DoD's $75M Northrop Grumman Contract for Launcher Subsystem Support Lacks Competition

Contract Overview

Contract Amount: $75,020,818 ($75.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2012-10-01

End Date: 2015-09-30

Contract Duration: 1,094 days

Daily Burn Rate: $68.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 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 $75.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: UK LAUNCHER SUBSYSTEM SUPPORT Key points: 1. Significant spending on a critical defense component. 2. Sole-source award to Northrop Grumman raises competition concerns. 3. Potential for inflated costs due to limited price discovery. 4. Engineering services sector is vital for defense readiness.

Value Assessment

Rating: questionable

The contract value of $75M over three years for engineering services is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to similar specialized defense support contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no competition. This significantly limits the government's ability to ensure the best possible price and value.

Taxpayer Impact: The lack of competition may lead to taxpayers paying more than necessary for these essential engineering services.

Public Impact

Ensures continued operational readiness of critical defense systems. Supports high-skilled engineering jobs within the defense industrial base. Highlights the reliance on established contractors for specialized support.

Waste & Efficiency Indicators

Waste Risk Score: 65 / 10

Warning Flags

Sole-source award
Lack of competition
Potential for cost overruns

Positive Signals

Essential service for defense systems
Long-term contract duration

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. Spending in this area is crucial for maintaining national security and technological superiority, often involving specialized expertise.

Small Business Impact

There is no indication that small businesses were involved in this sole-source award, suggesting a missed opportunity for their participation in the defense supply chain.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure fair pricing and effective service delivery, as competitive pressures are absent.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition.
Potential for higher costs due to lack of price discovery.
No small business participation noted.
Contract duration is significant.
Cost-plus contract type requires strong oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 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 $75.0 million.

What is the period of performance?

Start: 2012-10-01. End: 2015-09-30.

What is the justification for the sole-source award, and were alternatives explored?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that only one contractor can meet. The Department of Defense would need to provide specific documentation detailing why Northrop Grumman was the only viable option and what steps were taken to explore competitive alternatives before making this determination.

How is cost control managed in this Cost Plus Fixed Fee contract without competition?

In a Cost Plus Fixed Fee (CPFF) contract, the government reimburses the contractor for allowable costs plus a fixed fee representing profit. Without competition, cost control relies heavily on robust government oversight, detailed cost auditing, and strict adherence to contract terms to prevent unnecessary expenses and ensure the fixed fee remains reasonable.

What are the long-term implications of relying on a single provider for this critical subsystem support?

Long-term reliance on a single provider can lead to vendor lock-in, reduced innovation, and potential price increases over time as competition is eliminated. It also concentrates risk, as any issues with the sole provider could significantly impact the defense system's operational readiness.

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

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: $113,892,092

Exercised Options: $99,111,495

Current Obligation: $75,020,818

Subaward Activity

Number of Subawards: 3827

Total Subaward Amount: $595,943,535

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline