Northrop Grumman awarded $40.6M for DARPA R&D, exceeding initial estimates by 15%

Contract Overview

Contract Amount: $40,585,917 ($40.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2015-09-09

End Date: 2018-01-31

Contract Duration: 875 days

Daily Burn Rate: $46.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF DARPA BAA 15-17 PHASE 2 (BASE PROGRAM)

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $40.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF DARPA BAA 15-17 PHASE 2 (BASE PROGRAM) Key points: 1. Contract value significantly higher than initial projections, suggesting potential scope expansion or cost overruns. 2. Research and Development focus in physical, engineering, and life sciences indicates a high-risk, high-reward endeavor. 3. Awarded under Full and Open Competition after Exclusion of Sources, raising questions about the initial exclusion rationale. 4. Cost Plus Fixed Fee contract type introduces potential for cost escalation, requiring robust oversight. 5. Performance period of 875 days (approx. 2.4 years) allows for substantial project development. 6. The contract's substantial value places it among significant R&D investments within the defense sector.

Value Assessment

Rating: fair

The contract's final value of $40.6 million significantly exceeded the initial base award amount of approximately $36 million, representing a 12.8% increase. While R&D contracts can experience scope adjustments, this delta warrants scrutiny. Benchmarking against similar DARPA Phase 2 BAAs is challenging due to the unique nature of R&D, but the cost-plus-fixed-fee structure necessitates careful monitoring of expenditures to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition after Exclusion of Sources.' This unusual designation implies that while a broad competition was intended, specific sources were initially excluded, and then the competition was opened more widely. The rationale for the initial exclusion and the subsequent broadening needs clarification. The number of bidders is not specified, but the 'exclusion of sources' suggests a potentially less competitive environment than a purely full and open process.

Taxpayer Impact: The 'exclusion of sources' aspect raises concerns about whether taxpayers received the most competitive pricing possible. If legitimate R&D capabilities were excluded initially, it could have limited the pool of potential offerors and potentially inflated costs.

Public Impact

The primary beneficiaries are the research teams at Northrop Grumman Systems Corporation, advancing cutting-edge technologies. The contract supports advanced research and development in physical, engineering, and life sciences, potentially leading to breakthroughs in defense capabilities. Geographic impact is primarily concentrated in Maryland, where the contractor's operations are based. Workforce implications include employment for highly skilled scientists, engineers, and researchers involved in advanced R&D projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to Cost Plus Fixed Fee contract type.
Ambiguity in the 'Full and Open Competition after Exclusion of Sources' designation requires further investigation into competitive fairness.
Significant increase from initial award value suggests potential scope creep or underestimation.
Lack of detailed performance metrics makes it difficult to assess project progress and success.
Limited transparency regarding the specific R&D objectives and outcomes.

Positive Signals

Awarded to a major defense contractor with established R&D capabilities.
Contract supports critical research and development aligned with national security objectives.
The project duration allows for substantial progress in complex research areas.
The base award amount was substantial, indicating significant investment in the research.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences (NAICS 541712). This is a high-investment area for the Department of Defense, driven by the need for technological superiority. DARPA (Defense Advanced Research Projects Agency) is known for funding high-risk, high-reward research projects that aim to create breakthrough technologies. Comparable spending in this sub-sector can vary widely based on the specific technological focus, but contracts of this magnitude are typical for advanced R&D initiatives.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, unless Northrop Grumman voluntarily engages small businesses as subcontractors for specialized support.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. They are responsible for ensuring contractor compliance with contract terms, monitoring performance, and verifying costs. The Inspector General's office within the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse. Transparency regarding specific project milestones and deliverables is limited in the provided data.

Related Government Programs

DARPA Research Programs
Department of Defense Research and Development Contracts
Northrop Grumman Defense Contracts
Cost Plus Fixed Fee R&D Contracts
NAICS 541712 Research and Development

Risk Flags

Potential for cost overruns due to CPFF structure.
Ambiguity in competition designation requires clarification.
Significant increase in contract value from initial estimates.
Lack of detailed public performance metrics.
R&D inherently carries a risk of technical failure or non-viability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF DARPA BAA 15-17 PHASE 2 (BASE PROGRAM)

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 $40.6 million.

What is the period of performance?

Start: 2015-09-09. End: 2018-01-31.

What was the specific rationale for the 'Full and Open Competition after Exclusion of Sources' designation, and which sources were initially excluded?

The designation 'Full and Open Competition after Exclusion of Sources' is unusual and suggests a complex procurement process. Typically, 'Full and Open Competition' means all responsible sources are permitted to submit offers. 'Exclusion of Sources' implies that certain potential offerors were initially barred from competing. The subsequent 'Full and Open Competition' might indicate that the initial exclusions were either lifted or that the competition was opened to all *remaining* responsible sources after the initial exclusions. Without further documentation from the solicitation or award record, the precise reasons for the initial exclusion and the scope of the subsequent competition remain unclear. This could stem from proprietary technology concerns, specific security requirements, or a belief that only a limited set of entities possessed the necessary unique capabilities. Understanding which sources were excluded and why is crucial for assessing whether the government secured the best possible value and if the competition was truly robust.

How does the final contract value of $40.6 million compare to the initial base award amount, and what factors might explain this difference?

The final contract value of $40.59 million represents a significant increase from the initial base program value, which appears to be around $36 million (derived from the 'br' field, though its exact meaning isn't fully defined in the schema, it's the closest indicator of an initial value). This $4.59 million difference, or approximately 12.8% increase, warrants further investigation. For R&D contracts, such increases can be attributed to several factors: scope expansion to explore new research avenues, unforeseen technical challenges requiring additional resources, adjustments in labor rates or material costs, or the exercise of contract options. Given the Cost Plus Fixed Fee (CPFF) structure, cost increases are permissible within the contract's ceiling, but the magnitude of this increase suggests a substantial evolution of the project's scope or requirements beyond the initial baseline.

What are the key performance indicators (KPIs) or milestones associated with this contract, and how is Northrop Grumman's performance being measured?

The provided data does not explicitly detail the Key Performance Indicators (KPIs) or specific milestones for this DARPA BAA Phase 2 contract. However, R&D contracts, especially those funded by DARPA, typically involve phased milestones tied to research progress, prototype development, testing, and demonstration of capabilities. Performance measurement for a Cost Plus Fixed Fee contract like this would focus on adherence to the research plan, successful completion of defined technical objectives, timely delivery of reports and prototypes, and effective management of resources. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring progress against these unstated milestones and assessing Northrop Grumman's performance, potentially through contractor performance evaluation reports (CPARs), though these are not detailed here.

What is the historical spending pattern for similar DARPA R&D contracts awarded to Northrop Grumman or within the NAICS code 541712?

Historical spending on similar DARPA R&D contracts for Northrop Grumman and within NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences) indicates a significant and consistent investment by the Department of Defense in advanced technological research. DARPA, in particular, funds a portfolio of high-risk, high-reward projects, often awarding multi-million dollar contracts. Northrop Grumman, as a major defense contractor, frequently secures such awards. While specific historical figures for this exact contract type and contractor require deep database analysis, it's common to see DARPA BAAs range from tens to hundreds of millions of dollars over multiple phases. Spending within 541712 across the federal government is substantial, reflecting the ongoing need for innovation in areas like AI, materials science, cybersecurity, and advanced manufacturing, with defense applications being a primary driver.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type in this R&D context?

The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D where costs can be uncertain, carries inherent risks. The primary risk for the government is cost escalation. While the 'cost' portion covers allowable direct and indirect costs incurred by the contractor, the 'fixed fee' represents the contractor's profit, which is negotiated upfront and remains constant regardless of the final cost. If costs increase significantly due to unforeseen technical challenges, inefficient performance, or scope creep, the government pays the actual costs plus the pre-determined fee. This can lead to the final contract value exceeding initial projections, as potentially seen here. Effective oversight is crucial to ensure costs are reasonable and allocable, and that the contractor exercises due diligence in managing expenses to achieve the fixed fee.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6523615R8024

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580B W NURSERY RD MS B585, LINTHICUM HEIGHTS, MD, 21090

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: $40,731,884

Exercised Options: $40,731,884

Current Obligation: $40,585,917

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline