DoD's $87M engineering services contract to Northrop Grumman spanned 9 years, ending in 2010

Contract Overview

Contract Amount: $87,056,018 ($87.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2001-08-16

End Date: 2010-09-15

Contract Duration: 3,317 days

Daily Burn Rate: $26.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94086

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $87.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract awarded for engineering services, indicating a need for specialized technical expertise. 2. Long duration of 9 years suggests a sustained requirement for the services provided. 3. Cost-plus incentive contract type implies performance targets and potential for shared savings or overruns. 4. Sole-source award raises questions about competition and potential for higher pricing. 5. Contractor has a significant history with the Department of Defense. 6. Services provided under NAICS code 541330 (Engineering Services) are critical for defense operations.

Value Assessment

Rating: fair

The total award amount of $87 million over nine years averages to approximately $9.67 million per year. Without specific performance metrics or comparable contracts for similar engineering services within the DoD, a precise value-for-money assessment is challenging. The cost-plus incentive fee structure suggests an attempt to align contractor incentives with government objectives, but the lack of competition could have led to less favorable pricing than a fully competed contract might have achieved. Benchmarking this against other large-scale engineering support contracts within the defense sector would be necessary for a more definitive evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when only one responsible source is available or when there is a compelling justification for not seeking competition. The lack of multiple bidders limits the government's ability to leverage competitive pressures to drive down costs and ensure the best possible value. It suggests that either Northrop Grumman was uniquely qualified or that the circumstances of the requirement did not allow for a broader solicitation.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the government does not benefit from competitive bidding. This contract's value of $87 million represents a significant expenditure without the assurance of competitive pricing.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its complex operations and systems. This contract likely supported the development, maintenance, or enhancement of critical defense technologies or infrastructure. The geographic impact is primarily within California, where the contractor is located, but the services likely support national defense objectives. The contract may have implications for a specialized engineering workforce, potentially creating or sustaining high-skilled jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Long contract duration without clear performance benchmarks makes ongoing value assessment difficult.
Cost-plus incentive fee contracts can sometimes lead to cost overruns if not managed tightly.

Positive Signals

Contract awarded to a large, established defense contractor with significant experience.
The contract type (cost-plus incentive) aims to align contractor performance with government goals.
The sustained nature of the contract suggests a critical and ongoing need for these engineering services.

Sector Analysis

Engineering services are a vital component of the defense industrial base, encompassing a wide range of activities from research and development to system integration and lifecycle support. The market for defense engineering services is substantial, with significant spending allocated annually by agencies like the Department of Defense. This contract fits within the broader category of professional services supporting defense acquisition and sustainment. Comparable spending benchmarks would involve looking at other large, long-term engineering support contracts awarded to major defense contractors.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Northrop Grumman engaged in significant small business subcontracting, which is not specified here. The focus appears to be on securing specialized engineering capabilities from a large, established entity.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA) given the contract's nature and duration. Accountability measures would be tied to the terms of the Cost Plus Incentive Fee (CPIF) contract, focusing on performance against defined objectives and cost controls. Transparency is limited due to the sole-source nature and the historical context of the award; detailed oversight reports are not publicly available.

Related Government Programs

Defense Engineering Services
Northrop Grumman Defense Contracts
Cost-Plus Incentive Fee Contracts
Department of Defense Professional Services

Risk Flags

Sole-source award
Long contract duration
Cost-plus contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $87.1 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 $87.1 million.

What is the period of performance?

Start: 2001-08-16. End: 2010-09-15.

What specific engineering services were provided under this contract, and how did they contribute to DoD's mission?

The contract, NAICS code 541330, specifies 'Engineering Services.' While the exact nature of these services is not detailed in the provided data, they likely encompassed a broad spectrum of technical support critical to the Department of Defense's operations. This could include areas such as systems engineering, design, analysis, testing, integration, and lifecycle support for various defense platforms, weapons systems, or infrastructure. The long duration (9 years) suggests these services were essential for ongoing programs or sustained operational requirements, contributing to the overall readiness, modernization, or sustainment of defense capabilities. Without more specific task orders or project descriptions, the precise contribution remains generalized but is understood to be within the technical domain supporting military objectives.

How does the $87 million award value compare to similar engineering services contracts within the DoD during that period?

Benchmarking the $87 million award value requires comparing it to similar engineering services contracts awarded by the DoD between 2001 and 2010. This contract, spanning nine years, represents an average annual value of approximately $9.67 million. To assess its relative value, one would need to identify contracts with similar scope, duration, and complexity, particularly those awarded on a sole-source or limited-competition basis versus fully competed ones. Given the significant scale and duration, $87 million is a substantial sum, but its 'fairness' as a value is contingent on the specific technical requirements, the criticality of the services, and the prevailing market rates for specialized engineering expertise within the defense sector during that era. A comprehensive analysis would involve examining contract databases for comparable awards to gauge if this represented a typical, high, or low expenditure for such services.

What were the key performance indicators (KPIs) or milestones associated with the Cost Plus Incentive Fee (CPIF) structure?

The provided data indicates the contract type was 'COST PLUS INCENTIVE,' suggesting a CPIF structure. In a CPIF contract, the final profit is determined by the relationship between the final costs and the target costs, with incentives for the contractor to perform efficiently. Key performance indicators (KPIs) and milestones would have been defined in the contract's Statement of Work (SOW) and Performance Requirements. These could have included metrics related to technical performance (e.g., system reliability, accuracy), schedule adherence (e.g., meeting project deadlines), cost control (e.g., staying within budget targets), or specific deliverable quality standards. The 'incentive' aspect means that achieving or exceeding these KPIs would result in a higher fee for Northrop Grumman, while failing to meet them could lead to a reduced fee, up to a ceiling and floor established in the contract. Specific details of these KPIs are not publicly available without accessing the contract's detailed documentation.

What is Northrop Grumman Systems Corporation's track record with the Department of Defense, particularly for engineering services?

Northrop Grumman Systems Corporation is a major defense contractor with an extensive and long-standing relationship with the Department of Defense. They have a well-established track record in providing a wide array of services and products, including complex engineering solutions, systems integration, and technology development across various defense platforms (air, space, land, and sea). Their history with the DoD includes numerous large-scale contracts, often involving advanced technologies and critical national security programs. For engineering services specifically, Northrop Grumman possesses significant capabilities and has historically been a key player in supporting DoD's research, development, testing, and evaluation efforts. This particular $87 million contract, awarded in 2001, falls within this broader pattern of substantial engagement and demonstrates a sustained need for their specialized engineering expertise by the DoD over an extended period.

Given the sole-source nature, what risks might taxpayers have faced regarding cost escalation or suboptimal service delivery?

The primary risk to taxpayers associated with a sole-source contract is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the contractor may have less incentive to offer the lowest possible price. Furthermore, the absence of multiple bidders can sometimes mean that the government does not have access to the full range of available solutions or innovations, potentially leading to suboptimal service delivery if the chosen contractor is not the most capable or efficient option. While the CPIF structure aims to mitigate cost risks by incentivizing efficiency, the baseline pricing and the overall value proposition are less scrutinized in a sole-source environment compared to a fully competed procurement. Robust oversight and negotiation are therefore critical to ensure fair pricing and adequate performance.

How did the contract's duration (9 years) impact its overall risk profile and management?

A nine-year contract duration significantly increases the complexity and risk profile compared to shorter-term agreements. For the government, managing such a long-term commitment requires sustained oversight to ensure continued relevance of services, adherence to evolving requirements, and effective cost control over an extended period. Risks include potential obsolescence of technology or methodologies, shifts in strategic priorities, and the contractor's sustained performance and financial stability. For the contractor, a long duration offers stability but also requires significant resource allocation and adaptability. The CPIF structure, while designed to manage performance, needs careful monitoring over such a long span to ensure incentives remain aligned and effective. The sheer length necessitates robust contract management processes to mitigate risks associated with long-term engagements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › QUALITY CONTROL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

Address: 401 E HENDY AVE, SUNNYVALE, CA, 17

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline