DoD's $15.1M engineering services contract awarded to Northrop Grumman shows fair value with 21 bids
Contract Overview
Contract Amount: $15,105,086 ($15.1M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2007-08-31
End Date: 2009-07-31
Contract Duration: 700 days
Daily Burn Rate: $21.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128
Plain-Language Summary
Department of Defense obligated $15.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. The contract demonstrates a competitive bidding process with 21 offers received. 2. Northrop Grumman, a large defense contractor, secured this award. 3. The contract duration of 700 days suggests a significant project scope. 4. The cost-plus-fixed-fee pricing structure allows for flexibility but requires careful oversight. 5. The award was made under full and open competition, indicating broad market access. 6. The contract was awarded by the Defense Contract Management Agency. 7. The North American Industry Classification System (NAICS) code 541330 points to engineering services.
Value Assessment
Rating: good
Benchmarking the value of this specific contract is challenging without more granular data on the engineering services provided. However, the presence of 21 bids suggests a competitive environment that likely drove pricing towards market rates. The cost-plus-fixed-fee structure, while common, necessitates robust oversight to ensure costs remain reasonable and the fixed fee is justified by the scope of work. Compared to similar large-scale engineering service contracts, the overall value appears within a reasonable range given the duration and the nature of defense-related engineering.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The fact that 21 bids were received indicates a healthy level of competition for these engineering services. A higher number of bidders generally leads to better price discovery and can result in more favorable terms for the government.
Taxpayer Impact: The robust competition for this contract suggests that taxpayers benefited from a more competitive pricing environment, potentially leading to cost savings compared to a less competitive procurement.
Public Impact
The Department of Defense benefits from specialized engineering expertise to support its operations. This contract likely supports critical defense infrastructure or systems development. The geographic impact is primarily within California, where the contract was managed. The workforce implications include employment for skilled engineers and technical staff at Northrop Grumman.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contracts can lead to cost overruns if not managed diligently.
- The long duration of the contract requires sustained oversight to ensure performance.
- Reliance on a single large contractor may limit future competition for similar services.
Positive Signals
- Full and open competition ensures a wide range of potential contractors can participate.
- The high number of bids received indicates strong market interest and potential for innovation.
- Northrop Grumman is a well-established defense contractor with a proven track record.
Sector Analysis
This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by the continuous need for research, development, and sustainment of military systems. Spending in this sector is often characterized by long-term contracts, complex technical requirements, and significant government oversight. Comparable spending benchmarks would typically involve analyzing other large-scale engineering support contracts awarded by the Department of Defense or other federal agencies for similar types of services.
Small Business Impact
This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus was on technical capability and capacity rather than small business participation goals. This could mean limited direct opportunities for small businesses on this specific contract, though they may be involved further down the supply chain.
Oversight & Accountability
The Defense Contract Management Agency (DCMA) is responsible for overseeing this contract, ensuring compliance with terms and conditions, and monitoring performance. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to manage expenditures and verify the reasonableness of costs incurred. Transparency is generally maintained through contract reporting mechanisms, though specific details of ongoing oversight activities are not publicly detailed.
Related Government Programs
- Defense Engineering Services
- Northrop Grumman Contracts
- Department of Defense IT Services
- Aerospace Engineering Support
Risk Flags
- Cost-plus-fixed-fee contract type requires diligent oversight to manage costs.
- Long contract duration increases risk of scope creep and potential obsolescence.
Tags
defense, engineering-services, northrop-grumman-systems-corporation, department-of-defense, cost-plus-fixed-fee, full-and-open-competition, definitive-contract, california, large-contract, 700-day-duration
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $15.1 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 $15.1 million.
What is the period of performance?
Start: 2007-08-31. End: 2009-07-31.
What is the historical spending trend for engineering services by the Department of Defense?
The Department of Defense (DoD) consistently allocates significant funding towards engineering services, essential for the research, development, acquisition, and sustainment of complex military systems. Historical data indicates a substantial and often increasing trend in spending on these services over the past decade, driven by evolving geopolitical landscapes, technological advancements, and the modernization of military platforms. While specific figures fluctuate annually based on budgetary priorities and program needs, engineering services represent a core expenditure category within the DoD's vast budget. This spending supports a wide array of activities, from conceptual design and prototyping to systems integration, testing, and lifecycle support. The reliance on external contractors for specialized engineering expertise is a long-standing practice, reflecting the need for cutting-edge capabilities and the efficient allocation of resources.
How does the pricing structure (Cost Plus Fixed Fee) compare to other contract types for similar services?
The Cost Plus Fixed Fee (CPFF) contract type is common for research and development or complex services where the scope of work is not precisely defined at the outset, allowing for flexibility. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from Firm-Fixed-Price (FFP) contracts, where the price is set regardless of actual costs, offering the government maximum price certainty but potentially shifting risk to the contractor. Cost-Plus-Incentive-Fee (CPIF) contracts also reimburse costs plus a fee, but the fee is adjusted based on performance against pre-determined targets, incentivizing efficiency. For engineering services, CPFF is often chosen when innovation or adaptation is key, but it requires robust government oversight to control costs. FFP is preferred when requirements are well-defined, while CPIF is used to balance risk and reward.
What is Northrop Grumman's track record with government contracts, particularly with the DoD?
Northrop Grumman Systems Corporation is a major American aerospace and defense technology company with an extensive history of securing and performing on large government contracts, particularly with the Department of Defense (DoD). The company is a prime contractor on numerous high-value programs across various defense sectors, including aircraft, spacecraft, defense electronics, and cybersecurity. Their track record generally indicates a capacity to handle complex, large-scale projects requiring advanced technological expertise. While specific performance metrics for individual contracts are not always publicly detailed, Northrop Grumman's consistent presence as a leading defense contractor suggests a generally positive relationship with the DoD, characterized by successful contract execution and adherence to program requirements. However, like any large contractor, they may have faced performance reviews or contract disputes on specific projects over their long operational history.
What are the potential risks associated with a 700-day contract duration for engineering services?
A 700-day contract duration for engineering services, approximately 23 months, presents several potential risks. Firstly, the extended timeline increases the likelihood of scope creep, where the project's requirements may evolve or expand beyond the original agreement, potentially leading to cost overruns if not managed through formal change orders. Secondly, the longer the contract, the greater the risk of technological obsolescence, especially in rapidly advancing fields like defense technology. The services or systems being developed might be outdated by the time the contract concludes. Thirdly, maintaining consistent performance and quality over such a long period can be challenging, requiring sustained project management focus and contractor commitment. Finally, market conditions, regulatory environments, or the contractor's own financial stability could change, impacting the project's successful completion. Robust oversight and clear communication channels are essential to mitigate these risks.
How does the 'Engineering Services' NAICS code (541330) typically relate to defense spending?
The North American Industry Classification System (NAICS) code 541330, 'Engineering Services,' is highly relevant to defense spending as it encompasses a broad range of professional engineering activities crucial for military operations and equipment. This includes design, development, testing, and evaluation of military hardware, software, and infrastructure. Defense contractors utilize these services for everything from conceptualizing new weapon systems and aircraft to designing complex communication networks and ensuring the structural integrity of bases. The DoD is a major consumer of engineering services, often contracting for specialized expertise in areas like aerospace, mechanical, electrical, and civil engineering to support its vast array of projects. Spending under this NAICS code within the defense sector reflects the ongoing need for innovation, modernization, and maintenance of national security capabilities.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0003907R0023
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 1 RANCHO CARMEL DR, SAN DIEGO, CA, 92128
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $19,693,277
Exercised Options: $19,693,277
Current Obligation: $15,105,086
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2007-08-31
Current End Date: 2009-07-31
Potential End Date: 2009-07-31 00:00:00
Last Modified: 2016-03-01
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)