Northrop Grumman awarded $14.5M for engineering services, with a 4-year duration and a cost-plus-fixed-fee structure

Contract Overview

Contract Amount: $14,485,739 ($14.5M)

Contractor: Northrop Grumman Information T

Awarding Agency: Department of Defense

Start Date: 2002-06-18

End Date: 2006-06-30

Contract Duration: 1,473 days

Daily Burn Rate: $9.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200210!026278!1700!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003902C2208 !A!N! !N! !20020618!20040331!020226700!008255408!016435559!N!NORTHROP GRUMMAN INFORMATION T!3990 SHERMAN ST !SAN DIEGO !CA!92110!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000000220000!N!N!000000000000!1820!SPACE VEHICLE COMPONENTS !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!E! !3! ! ! ! ! !99990909!B! ! !N!Z!D!N!U!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! !N00039!0001!

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.5 million to NORTHROP GRUMMAN INFORMATION T for work described as: 200210!026278!1700!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003902C2208 !A!N! !N! !20020618!20040331!020226700!008255408!016435559!N!NORTHROP GRUMMAN INFORMATION T!3990 SHERMAN ST !SAN DIEGO !CA!92110!66000!073!06!SAN DIEGO !SAN D… Key points: 1. Contract awarded for engineering services, indicating a need for specialized technical expertise. 2. The contract's cost-plus-fixed-fee structure suggests potential for cost overruns if not closely managed. 3. A 4-year duration implies a long-term requirement for the services provided. 4. The award was not competed, raising questions about potential cost savings through competitive bidding. 5. The contractor, Northrop Grumman, is a major defense industry player, suggesting established capabilities. 6. The contract falls under the 'Engineering Services' NAICS code, aligning with technical and scientific support.

Value Assessment

Rating: fair

The contract value of $14.5 million over approximately four years averages to about $3.6 million annually. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively assess value for money. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D or uncertain scope work, can lead to higher costs than fixed-price contracts if not managed diligently. Benchmarking against similar engineering services contracts for defense systems would be necessary for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential bidders. Sole-source awards are typically justified when only one contractor possesses the necessary unique capabilities, or in cases of urgent need. The lack of competition means that the government did not benefit from the price discovery and potential cost reductions that typically arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a competitive process, there is less assurance that the price reflects the best possible value.

Public Impact

The Department of Defense benefits from specialized engineering services crucial for its operations. Services likely support the development, maintenance, or enhancement of defense systems, particularly in space and naval warfare. The geographic impact is centered around the contractor's location in San Diego, California, and potentially extends to defense installations. Workforce implications include employment opportunities for engineers and technical staff at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts carry inherent risks of cost overruns if not rigorously managed.
Sole-source awards can limit opportunities for other capable businesses to secure government contracts.

Positive Signals

Award to a large, established defense contractor like Northrop Grumman suggests a high likelihood of technical capability and delivery.
The long contract duration indicates a stable, ongoing need for these critical engineering services.
The specific nature of the services (space and naval warfare systems) points to support for advanced defense technologies.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a significant segment of the professional, scientific, and technical services industry. The defense industry heavily relies on such services for research, development, design, and testing of complex systems. Spending in this area is often driven by national security priorities and technological advancements. Comparable spending benchmarks would typically be found within broader defense procurement data, focusing on engineering and technical support contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned 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 voluntarily engages small businesses for subcontracting opportunities. Further investigation into subcontracting plans would be needed to assess broader small business implications.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and administration processes, likely through the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the cost-plus-fixed-fee structure, requiring detailed reporting and auditing of costs. Transparency is limited by the sole-source nature and the potential classification of the specific services, but contract award details are generally publicly available.

Related Government Programs

Naval Systems Engineering Support
Space Systems Development Contracts
Defense Research and Development Services
Aerospace Engineering Services
Department of Defense Professional Services

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure carries inherent risk of cost overruns.
Limited public information on specific services provided.
Contract duration is lengthy, requiring sustained oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.5 million to NORTHROP GRUMMAN INFORMATION T. 200210!026278!1700!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003902C2208 !A!N! !N! !20020618!20040331!020226700!008255408!016435559!N!NORTHROP GRUMMAN INFORMATION T!3990 SHERMAN ST !SAN DIEGO !CA!92110!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000000220000!N!N!000000000000!1820!SPACE VEHICLE COMPONENTS !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN INFORMATION T.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $14.5 million.

What is the period of performance?

Start: 2002-06-18. End: 2006-06-30.

What specific engineering services are being provided under this contract, and how do they align with current defense priorities?

The contract data indicates the services fall under NAICS code 541330 (Engineering Services) and are related to 'SPACE VEHICLE COMPONENTS' and 'SERVICES' for 'SPACE AND NAVAL WARFARE SYSTEMS'. While the exact nature of the services is not detailed, it strongly suggests support for the design, development, testing, or maintenance of advanced space and naval defense technologies. This aligns with current defense priorities focused on maintaining technological superiority in areas like satellite systems, electronic warfare, and naval platform capabilities. The specific services could range from systems engineering and integration to specialized technical analysis and support for complex weapon systems.

How does the cost-plus-fixed-fee (CPFF) structure compare to alternative contract types for similar engineering services, and what are the associated risks?

The Cost-Plus-Fixed-Fee (CPFF) structure is often used when the scope of work is not precisely defined or involves significant research and development, making fixed-price contracts impractical. It allows the contractor to recover all allowable costs plus a predetermined fixed fee. Compared to fixed-price contracts, CPFF offers flexibility but carries a higher risk of cost overruns for the government, as the contractor is incentivized to incur costs to achieve the fee. Other alternatives like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives to better control costs and align contractor efforts with government objectives. Without clear performance metrics and rigorous oversight, CPFF contracts can be less cost-effective than competitively bid fixed-price arrangements.

What is Northrop Grumman's track record with similar sole-source, CPFF contracts within the Department of Defense?

Northrop Grumman is a major defense contractor with extensive experience across various contract types, including sole-source and CPFF agreements within the Department of Defense. While specific details on their track record for similar contracts are not provided in this data snippet, their long history and significant presence in the defense sector suggest a capacity to manage complex projects. Historical performance data, often available through contract databases and government accountability reports, would be necessary to assess their specific success rates, cost performance, and adherence to schedules on comparable sole-source CPFF contracts. Generally, large contractors like Northrop Grumman are expected to have robust internal controls and project management systems to handle such awards.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent potential contractor overreach?

In sole-source procurements, ensuring fair pricing relies heavily on robust government oversight and negotiation. The Department of Defense typically employs contract price analysis techniques, which may include reviewing the contractor's cost proposals, comparing them to historical data for similar work, using independent government cost estimates, and analyzing market research. For CPFF contracts, the 'fixed fee' component is negotiated upfront, and the government audits the incurred costs to ensure they are allowable, allocable, and reasonable according to federal acquisition regulations. The Defense Contract Audit Agency (DCAA) often plays a crucial role in auditing costs. Additionally, contract clauses may include provisions for equitable adjustments or termination for convenience, providing leverage for the government.

What is the historical spending trend for 'Engineering Services' (NAICS 541330) within the Department of Defense, and how does this contract fit into that pattern?

The Department of Defense is consistently one of the largest federal agencies awarding contracts under the 'Engineering Services' (NAICS 541330) category. Historical spending data reveals a substantial and often increasing trend in this sector, driven by the need for advanced technological development, system modernization, and ongoing support for complex defense platforms. This specific contract, valued at $14.5 million over four years, represents a relatively modest portion of the overall DoD spending in engineering services. It fits the pattern of specialized, long-term support contracts awarded to major defense contractors for critical capabilities, particularly in areas like space and naval warfare systems, which are high-priority areas for the DoD.

Industry Classification

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

Product/Service Code: SPACE VEHICLES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: 3990 SHERMAN ST, SAN DIEGO, CA, 92110

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline