DoD's $2.9B Engineering Support Contract Awarded to Northrop Grumman Without Competition
Contract Overview
Contract Amount: $28,975,382 ($29.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2014-01-06
End Date: 2017-03-31
Contract Duration: 1,180 days
Daily Burn Rate: $24.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING AND TECHNICAL SUPPORT
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20171
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $29.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING AND TECHNICAL SUPPORT Key points: 1. Significant contract value of $2.9 billion highlights substantial investment in engineering services. 2. Sole-source award to Northrop Grumman raises questions about competitive pricing and market alternatives. 3. Long contract duration (1180 days) suggests a complex, ongoing need for specialized technical support. 4. The 'VA' status and Virginia location indicate a specific regional focus for this defense spending.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Without benchmarks from competing bids, it's challenging to determine if the $2.9 billion represents optimal value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This method bypasses the price discovery process inherent in competitive bidding, potentially leading to higher costs for taxpayers.
Taxpayer Impact: The absence of competition for a nearly $3 billion contract likely results in a higher cost to taxpayers than if multiple vendors had vied for the work.
Public Impact
Taxpayers may be overpaying for engineering and technical support due to the lack of competitive bidding. The significant investment in a single contractor could limit opportunities for smaller, innovative firms in the defense sector. Long-term reliance on one provider might create vendor lock-in and reduce flexibility in future service acquisition.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- High contract value
Positive Signals
- Essential engineering services for defense
- Established contractor with proven capabilities
Sector Analysis
This contract falls under Engineering Services, a critical sector for the Department of Defense. Spending benchmarks for similar large-scale, sole-source engineering support contracts are difficult to establish due to their unique nature.
Small Business Impact
The sole-source nature of this large contract, awarded to Northrop Grumman, suggests limited direct opportunities for small businesses. Subcontracting opportunities may exist, but the primary awardee is a large corporation.
Oversight & Accountability
The lack of competition raises concerns about oversight effectiveness in ensuring fair pricing and value. Robust oversight would be crucial to mitigate potential cost overruns and ensure performance standards are met.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competitive bidding
- Potential for inflated costs
- Limited transparency in pricing
- Risk of vendor lock-in
- Questionable value for taxpayer money
Tags
engineering-services, department-of-defense, va, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $29.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING AND TECHNICAL 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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $29.0 million.
What is the period of performance?
Start: 2014-01-06. End: 2017-03-31.
What specific justifications were provided for awarding this significant contract on a sole-source basis, and were alternatives explored?
Sole-source awards typically require strong justification, such as unique capabilities or urgent needs. Without access to the specific justification documentation, it's impossible to definitively state the reasons. However, the absence of competition suggests that either no other vendors were deemed capable, or the procurement process favored a single provider, potentially impacting overall value for money.
How does the cost-plus-fixed-fee structure impact the contractor's incentive to control costs on this $2.9 billion contract?
Cost-plus-fixed-fee contracts reimburse the contractor for allowable costs plus a predetermined fixed fee. While the fee is fixed, the contractor is incentivized to manage costs to maximize profit margin. However, the government bears the risk of cost overruns, which can lead to higher overall expenditure compared to fixed-price contracts, especially without competitive pressure.
What mechanisms are in place to ensure the quality and effectiveness of the engineering services provided by Northrop Grumman under this contract?
Given the contract's value and duration, the Defense Contract Management Agency (DCMA) is likely responsible for oversight. Mechanisms would typically include performance monitoring, milestone reviews, and quality assurance checks. However, the effectiveness of these mechanisms in ensuring optimal value and performance is harder to gauge without direct insight into the oversight process and contractor performance data.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0042113R0095
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
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: $31,388,400
Exercised Options: $31,388,400
Current Obligation: $28,975,382
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $551,295
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-01-06
Current End Date: 2017-03-31
Potential End Date: 2017-03-31 00:00:00
Last Modified: 2018-07-30
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