DoD Awards Northrop Grumman $152.7M for R&D Services, Facing Potential Cost Overruns

Contract Overview

Contract Amount: $50,757,793 ($50.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2000-04-13

End Date: 2011-09-29

Contract Duration: 4,186 days

Daily Burn Rate: $12.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE

Sector: R&D

Official Description: 200007!1700!000112!BW12A !NAVAL SURFACE WARFARE CENTER, DD!N6133100C0022 !A!*!* !20000413!20041201!152670030!008255408!008255408!N!70974!NORTHROP GRUMMAN CORPORATION !2000 W NASA BLVD !MELBOURNE !FL!32902!43975!009!12!MELBOURNE !BREVARD !FLORIDA !0001!+000013578000!N!N!000000000000!AZ15!RDTE/OTHER RESEARCH & DEVELOPMENT-ENG/MANUF DEVEL !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!*!B!A!*!A !N!V!2!002!E!* !Z!Y!Z!* !* !N!C!*!A!C!A!A!A!A!* !*!N!A!D!N!*!*!*!*!*!

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $50.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200007!1700!000112!BW12A !NAVAL SURFACE WARFARE CENTER, DD!N6133100C0022 !A!*!* !20000413!20041201!152670030!008255408!008255408!N!70974!NORTHROP GRUMMAN CORPORATION !2000 W NASA BLVD !MELBOURNE !FL!32902!43975!009!12!MELBOURNE !BRE… Key points: 1. Contract awarded to Northrop Grumman for Research, Development, Test, and Evaluation (RDT&E) services. 2. Significant contract value of $152.7 million, with a substantial duration of 4186 days. 3. The contract type is Cost Plus Incentive Fee (CPIF), which can lead to cost overruns if not managed carefully. 4. Competition was full and open, suggesting a competitive bidding process was utilized. 5. The primary sector is R&D, indicating investment in innovation and future capabilities.

Value Assessment

Rating: questionable

The contract's Cost Plus Incentive Fee (CPIF) structure, combined with a long duration and significant value, raises concerns about potential cost escalation. The initial award amount of $152.7 million may increase if performance targets are met or exceeded, but also carries the risk of exceeding budgeted amounts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This method generally promotes competitive pricing and ensures the government receives the best value. However, the CPIF structure still introduces cost uncertainty.

Taxpayer Impact: While full and open competition aims for cost efficiency, the CPIF contract type introduces inherent risk of cost growth, potentially impacting taxpayer funds if not closely monitored.

Public Impact

Investment in advanced R&D services supports national defense capabilities. Long-term contract provides stability for the contractor and potential for sustained innovation. Potential for cost overruns could divert funds from other critical government programs. Transparency in R&D spending is crucial for public trust and accountability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee (CPIF) contract type
Long contract duration (4186 days)
Potential for cost overruns
Limited visibility into specific R&D deliverables

Positive Signals

Full and open competition
Award to a major defense contractor
Investment in critical R&D

Sector Analysis

This contract falls within the Research, Development, Test, and Evaluation (RDT&E) sector, specifically focusing on engineering and manufacturing development. Spending in this area is critical for maintaining technological superiority but can be prone to cost fluctuations due to the inherent uncertainties of innovation.

Small Business Impact

While the primary awardee is a large corporation (Northrop Grumman), it's possible that subcontractors, including small businesses, may be involved in fulfilling specific aspects of this R&D contract. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight of this contract will be managed by the Defense Contract Management Agency (DCMA). Given the CPIF structure and long duration, rigorous oversight is essential to ensure cost control, performance, and adherence to contract terms to protect taxpayer interests.

Related Government Programs

Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Cost overruns due to CPIF structure
Long contract duration leading to potential scope creep or changing requirements
Lack of transparency on specific R&D deliverables and objectives
Potential for contractor to exceed target costs without sufficient penalty
Dependency on a single large contractor for critical R&D

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200007!1700!000112!BW12A !NAVAL SURFACE WARFARE CENTER, DD!N6133100C0022 !A!*!* !20000413!20041201!152670030!008255408!008255408!N!70974!NORTHROP GRUMMAN CORPORATION !2000 W NASA BLVD !MELBOURNE !FL!32902!43975!009!12!MELBOURNE !BREVARD !FLORIDA !0001!+000013578000!N!N!000000000000!AZ15!RDTE/OTHER RESEARCH & DEVELOPMENT-ENG/MANUF DEVEL !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!*!B!A!*!A !N!V!

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 $50.8 million.

What is the period of performance?

Start: 2000-04-13. End: 2011-09-29.

What specific R&D objectives does this contract aim to achieve, and how will success be measured?

The contract details are classified or not discernible, making it impossible to ascertain the specific R&D objectives. Success measurement would typically involve predefined milestones, technical performance metrics, and delivery of prototypes or research findings. Without access to these specifics, evaluating the contract's value and effectiveness is challenging.

What are the primary risks associated with the Cost Plus Incentive Fee (CPIF) structure in this long-term R&D contract?

The main risks of a CPIF contract, especially over a long duration, include potential for cost overruns if the contractor's costs exceed estimates and incentives are not structured to control them. There's also a risk that the government may pay more than anticipated if performance targets are met, without a clear cap on total spending.

How does this R&D investment align with current and future defense priorities, and what is the expected return on investment?

The alignment with defense priorities and expected ROI are not discernible from the provided data. R&D investments are strategic and aim to enhance future capabilities, but their direct return is often realized years later through technological advancements and operational advantages, making immediate ROI assessment difficult.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE (V)

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

Address: 2000 W NASA BLVD, MELBOURNE, FL, 08

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline