DoD awards Northrop Grumman $940M for Engineering Services, a sole-source contract spanning 8 years
Contract Overview
Contract Amount: $94,047,205 ($94.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2005-09-07
End Date: 2013-05-23
Contract Duration: 2,815 days
Daily Burn Rate: $33.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32904
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $94.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Significant contract value of $940M awarded to a single large business. 2. Sole-source award raises questions about competition and potential price inflation. 3. Long contract duration (8 years) may limit flexibility and market responsiveness. 4. Engineering services sector is critical for defense, but specific value needs context.
Value Assessment
Rating: questionable
The contract value of $940M for engineering services is substantial. Without specific deliverables or benchmarks, it's difficult to assess value for money. The fixed-price incentive structure suggests some cost control, but the lack of competition is a primary concern.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This method bypasses competitive bidding, potentially leading to higher prices and reduced innovation as there is no market pressure to offer the best value.
Taxpayer Impact: The absence of competition for a nearly billion-dollar contract suggests taxpayers may not be receiving the most cost-effective solution available.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Long-term commitment to one provider could stifle innovation in critical engineering services. Defense capabilities might be reliant on a single, non-competed source for an extended period.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of transparency on specific services and pricing justification
Positive Signals
- Established relationship with a major defense contractor
- Fixed-price incentive contract type aims for cost control
Sector Analysis
This contract falls within the engineering services sector, which is vital for the Department of Defense's research, development, and sustainment activities. Benchmarks for such large, long-term sole-source engineering contracts are hard to establish without detailed service descriptions.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large business. There is no indication of small business participation or subcontracting in the provided data.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight to ensure fair pricing and adequate performance. The Defense Contract Management Agency's role is crucial in monitoring this significant award.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award lacks competitive pricing.
- Long contract duration may lead to price escalation.
- Potential for vendor lock-in and reduced innovation.
- Limited transparency on specific services and cost justification.
- Significant taxpayer investment without clear market validation.
Tags
engineering-services, department-of-defense, fl, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $94.0 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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $94.0 million.
What is the period of performance?
Start: 2005-09-07. End: 2013-05-23.
What specific engineering services are covered under this $940M contract, and how was the pricing determined without competition?
The provided data does not specify the exact engineering services. However, the contract type is Fixed Price Incentive, suggesting a target cost and fee structure with adjustments based on actual costs. The lack of competition means the initial pricing was likely based on historical data, sole-source negotiations, or cost-plus estimates rather than market-driven bids.
What are the primary risks associated with awarding such a large contract on a sole-source basis for an extended period?
The primary risks include potential cost overruns if the incentive structure is not effectively managed, reduced innovation due to lack of competitive pressure, and vendor lock-in. There's also a risk that the government might not be getting the best available technology or pricing compared to what a competitive market could offer over the contract's lifespan.
How does the fixed-price incentive contract type mitigate risks for the government in a sole-source scenario?
A fixed-price incentive (FPI) contract aims to share cost savings or overruns between the government and the contractor. It establishes a target cost, target fee, and ceiling price. While this provides some incentive for the contractor to control costs, the effectiveness in a sole-source situation depends heavily on the accuracy of the initial cost estimates and the government's negotiation and oversight capabilities.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2005-09-07
Current End Date: 2013-05-23
Potential End Date: 2013-05-23 00:00:00
Last Modified: 2023-06-14
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