ongoing defense expenditure.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact final contract costs compared to other contract types?

The Cost Plus Incentive Fee (CPIF) contract type aims to balance cost control with performance achievement. In a CPIF contract, the final negotiated price is based on the actual allowable costs incurred by the contractor plus a fee that is adjusted based on whether the contractor meets or exceeds targets for cost, schedule, and performance. If the contractor performs better than the target, they receive a higher fee (up to a ceiling), and if they perform worse, their fee is reduced (down to a floor). This structure incentivizes the contractor to be efficient and meet objectives. Compared to a firm-fixed-price contract, CPIF generally results in higher final costs for the government because the contractor is reimbursed for all allowable costs, and the fee is variable. However, it is often used when the scope of work is not well-defined or involves high technical risk, where fixed-price contracts would be too risky for the contractor, leading to excessively high initial bids. Compared to Cost Plus Fixed Fee (CPFF), CPIF offers a stronger incentive for cost savings and performance improvements.

What are the key performance indicators (KPIs) likely associated with this ISM DESIGN (PDR) contract?

For a contract focused on 'ISM DESIGN (PDR)' (likely Preliminary Design Review), key performance indicators (KPIs) would typically revolve around the successful completion of design milestones, adherence to technical specifications, and timely delivery of design documentation. Specific KPIs could include: 1. Completion of the Preliminary Design Review (PDR) by a specified date. 2. Meeting all technical requirements outlined in the system's Statement of Work (SOW). 3. Accuracy and completeness of design documentation, including drawings, schematics, and reports. 4. Performance of simulations or analyses to validate design concepts. 5. Adherence to budget constraints for the design phase. 6. Successful integration planning for subsequent development phases. 7. Compliance with relevant military standards and regulations. The incentive portion of the CPIF contract would likely tie the fee to the achievement of these or similar critical performance metrics.

What is Northrop Grumman's track record with Cost Plus Incentive Fee (CPIF) contracts within the Department of Defense?

Northrop Grumman Systems Corporation, as a major defense contractor, has extensive experience with various contract types, including Cost Plus Incentive Fee (CPIF) contracts, across numerous programs within the Department of Defense (DoD). Analyzing their specific track record with CPIF contracts would require a deep dive into historical contract awards and performance data. Generally, large contractors like Northrop Grumman are adept at managing the complexities of CPIF agreements. Their success often depends on the specific program's technical challenges, the clarity of performance metrics, and the effectiveness of government oversight. While CPIF contracts inherently carry risks of cost growth if not managed diligently, Northrop Grumman's long-standing presence and significant role in defense systems development suggest they have a substantial history of successfully navigating these structures, delivering complex systems while managing performance incentives.

How does the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing) relate to the 'ISM DESIGN (PDR)' contract?

The NAICS code 334511 directly classifies the industry sector relevant to the 'ISM DESIGN (PDR)' contract. This code encompasses establishments primarily engaged in manufacturing instruments and related equipment for detecting, measuring, and controlling or displaying the results of such activities. This includes a wide range of systems such as radar, sonar, navigation systems (GPS, inertial), guidance systems for missiles and aircraft, and related components. Therefore, a contract for 'ISM DESIGN (PDR)' within this code signifies that the work involves the conceptualization and preliminary design of such sophisticated systems. The 'PDR' (Preliminary Design Review) stage is a critical milestone in the engineering process, where the feasibility and basic design of the system are evaluated before proceeding to more detailed design and development phases.

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: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002415R5226

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1070 SEMINOLE TRAIL, CHARLOTTESVILLE, VA, 22901

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: $53,708,750

Exercised Options: $46,901,442

Current Obligation: $46,386,250

Subaward Activity

Number of Subawards: 508

Total Subaward Amount: $37,939,606

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline