DoD awards Northrop Grumman $12.3M for software, raising concerns about competition and value
Contract Overview
Contract Amount: $12,293,112 ($12.3M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2023-07-26
End Date: 2027-11-26
Contract Duration: 1,584 days
Daily Burn Rate: $7.8K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: MMTT 2023 SOFTWARE PID # N61340-23-RFPREQ-136100G-0004, DO GREEN
Place of Performance
Location: MIDDLETOWN, NEWPORT County, RHODE ISLAND, 02842
Plain-Language Summary
Department of Defense obligated $12.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: MMTT 2023 SOFTWARE PID # N61340-23-RFPREQ-136100G-0004, DO GREEN Key points: 1. Significant award to a single large contractor, Northrop Grumman. 2. Contract type (Cost Plus Fixed Fee) can lead to cost overruns. 3. Lack of competition raises questions about price reasonableness. 4. Software procurement in the 'Other Commercial and Service Industry Machinery Manufacturing' NAICS code is unusual.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee contract type offers limited incentive for cost control. Without competitive bidding, it's difficult to assess if the $12.3 million price is reasonable compared to market rates for similar software solutions.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source or limited competition award. This significantly restricts price discovery and may result in a higher cost to the government than a competitive process would yield.
Taxpayer Impact: The lack of competition and potentially inflated costs directly impact taxpayer funds, as more money is spent than might be necessary for the acquired software.
Public Impact
Taxpayers may be overpaying for software due to the absence of competitive bidding. The Department of the Navy is procuring software under an unusual manufacturing NAICS code. The long contract duration (2023-2027) means potential cost inefficiencies persist over several years. Reliance on a single large contractor for critical software could pose long-term risks.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost Plus Fixed Fee contract type
- Unusual NAICS code for software
- Long contract duration
Positive Signals
- Award to established contractor
- Clear delivery and performance period
Sector Analysis
The Department of Defense is a major spender on IT and software. However, this specific procurement falls under NAICS code 333318 (Other Commercial and Service Industry Machinery Manufacturing), which is atypical for software acquisition and warrants further investigation into the nature of the software and its intended use.
Small Business Impact
The award went to Northrop Grumman Systems Corporation, a large business. There is no indication that small businesses were involved in this specific contract, either as prime contractors or subcontractors.
Oversight & Accountability
The 'NOT COMPETED' status suggests a potential lapse in competitive sourcing. Further oversight is needed to understand why this contract was not opened to a wider range of vendors and if proper justification for sole-sourcing was documented.
Related Government Programs
- Other Commercial and Service Industry Machinery Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost Plus Fixed Fee contract type
- Unusual NAICS code classification
- Potential for cost overruns
- Limited transparency on pricing justification
Tags
other-commercial-and-service-industry-ma, department-of-defense, ri, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $12.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. MMTT 2023 SOFTWARE PID # N61340-23-RFPREQ-136100G-0004, DO GREEN
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 $12.3 million.
What is the period of performance?
Start: 2023-07-26. End: 2027-11-26.
What specific software is being procured under NAICS code 333318, and why is it classified under machinery manufacturing rather than a software-specific category?
The classification under NAICS 333318 is highly unusual for software. Typically, software procurement falls under categories like 'Computer and Electronic Product Manufacturing' (e.g., 334) or 'Information Services and Data Processing Services' (e.g., 518). This suggests the software might be embedded within or integral to specialized machinery, or there may be a misclassification. Clarification is needed to understand the exact nature of the product and ensure appropriate categorization for future procurements.
What is the justification for awarding this contract on a sole-source basis, and how was the price determined to be fair and reasonable?
Without competition, establishing fair and reasonable pricing is challenging. The government must have conducted a price analysis based on historical data, commercial pricing, or other methods. The justification for sole-sourcing needs to be thoroughly reviewed to ensure it aligns with federal acquisition regulations and that no viable alternatives were overlooked, especially given the significant dollar amount.
What are the potential risks associated with using a Cost Plus Fixed Fee (CPFF) contract for this software acquisition, and what mitigation strategies are in place?
CPFF contracts shift cost risk to the government, as the contractor is reimbursed for allowable costs plus a fixed fee. This can incentivize cost overruns if not closely monitored. Mitigation strategies should include rigorous cost tracking, detailed performance metrics, and clear deliverables to ensure the contractor remains focused on efficiency and meeting program objectives within the established fee structure.
Industry Classification
NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Other Commercial and Service Industry Machinery Manufacturing
Product/Service Code: TRAINING AIDS AND DEVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6134020R0047
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 7575 COLSHIRE DR, MCLEAN, VA, 22102
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $12,546,065
Exercised Options: $12,293,112
Current Obligation: $12,293,112
Subaward Activity
Number of Subawards: 21
Total Subaward Amount: $1,915,873
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N6134020D0016
IDV Type: IDC
Timeline
Start Date: 2023-07-26
Current End Date: 2027-11-26
Potential End Date: 2027-11-26 00:00:00
Last Modified: 2025-12-15
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