Northrop Grumman awarded $27.5M contract for Navy ECDIS software, highlighting IT modernization needs

Contract Overview

Contract Amount: $27,459,148 ($27.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2018-09-07

End Date: 2026-03-09

Contract Duration: 2,740 days

Daily Burn Rate: $10.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: NAVY ECDIS SW 1.0 PRODUCTION BUILD

Place of Performance

Location: CHARLOTTESVILLE, ALBEMARLE County, VIRGINIA, 22901

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $27.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NAVY ECDIS SW 1.0 PRODUCTION BUILD Key points: 1. Contract value of $27.5M over nearly 8 years suggests a significant investment in naval IT infrastructure. 2. The award to a single large contractor, Northrop Grumman, indicates a focus on established capabilities for complex systems. 3. The 'Cost Plus Incentive Fee' pricing structure implies shared risk and reward, aiming to control costs while ensuring performance. 4. This contract falls under Computer Systems Design Services, a broad category essential for modern defense operations. 5. The long duration of the contract (2740 days) points to the ongoing and evolving nature of the ECDIS software requirements. 6. The absence of small business set-aside flags suggests the scope or nature of the work may not have been suitable for smaller firms.

Value Assessment

Rating: good

The $27.5 million contract for ECDIS software development and production over approximately 7.5 years represents a substantial investment. Benchmarking this against similar large-scale software development contracts within the Department of Defense is challenging without more specific details on the scope and complexity of the ECDIS system. However, the Cost Plus Incentive Fee (CPIF) structure suggests an effort to manage costs effectively by incentivizing the contractor to meet performance targets within budgetary constraints. The pricing appears to be in line with the significant resources required for developing and maintaining sophisticated defense IT systems.

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 were likely solicited. The presence of 5 bids suggests a competitive environment, which is generally favorable for price discovery and innovation. However, the specific details of the competition, such as the number of proposals received and the evaluation criteria, are not provided. A competitive process for a complex IT system like ECDIS is crucial for ensuring the Navy receives the best value and a robust solution.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, potentially driving down costs and improving the quality of the final product. This process helps ensure that government funds are used efficiently by selecting the most capable and cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will utilize the ECDIS software for navigation and operational planning. The contract delivers essential software production and development services, crucial for maintaining and enhancing naval operational capabilities. The geographic impact is primarily within the Department of the Navy's operational theaters and shore commands. Workforce implications include employment for software developers, engineers, and project managers within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Incentive Fee contracts if performance targets are not met efficiently.
Long contract duration could lead to scope creep or require significant adaptation to evolving technological landscapes.
Reliance on a single large contractor may limit future flexibility or competition for subsequent phases or upgrades.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The CPIF structure incentivizes contractor performance and cost control.
The contract is with a well-established defense contractor with a track record in complex systems integration.
The long duration allows for sustained development and support of a critical system.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on software development and systems design for defense applications. The market for defense IT is characterized by large, complex contracts often awarded to major defense contractors. Spending in this area is driven by the need for advanced technological capabilities to maintain military superiority. Comparable spending benchmarks would involve other large-scale software development contracts for command, control, communications, computers, and intelligence (C4I) systems within the DoD.

Small Business Impact

The contract data indicates that this was not set aside for small businesses (SB is false). The prime contractor, Northrop Grumman, is a large corporation. While there is no explicit information on subcontracting plans for small businesses, large defense contracts often include provisions for small business participation. The absence of a small business set-aside suggests the primary contract requirements were likely beyond the typical scope or capabilities of small businesses, or that the competition was structured to favor larger, more integrated solutions.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. The Cost Plus Incentive Fee structure necessitates close monitoring of performance metrics and cost expenditures to ensure the incentive goals are met and taxpayer funds are used efficiently. Transparency is generally maintained through contract reporting requirements. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse, with the DoD IG overseeing such investigations.

Related Government Programs

Navy Tactical Software Development
Defense Command and Control Systems
Naval Navigation Systems
DoD IT Modernization Programs
Electronic Chart Display and Information Systems (ECDIS)

Risk Flags

Long contract duration may increase risk of scope creep or obsolescence.
Cost Plus Incentive Fee structure requires diligent oversight to manage costs effectively.
Reliance on a single large contractor could limit future market flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. NAVY ECDIS SW 1.0 PRODUCTION BUILD

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 $27.5 million.

What is the period of performance?

Start: 2018-09-07. End: 2026-03-09.

What is the historical spending trend for ECDIS software within the Department of the Navy?

Analyzing historical spending on ECDIS software within the Department of the Navy requires access to detailed procurement data over multiple fiscal years. Without specific historical figures for this contract or similar ECDIS-related procurements, it's difficult to establish a precise trend. However, the award of a significant, multi-year contract like this ($27.5M over ~7.5 years) suggests a sustained and potentially increasing investment in this capability. Factors driving such spending likely include the need to modernize aging systems, comply with international maritime regulations (like those mandating ECDIS), and enhance operational efficiency and safety for naval vessels. Future spending will likely depend on technological advancements, evolving operational requirements, and the overall defense budget.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact contractor performance and cost control for IT development contracts?

The Cost Plus Incentive Fee (CPIF) contract type is designed to share risks and rewards between the government and the contractor, particularly for research and development or complex IT projects where precise cost and performance outcomes are uncertain at the outset. In a CPIF arrangement, the final fee (profit) is adjusted based on the contractor's performance against pre-defined targets, such as cost, schedule, or technical performance. If the contractor achieves or exceeds these targets, they earn a higher fee; if they fall short, the fee is reduced. This structure incentivizes the contractor to manage costs diligently and meet performance objectives, as their profit is directly linked to successful outcomes. For IT development, this can encourage innovation and efficiency, but it also requires robust government oversight to ensure targets are realistic and appropriately monitored to prevent potential manipulation or excessive cost escalation.

What are the key performance indicators (KPIs) likely being used to evaluate Northrop Grumman's performance under this ECDIS software contract?

For a complex IT development and production contract like the Navy's ECDIS software, key performance indicators (KPIs) would likely focus on several critical areas. These would include technical performance, such as the software meeting specified functional requirements, reliability, and performance benchmarks (e.g., processing speed, uptime). Schedule adherence, measured by milestones met and overall delivery timelines, is crucial. Cost control, especially within the CPIF framework, would be monitored closely against projected expenditures and targets. Additionally, quality assurance metrics, such as defect rates, successful testing outcomes, and adherence to security protocols, would be vital. User feedback and operational effectiveness in simulated or real-world naval environments could also serve as important performance indicators.

What is Northrop Grumman's track record with similar large-scale IT development contracts for the Department of Defense?

Northrop Grumman is a major defense contractor with extensive experience in developing and integrating complex IT systems for the Department of Defense and other government agencies. They have a significant track record in areas such as command and control systems, intelligence, surveillance, and reconnaissance (ISR) platforms, and cybersecurity solutions. While specific details on their past performance for ECDIS software are not provided in this data, their history includes large, multi-year programs requiring sophisticated software engineering, systems integration, and lifecycle support. Their experience suggests a capability to handle the technical challenges and program management demands associated with this type of contract. However, as with any large contractor, performance can vary across different programs, and a detailed review of past performance specific to similar systems would be necessary for a comprehensive assessment.

How does the $27.5M contract value compare to the overall IT spending of the Department of the Navy?

The $27.5 million contract value for the Navy's ECDIS software represents a specific investment within the broader IT budget of the Department of the Navy. The DoD, and by extension the Navy, allocates tens of billions of dollars annually to IT modernization, cybersecurity, and C4ISR systems. Therefore, this $27.5 million contract, while substantial for a single software project, is a relatively small fraction of the Navy's total IT expenditure. It signifies a focused investment in a critical navigation and operational software capability. To contextualize further, one would need to compare it against the Navy's annual IT budget, which typically runs into the tens of billions, and potentially benchmark it against other similar software development contracts awarded within the same fiscal year or across different naval commands.

What are the potential risks associated with a sole-source or limited competition award for advanced defense software?

This contract was awarded under 'Full and Open Competition,' not sole-source or limited competition. Therefore, the risks typically associated with limited competition, such as potentially higher prices due to reduced market pressure, less innovation, and a narrower pool of technical solutions, do not directly apply here. The 'Full and Open Competition' award suggests that multiple bidders were considered, which inherently mitigates many of these risks. The primary risks for this specific contract, as noted in the 'Wi' section, relate more to the inherent complexities of large IT development projects: potential cost overruns (even with CPIF), schedule delays, scope creep over the long duration, and the need for continuous adaptation to evolving technology and threats. The choice of a large, established contractor like Northrop Grumman also implies a reliance on their specific expertise and systems, which could pose integration challenges or limit future flexibility if not managed carefully.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002417R5216

Offers Received: 5

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: $31,287,299

Exercised Options: $31,287,299

Current Obligation: $27,459,148

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $284,673

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline