DoD awards $20.9M for SSDS Production Hardware to Northrop Grumman, raising value-for-money questions

Contract Overview

Contract Amount: $20,888,292 ($20.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-06-07

End Date: 2021-12-14

Contract Duration: 921 days

Daily Burn Rate: $22.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SSDS PRODUCTION HARDWARE

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $20.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SSDS PRODUCTION HARDWARE Key points: 1. Contract value appears high relative to the duration and scope of hardware production. 2. Limited public data makes direct value-for-money assessment challenging. 3. Northrop Grumman's extensive defense contracting history suggests familiarity with requirements. 4. The contract's fixed-price nature aims to control costs, but initial award value warrants scrutiny. 5. Sector positioning within electronic computer manufacturing is standard for defense hardware. 6. Risk indicators are moderate, primarily related to potential cost overruns if initial estimates are inaccurate.

Value Assessment

Rating: fair

The contract's total value of approximately $20.9 million for SSDS Production Hardware awarded to Northrop Grumman Systems Corporation is difficult to benchmark without more specific details on the hardware produced. Compared to similar large-scale defense hardware production contracts, the per-unit cost or overall value proposition is not immediately clear. The firm fixed-price contract type suggests an attempt to control costs, but the initial award amount warrants further investigation into the underlying cost estimates and the value delivered.

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 were likely considered. The presence of a competitive process is generally positive for price discovery and ensuring the government receives competitive pricing. However, the number of actual bidders and the specific evaluation criteria are not detailed, which limits a full assessment of the competition's intensity.

Taxpayer Impact: Full and open competition suggests that taxpayers benefited from a potentially more competitive pricing environment, as multiple companies vied for the contract.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical production hardware. The services delivered involve the manufacturing and supply of electronic computer hardware essential for defense systems. The geographic impact is primarily within the United States, where the contractor operates and potentially sources materials. Workforce implications include employment opportunities within Northrop Grumman's manufacturing and engineering divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if initial production estimates are inaccurate, despite fixed-price contract.
Dependence on a single large contractor for critical hardware could pose supply chain risks.
Limited transparency on specific hardware components and their cost breakdown.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Firm fixed-price contract type helps to establish cost certainty for the government.
Northrop Grumman has a long-standing track record in defense contracting, implying experience with complex requirements.

Sector Analysis

This contract falls within the Electronic Computer Manufacturing sector (NAICS 334111), a critical component of the broader defense industrial base. The market for defense-related electronic hardware is characterized by high barriers to entry, specialized technical requirements, and significant government investment. Spending in this sector is often driven by modernization efforts and the need for advanced technological capabilities. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the 'SSDS Production Hardware'.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The prime contractor, Northrop Grumman, is a large defense contractor, and any subcontracting would likely be managed through their internal procurement processes.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the firm fixed-price contract type, which places the cost risk on the contractor. Transparency is moderate; while the award is public, detailed breakdowns of the hardware and costs are not readily available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Production Act Investments
Tactical Data Link Systems
Command and Control Systems
Electronic Warfare Systems
Naval Systems Production

Risk Flags

Potential for cost escalation if initial estimates are inaccurate.
Supply chain vulnerability for specialized electronic components.
Technological obsolescence risk for defense hardware.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SSDS PRODUCTION HARDWARE

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 $20.9 million.

What is the period of performance?

Start: 2019-06-07. End: 2021-12-14.

What is the specific nature of the 'SSDS Production Hardware' being procured, and how does its complexity influence the contract value?

The specific nature of 'SSDS Production Hardware' is not detailed in the provided data. SSDS typically refers to the Ship Self-Defense System, a crucial component of naval combat systems. Production hardware for such systems can range from complex electronic modules and processors to integrated subsystems. The complexity directly influences the contract value due to the advanced engineering, specialized manufacturing processes, rigorous testing, and quality assurance required. Without a detailed Bill of Materials or technical specifications, it is challenging to ascertain if the $20.9 million award is commensurate with the expected complexity and quantity of the hardware.

How does the $20.9 million award compare to historical spending on similar defense hardware production contracts by the Department of Defense?

Comparing the $20.9 million award requires identifying contracts with similar scope, technology, and contractor. Northrop Grumman, as a major defense contractor, produces a wide array of hardware. Historical data for large-scale electronic hardware production for naval systems can vary significantly. For instance, contracts for radar systems, communication suites, or combat management systems can range from tens to hundreds of millions of dollars. The $20.9 million figure appears moderate for a production hardware contract from a prime contractor of Northrop Grumman's size, but its value proposition is contingent on the quantity and technological sophistication of the SSDS components delivered over the contract period.

What are the primary risk indicators associated with this contract, and what mitigation strategies are in place?

Primary risk indicators for this contract include potential cost overruns if the firm fixed-price estimate proves insufficient for the actual production challenges, supply chain disruptions for specialized components, and technical obsolescence if the hardware's technology lifecycle is shorter than anticipated. Mitigation strategies are inherent in the contract type; the contractor bears the cost risk. Additionally, the Department of Defense likely has quality assurance and acceptance testing protocols. Northrop Grumman's experience in defense production suggests established risk management processes, but specific mitigation details are not publicly available.

What is Northrop Grumman's track record with the Department of Defense, particularly concerning production hardware contracts?

Northrop Grumman Systems Corporation has an extensive and long-standing track record as a prime contractor for the Department of Defense, involved in numerous large-scale programs across various domains including aerospace, naval systems, and C4ISR (Command, Control, Communications, Computers, and Intelligence, Surveillance, and Reconnaissance). They have consistently been awarded significant contracts for the production of complex defense hardware. Their performance history generally indicates a capability to meet stringent military requirements, though like any major contractor, they have experienced program challenges and cost adjustments on specific contracts over their history.

How does the contract duration (921 days) align with the total award value of $20.9 million for production hardware?

A contract duration of 921 days (approximately 2.5 years) for a $20.9 million award suggests an average annual value of roughly $8.36 million. This annual rate for the production of specialized defense hardware, such as components for the Ship Self-Defense System, appears reasonable. It implies a steady, ongoing production effort rather than a large, one-time surge delivery. The duration allows for phased production, testing, and integration, which is typical for complex defense systems. The alignment suggests a manageable production schedule within the awarded budget.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Electronic Computer Manufacturing

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0017814R3010

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $28,307,113

Exercised Options: $21,025,370

Current Obligation: $20,888,292

Actual Outlays: $3,093,768

Subaward Activity

Number of Subawards: 2162

Total Subaward Amount: $277,734,271

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017814D3035

IDV Type: IDC

Timeline