Northrop Grumman awarded $31.2M contract for FY19 Design Agent Services by the Department of the Navy

Contract Overview

Contract Amount: $31,215,107 ($31.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-05-31

End Date: 2024-09-30

Contract Duration: 1,949 days

Daily Burn Rate: $16.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DESIGN AGENT SERVICES FOR FY19

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $31.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DESIGN AGENT SERVICES FOR FY19 Key points: 1. The contract value of $31.2 million represents a significant investment in specialized design agent services. 2. Competition dynamics for this contract appear robust, with three bidders vying for the award. 3. The use of a Cost Plus Fixed Fee (CPFF) pricing structure warrants scrutiny for potential cost overruns. 4. This contract supports critical navigation and guidance systems, aligning with the Navy's strategic objectives. 5. The duration of the contract, spanning over 1900 days, suggests a long-term need for these services. 6. The contractor, Northrop Grumman, is a major defense industry player with extensive experience in related systems.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable service contracts. The Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D, can lead to costs exceeding initial estimates if not managed tightly. The fixed fee component provides some cost control, but the overall value will depend on the efficiency of Northrop Grumman's execution and the final negotiated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of three bidders suggests a healthy level of competition for this specialized service. This competitive environment likely contributed to achieving a reasonable price, although the CPFF structure means the final cost is subject to actual expenses incurred.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for the government. The open competition increases the likelihood that the awarded price reflects market rates for these specialized design agent services.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives critical design agent services for its systems. Services delivered include design, development, and potentially testing support for search, detection, navigation, guidance, and related systems. The geographic impact is likely concentrated around Navy facilities and contractor sites involved in system development, primarily in Maryland. Workforce implications include employment opportunities for engineers, designers, and technical specialists within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type introduces inherent risk of cost escalation if not meticulously monitored.
The long contract duration (1949 days) necessitates sustained oversight to ensure continued relevance and efficiency.
Lack of specific performance metrics in the provided data makes it difficult to assess the contractor's efficiency beyond cost.
The specialized nature of the services could limit the pool of qualified contractors in future procurements, potentially impacting competition.
The contract's focus on design agent services might not directly translate to end-user system performance without further integration and testing phases.

Positive Signals

Awarded through full and open competition, ensuring a broad range of potential bidders.
The contractor, Northrop Grumman, possesses significant experience in defense systems, suggesting technical capability.
The fixed fee component within the CPFF structure provides a degree of cost predictability.
The contract supports critical Navy functions related to navigation and guidance systems.
The contract is managed by the Department of the Navy, a major defense procurement entity with established oversight processes.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing and integration of complex navigation and guidance systems. The North American Industry Classification System (NAICS) code 334511 covers 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Comparable spending benchmarks would involve other contracts for system design, engineering services, and specialized component manufacturing within the defense industry.

Small Business Impact

The provided data indicates that small business participation (sb) is false and there is no specific small business set-aside (ss) mentioned for this contract. This suggests that the primary award went to a large business, Northrop Grumman. There is no information on subcontracting plans for small businesses. This contract may not directly benefit the small business ecosystem unless Northrop Grumman actively engages small businesses as subcontractors for specialized components or services.

Oversight & Accountability

Oversight for this contract is primarily the responsibility of the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including reporting requirements, milestones, and the CPFF structure which links payment to incurred costs. Transparency is facilitated through contract awards databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Naval Air Systems Command (NAVAIR) contracts
Defense Advanced Research Projects Agency (DARPA) programs
Navigation and Guidance System Development
Aerospace Engineering Services
Department of Defense Research and Development

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires diligent oversight to manage potential cost overruns.
Long contract duration necessitates sustained monitoring for efficiency and relevance.
Lack of specific performance metrics makes objective value assessment difficult.
Specialized nature of services may limit future competition.
Potential for scope creep if requirements are not tightly controlled.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DESIGN AGENT SERVICES FOR FY19

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 $31.2 million.

What is the period of performance?

Start: 2019-05-31. End: 2024-09-30.

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

Northrop Grumman has a long history of executing complex defense contracts, many of which utilize CPFF or similar cost-reimbursement structures. Analyzing their past performance on CPFF contracts would involve reviewing contract close-out data, any incurred cost audits, and performance reviews. Generally, large defense contractors like Northrop Grumman have established systems for managing CPFF awards, but specific instances of cost overruns or efficiencies would require a deeper dive into individual contract histories. Their extensive experience suggests a capability to manage the complexities inherent in such agreements, but vigilance in oversight remains crucial to ensure value for taxpayer dollars.

How does the $31.2 million contract value compare to other Design Agent Services contracts awarded by the Navy or DoD?

Without access to a comprehensive database of 'Design Agent Services' contracts specifically, a direct comparison is difficult. However, $31.2 million for a definitive contract spanning nearly five years (1949 days) suggests a substantial, long-term requirement. The value is consistent with contracts for specialized engineering, system design, and integration support within the defense sector, particularly for complex systems like navigation and guidance. The amount reflects the specialized expertise and resources required, and it is likely within the typical range for such critical support functions for major defense platforms.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this specific procurement?

The primary risk with a CPFF contract is the potential for cost escalation beyond the government's initial expectations, as the contractor is reimbursed for allowable costs. While the fixed fee provides a ceiling for the contractor's profit, the base cost is variable. For this 'Design Agent Services' contract, risks include unforeseen technical challenges during the design phase, scope creep if requirements are not tightly managed, and potential inefficiencies in contractor performance that drive up costs. Effective oversight by the Department of the Navy is critical to monitor incurred costs, ensure compliance with contract terms, and validate the necessity of all expenditures to mitigate these risks.

How effective is the 'full and open competition' strategy in ensuring the best value for these specialized design services?

The 'full and open competition' strategy is generally considered the most effective method for ensuring best value, as it maximizes the pool of potential offerors and fosters price competition. In this case, having three bidders suggests that the market was sufficiently competitive for these specialized design agent services. This process allows the government to solicit proposals based on technical merit and price, selecting the offer that provides the optimal balance. While the CPFF structure introduces cost uncertainty, the competitive award process itself is a strong indicator that the government sought to secure favorable terms and capabilities from the outset.

What is the historical spending trend for 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) by the Department of the Navy?

Historical spending data for NAICS code 334511 by the Department of the Navy would reveal the overall investment in this manufacturing subsector. Typically, spending in this area is substantial, driven by the need for advanced technology in naval operations, including radar, sonar, inertial navigation systems, GPS, and flight control systems. Trends would likely show consistent or increasing investment, reflecting the ongoing modernization of naval assets and the critical role these systems play. Fluctuations might correlate with specific platform procurements or upgrades, and major defense contractors like Northrop Grumman are consistently significant recipients of such funding.

Are there any specific performance metrics or Key Performance Indicators (KPIs) associated with this contract that are publicly available?

The provided data does not include specific performance metrics or Key Performance Indicators (KPIs) for this contract. Typically, such details are outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). For a design agent services contract, KPIs might relate to design completion timelines, adherence to technical specifications, number of design revisions required, or successful integration testing support. The absence of publicly available KPIs makes it challenging to quantitatively assess the contractor's performance and the overall effectiveness of the services rendered beyond the financial aspects.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002418R5308

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580B W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090

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: $34,913,911

Exercised Options: $34,913,911

Current Obligation: $31,215,107

Actual Outlays: $3,399,377

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $47,590

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline