DoD's $122M Engineering Services Contract with Northrop Grumman: A 10-Year Sole-Source Award
Contract Overview
Contract Amount: $122,294,198 ($122.3M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2006-12-08
End Date: 2017-12-28
Contract Duration: 4,038 days
Daily Burn Rate: $30.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94086
Plain-Language Summary
Department of Defense obligated $122.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Significant long-term award to a single large contractor. 2. Sole-source nature raises questions about price discovery and competition. 3. Cost-plus contract type can incentivize spending. 4. Engineering services are critical for defense operations.
Value Assessment
Rating: questionable
The contract's cost-plus fixed fee structure, awarded sole-source over a decade, suggests potential for cost overruns and limited price scrutiny. Benchmarking is difficult without competitive data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition for a large, long-term contract likely results in a higher cost to taxpayers than if it had been competitively bid.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long duration of the contract limits opportunities for other firms to compete. Reliance on a single contractor for critical engineering services could pose a risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Lack of small business participation
Positive Signals
- Critical engineering services provided
- Established contractor relationship
Sector Analysis
Engineering services are vital for the Department of Defense's operational readiness and technological advancement. Spending in this sector is substantial, and competitive procurement is generally preferred to ensure value.
Small Business Impact
The data indicates no small business participation in this contract. This is common in large, sole-source awards to major defense contractors, potentially limiting opportunities for smaller, specialized firms.
Oversight & Accountability
The sole-source nature of this contract warrants scrutiny regarding the justification for not competing it. Oversight should focus on ensuring costs are reasonable and performance meets requirements.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award lacks competition
- Cost-plus contract type may inflate costs
- Long contract duration limits flexibility
- No small business participation noted
- Potential for contractor lock-in
Tags
engineering-services, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $122.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES
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 $122.3 million.
What is the period of performance?
Start: 2006-12-08. End: 2017-12-28.
What was the justification for awarding this significant engineering services contract sole-source for over a decade?
Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, often due to unique capabilities, urgent needs, or specific program requirements. A thorough review of the justification documentation is necessary to assess its validity and ensure it aligns with federal procurement regulations.
How can the Department of Defense ensure cost-effectiveness and value for money in a long-term, cost-plus fixed-fee sole-source contract?
Ensuring value requires robust oversight, including detailed cost analysis, performance monitoring, and regular reviews of the contractor's performance and pricing. Implementing incentive structures within the cost-plus framework, where feasible, and seeking competitive alternatives for future contract renewals are also crucial steps.
What is the potential impact of this sole-source award on innovation and competition within the engineering services sector supporting the DoD?
Long-term sole-source awards can stifle innovation by reducing competitive pressure and limiting market entry for new or smaller companies with potentially novel solutions. This can lead to complacency and a slower pace of technological advancement compared to a more dynamic, competitive environment.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 401 E HENDY RD, SUNNYVALE, CA, 94086
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $3,566,135,943
Exercised Options: $528,477,910
Current Obligation: $122,294,198
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2006-12-08
Current End Date: 2017-12-28
Potential End Date: 2017-12-28 00:00:00
Last Modified: 2019-10-02
More Contracts from Northrop Grumman Systems Corporation
- 200506!000026!5700!fa8214!oo-Alc/Pkme/Lmke !F4261098C0001 !A!N! !Y! !p01502!20041213!20050701!001563738!004179453!016435559!n!northrop Grumman Space & Missi!888 S 2000 E !clearfield !ut!84015!13850!011!49!clearfield !davis !utah !-000001960000!n!n!000000000000!l014!tech REP Svcs/Guided Missiles !A2 !missile and Space Systems !302 !minuteman III GRP !541330!E! !3! ! !C! ! !20200930!B! ! !A! !a!n!l!2!002!b! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! — $10.0B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-7) — $8.5B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-2) — $5.4B (Department of Defense)
- First DDT and E, Ares I-X, and Flight Tests. First Stage Will BE a Five Segment, Solid Rocket Booster Derived From the Space Shuttle Program (SSP) Solid Rocket Booster (srb)/Reusable Solid Rocket Motor (rsrm). the Contractor Shall Furnish the Necessary Management, Engineering, Labor, Facilities, Tools, Equipment, and Materials Required for First Stage Development, Qualification, Certification and Acceptance Program. Activities Include: Redesign and Testing of the Motor to Incorporate the Fifth Segment and Production of Five Full Scale Ground Static Test Motors: TWO Development Motors (dms)-And Three Qualification Motors (QMS); Structural Test Article (STA), Ground Vibration Test Motors (gvtms) and Other Development Testing; Redesign of the Avionics, Deceleration, Separation, and Flight Termination System (FTS) Subsystems; Ares I-X: Simulated Ares I Outer Mold Line/Mass Properties Using Modified Srb/Rsrm; and Three Flight Test Vehicles. TAS::80 0124::TAS — $4.4B (National Aeronautics and Space Administration)
- Federal Contract — $4.4B (Department of Defense)
View all Northrop Grumman Systems Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)