DoD's $41M AEGIS Engineering Contract with Northrop Grumman Faces Scrutiny for Lack of Competition
Contract Overview
Contract Amount: $41,049,165 ($41.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2010-03-31
End Date: 2025-09-09
Contract Duration: 5,641 days
Daily Burn Rate: $7.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: AEGIS ENGINEERING AND TECHNICAL SERVICES
Place of Performance
Location: ORLANDO, ORANGE County, FLORIDA, 32826
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $41.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: AEGIS ENGINEERING AND TECHNICAL SERVICES Key points: 1. Significant contract value of over $41 million awarded to a single large corporation. 2. Lack of competition raises concerns about potential overpricing and reduced value for taxpayers. 3. The contract spans a long duration, increasing the risk of cost overruns and inefficiencies. 4. Engineering services sector is critical but requires robust oversight to ensure fair pricing.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee (CPFF) structure, combined with a lack of competition, makes it difficult to benchmark pricing effectively. Without competitive bids, it's challenging to ascertain if the fixed fee accurately reflects the effort and risk involved, potentially leading to inflated costs.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning no other vendors were considered. This significantly limits price discovery and negotiation leverage for the government, potentially resulting in higher costs than if the contract had been competitively bid.
Taxpayer Impact: The absence of competition likely means taxpayers are not receiving the best possible value, as the government may be paying a premium without the pressure of market forces driving down costs.
Public Impact
Taxpayers may be overpaying for engineering services due to the lack of competitive bidding. The long duration of the contract increases the potential for cost creep and reduced accountability over time. Limited transparency in pricing due to sole-source award hinders public understanding of defense spending efficiency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- No small business participation indicated
Positive Signals
- Essential engineering services for defense systems
- Established contractor with relevant experience
Sector Analysis
This contract falls within the Engineering Services sector, which is vital for complex defense systems like AEGIS. Benchmarks for similar large-scale engineering contracts often emphasize competitive bidding to ensure cost-effectiveness and value for money.
Small Business Impact
The data indicates no small business participation in this contract. Given the substantial value and sole-source nature, there's a missed opportunity to engage small businesses in the defense supply chain.
Oversight & Accountability
The sole-source award and CPFF structure warrant close oversight to ensure costs are reasonable and performance meets requirements. Independent cost reviews and regular performance audits are crucial for accountability.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration
- Potential for cost overruns
- No small business participation
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 $41.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. AEGIS ENGINEERING AND TECHNICAL SERVICES
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 $41.0 million.
What is the period of performance?
Start: 2010-03-31. End: 2025-09-09.
What specific justifications were provided for awarding this contract on a sole-source basis, and have these justifications been re-evaluated over the contract's lifespan?
Sole-source awards typically require rigorous justification, such as unique capabilities or urgent needs. Re-evaluating these justifications periodically is essential to ensure continued necessity and to explore opportunities for competition if circumstances change. Without this, the government risks locking into non-competitive arrangements indefinitely.
How are cost efficiencies and value for money being ensured under the Cost Plus Fixed Fee structure, given the lack of competition?
Ensuring value under a CPFF sole-source contract relies heavily on robust government oversight, detailed cost analysis, and performance metrics. The government must actively scrutinize incurred costs, validate the fixed fee's reasonableness against industry standards, and ensure the contractor is incentivized to control expenses beyond the fee.
What is the projected total cost of the contract over its full duration, and how does this compare to potential costs if it were competitively bid?
Projecting the total cost requires detailed analysis of the contract's ceiling and anticipated expenditures. Comparing this to hypothetical competitive bids is challenging but crucial. A competitive process would likely drive down the final negotiated price, offering significant savings to taxpayers compared to a sole-source arrangement.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6339410R1201
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 12011 SUNSET HILLS RD, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $47,396,039
Exercised Options: $47,396,039
Current Obligation: $41,049,165
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2010-03-31
Current End Date: 2025-09-09
Potential End Date: 2025-09-09 00:00:00
Last Modified: 2025-09-10
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