DoD's $56.4M engineering services contract awarded to Northrop Grumman Systems Corporation shows fair value
Contract Overview
Contract Amount: $56,408,085 ($56.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2003-10-24
End Date: 2008-09-30
Contract Duration: 1,803 days
Daily Burn Rate: $31.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Place of Performance
Location: DAHLGREN, KING GEORGE County, VIRGINIA, 22448
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $56.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. The contract's value appears reasonable when benchmarked against similar engineering services. 2. Full and open competition was utilized, suggesting a competitive pricing environment. 3. The contract duration of 1803 days indicates a long-term need for these services. 4. The fixed-fee structure provides some cost control, though potential for overruns exists. 5. Northrop Grumman's track record in defense contracting warrants consideration for performance. 6. The contract's focus on engineering services aligns with broader defense modernization efforts.
Value Assessment
Rating: good
The $56.4 million award for engineering services appears to be within a reasonable range for a contract of this duration and scope. Benchmarking against similar Department of Defense contracts for specialized engineering support suggests that the pricing is competitive. While specific per-unit costs are not detailed, the overall value proposition seems fair given the complexity and criticality of engineering services required by the Navy.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bids suggests a moderate level of competition for this requirement. A competitive process generally leads to better price discovery and potentially more favorable terms for the government.
Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it encourages a wider range of contractors to compete, driving down costs and ensuring the government receives the best possible value.
Public Impact
The Department of the Navy benefits from specialized engineering expertise to support its operations and development. Services delivered likely include design, analysis, testing, and technical support for naval systems. The geographic impact is primarily within the United States, supporting naval bases and facilities. The contract supports a workforce of engineers and technical specialists, contributing to the defense industrial base.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns in cost-plus contracts if not closely managed.
- Reliance on a single large contractor may limit future flexibility or innovation.
- Scope creep could increase the total contract value beyond initial estimates.
Positive Signals
- Awarded through full and open competition, ensuring a competitive process.
- Northrop Grumman is a well-established defense contractor with significant experience.
- The contract duration suggests a stable, long-term requirement, allowing for focused expertise development.
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 modernization, maintenance, and development of complex military systems. Comparable spending benchmarks in this sector often involve multi-year, high-value contracts for specialized technical support, similar to this award.
Small Business Impact
The data indicates this contract was not specifically set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary award went to a large prime contractor, and the direct impact on the small business ecosystem may be limited unless Northrop Grumman actively engages small businesses for subcontracting opportunities.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded in the contract's performance standards and reporting requirements. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Naval Sea Systems Command (NAVSEA) Contracts
- Defense Engineering Services
- Northrop Grumman Defense Contracts
- Cost Plus Fixed Fee Contracts
- Department of Defense IT and Engineering Services
Risk Flags
- Cost Overrun Risk
- Contractor Performance History
- Scope Creep Potential
- Long Contract Duration
- Reliance on Prime Contractor
Tags
defense, department-of-defense, northrop-grumman, engineering-services, cost-plus-fixed-fee, full-and-open-competition, navy, virginia, large-contract, professional-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $56.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
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 $56.4 million.
What is the period of performance?
Start: 2003-10-24. End: 2008-09-30.
What is Northrop Grumman's track record with similar Department of Defense engineering contracts?
Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in providing engineering and technical services to the Department of Defense across various branches, including the Navy. They have a history of managing large, complex contracts involving aircraft, shipbuilding, space systems, and advanced technologies. While specific performance details for every contract are not always public, their sustained presence as a prime contractor indicates a generally reliable performance history. However, like any large contractor, they may have faced scrutiny or challenges on specific projects, which would be detailed in contract performance reports and potentially Inspector General findings if issues arose regarding cost, schedule, or quality.
How does the value of this contract compare to other engineering services contracts awarded by the DoD?
The $56.4 million award for engineering services is a significant but not exceptionally large sum within the context of the Department of Defense's overall budget. When compared to other engineering services contracts, particularly those supporting major weapon systems development or sustainment, this contract appears to be in the mid-to-high range for a single award of this duration. Contracts for R&D, system integration, or long-term platform support can easily reach hundreds of millions or even billions of dollars. Therefore, while substantial, this $56.4 million contract represents a focused investment in specific engineering capabilities rather than a broad, overarching program.
What are the primary risks associated with this type of Cost Plus Fixed Fee (CPFF) contract?
The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, like this one, revolve around cost control and potential for scope creep. In a CPFF arrangement, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. The risk for the government is that costs could escalate beyond initial projections, even though the fee remains fixed. Contractors may have less incentive to control costs rigorously compared to fixed-price contracts, as their profit is guaranteed regardless of cost efficiency. Effective oversight, detailed cost tracking, and robust change management processes are crucial to mitigate these risks and ensure the government receives good value.
What is the expected program effectiveness given the contract details?
The effectiveness of the program supported by this contract is expected to be positive, contingent on Northrop Grumman's performance and the clarity of the Navy's requirements. The contract's duration (1803 days) suggests a stable, long-term need for the engineering services, allowing for continuity and deep expertise development. The use of full and open competition implies that the selected contractor is deemed capable of meeting these needs. However, program effectiveness ultimately depends on the specific engineering tasks, the quality of the deliverables, and how well these services contribute to the Navy's overall mission objectives. Without specific details on the engineering tasks, a definitive assessment of program effectiveness is challenging.
How have historical spending patterns for engineering services by the Department of the Navy evolved?
Historical spending patterns for engineering services by the Department of the Navy have generally shown a consistent and significant investment, reflecting the complexity and lifecycle needs of naval platforms and systems. Spending tends to increase during periods of major platform development, modernization programs, or when new technological capabilities are being integrated. The Navy, like other branches of the DoD, relies heavily on external engineering expertise for specialized design, analysis, testing, and sustainment. Trends often show a shift towards more integrated systems engineering and a greater emphasis on cybersecurity and data analytics within engineering services over time. The overall dollar amounts fluctuate based on defense budgets and strategic priorities.
What does the 'Engineering Services' (NAICS 541330) category typically encompass for the DoD?
The 'Engineering Services' category (NAICS 541330) for the DoD typically encompasses a wide range of professional services related to the design, development, and application of engineering principles. This includes services such as architectural and engineering consulting, research and development in engineering sciences, systems engineering, technical analysis, testing and evaluation, and specialized design for military equipment, infrastructure, and platforms. For the Navy, this could involve everything from naval architecture and marine engineering to aerospace engineering for aircraft carriers and submarines, as well as electronic systems engineering and weapons systems integration.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: EDUCATION AND TRAINING › EDUCATION AND TRAINING SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Titan II Inc. (UEI: 016435559)
Address: 12011 SUNSET HILLS ROAD, RESTON, VA, 11
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2003-10-24
Current End Date: 2008-09-30
Potential End Date: 2008-09-30 00:00:00
Last Modified: 2011-02-10
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