DoD's $74M contract for launcher subsystem support awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $74,119,291 ($74.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2015-01-31

Contract Duration: 1,583 days

Daily Burn Rate: $46.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FY11 UK LAUNCHER SUBSYSTEM SUPPORT

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94086

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $74.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FY11 UK LAUNCHER SUBSYSTEM SUPPORT Key points: 1. The contract's value, while significant, lacks clear benchmarks for assessing value for money due to its sole-source nature. 2. Limited competition raises concerns about potential overpricing and reduced innovation. 3. The contract duration of over four years suggests a long-term need for these services. 4. Performance is tied to a Cost Plus Incentive Fee structure, which can incentivize cost control but also requires careful monitoring. 5. The absence of small business participation is noted, with no set-aside or subcontracting indications. 6. This contract falls within the Engineering Services sector, supporting defense readiness.

Value Assessment

Rating: questionable

Benchmarking the value of this $74.1 million contract is challenging due to the lack of competitive bidding. Without comparable contract data or market analysis, it's difficult to ascertain if the pricing is fair or represents good value for the taxpayer. The Cost Plus Incentive Fee (CPIF) structure, while offering some incentive for cost efficiency, can also lead to higher costs if not managed rigorously. The absence of a clear comparison point makes a definitive value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates a rapid award. The lack of competition limits the government's ability to leverage market forces to secure the best possible price and terms. It also means that potential cost savings that could arise from a competitive bidding process were not realized.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This contract's lack of competition means the government may have paid more than it would have in a fully competed scenario.

Public Impact

The primary beneficiary is the Department of the Navy, receiving critical support for its launcher subsystems. This contract ensures the continued operational readiness and maintenance of essential defense equipment. The services provided are crucial for national security and defense capabilities. The contract's impact is primarily within the defense industrial base, supporting specialized engineering and technical roles.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Sole-source award limits transparency and potential for better pricing.
Cost Plus Incentive Fee contracts require robust oversight to prevent cost overruns.

Positive Signals

Northrop Grumman is a major defense contractor with established expertise.
The contract aims to ensure continued support for critical defense systems.
The CPIF structure provides some incentive for cost efficiency.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which is a significant segment of the federal contracting market, particularly for the Department of Defense. The market for defense engineering services is characterized by high barriers to entry, specialized knowledge, and long-term relationships between contractors and government agencies. Spending in this sector often reflects the need for complex technical solutions and sustainment of advanced military platforms. Comparable spending benchmarks are difficult to establish without more specific details on the subsystem supported.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside or subcontracting plan. This suggests that small businesses were not actively involved in this specific procurement. The absence of small business participation in sole-source contracts is common, but it represents a missed opportunity to foster growth and innovation within the small business defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates diligent monitoring of costs and performance to ensure accountability and value. While specific Inspector General (IG) jurisdiction is not detailed, defense contracts are generally subject to IG review for fraud, waste, and abuse. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Defense Logistics Agency Support Contracts
Naval Sea Systems Command (NAVSEA) Contracts
Aerospace Engineering Services
Weapon System Sustainment Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (CPIF)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FY11 UK LAUNCHER SUBSYSTEM SUPPORT

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 $74.1 million.

What is the period of performance?

Start: 2010-10-01. End: 2015-01-31.

What specific launcher subsystem is this contract supporting, and what is its criticality to naval operations?

The provided data does not specify the exact launcher subsystem. However, given the awardee (Northrop Grumman) and the awarding agency (Department of the Navy), it is highly probable that this contract supports a critical component of naval weapon systems, such as missile launchers or artillery systems. The criticality would be tied to the operational readiness of specific naval platforms (e.g., destroyers, submarines, aircraft carriers) that rely on these launchers for offensive or defensive capabilities. Without further details, the precise impact on naval operations remains speculative but is presumed to be significant given the contract's value and duration.

What is Northrop Grumman's track record with similar launcher subsystem support contracts for the Department of Defense?

Northrop Grumman has a long and extensive history of supporting various defense programs, including complex weapon systems and their subsystems, for the Department of Defense. They are a prime contractor for numerous platforms and components. While specific data on their track record for *this particular* launcher subsystem is not provided, their general profile as a major defense industrial base participant suggests they possess the technical expertise and infrastructure required. Past performance evaluations on other large, complex contracts would be the primary indicator of their reliability and capability in fulfilling such requirements.

How does the Cost Plus Incentive Fee (CPIF) structure typically perform in engineering services contracts of this magnitude?

Cost Plus Incentive Fee (CPIF) contracts are designed to provide a target cost and a fee that is adjusted based on the contractor's performance against that target. In engineering services contracts, CPIF can be effective when the scope of work is not fully defined or when there's a strong incentive to control costs and achieve specific performance metrics. However, they require robust government oversight to ensure the contractor is diligently managing costs and that the incentive structure is appropriately aligned with program goals. If not managed well, CPIF contracts can sometimes lead to cost overruns if the incentives are not structured correctly or if the government's oversight is insufficient.

What are the potential risks associated with awarding a $74M contract without competition?

The primary risk associated with awarding a $74 million contract without competition is the potential for inflated pricing. Without the pressure of competing bids, the contractor may not be incentivized to offer the most cost-effective solution. This can lead to taxpayers paying more than necessary for the goods or services received. Additionally, a lack of competition can stifle innovation, as there is less pressure on the incumbent contractor to develop more efficient or advanced methods. It also reduces transparency in the procurement process and can create a perception of favoritism or a lack of due diligence in seeking the best value.

What historical spending patterns exist for launcher subsystem support within the Department of the Navy?

Historical spending patterns for launcher subsystem support within the Department of the Navy are likely substantial and ongoing, reflecting the continuous need to maintain and upgrade complex weapon systems. While specific aggregate data for 'launcher subsystem support' is not readily available in this context, the Navy invests billions annually in shipbuilding, weapon systems procurement, and sustainment. Contracts for such support are often long-term, awarded to prime defense contractors, and can be sole-source due to the specialized nature of the technology and the need for continuity. Spending can fluctuate based on modernization programs, fleet readiness requirements, and the lifecycle of different weapon systems.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 401 E HENDY AVE MS 33-3, SUNNYVALE, CA, 94086

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: $77,659,339

Exercised Options: $74,119,291

Current Obligation: $74,119,291

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline