Northrop Grumman awarded $70.6M for Enterprise Network Cyber Defense, highlighting significant investment in defense IT

Contract Overview

Contract Amount: $70,604,460 ($70.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-04-03

End Date: 2024-08-30

Contract Duration: 1,976 days

Daily Burn Rate: $35.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: ENTERPRISE NETWORK CYBER DEFENSE

Place of Performance

Location: QUANTICO, PRINCE WILLIAM County, VIRGINIA, 22134

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $70.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENTERPRISE NETWORK CYBER DEFENSE Key points: 1. Contract value represents a substantial commitment to cybersecurity infrastructure. 2. Full and open competition suggests a potentially competitive bidding process. 3. The contract duration of nearly 2000 days indicates a long-term need for these services. 4. Cost Plus Fixed Fee pricing structure requires careful monitoring of expenditures. 5. The award is situated within the broader context of increasing defense spending on advanced technologies. 6. Engineering services are critical for maintaining and enhancing complex network defenses.

Value Assessment

Rating: good

The contract value of $70.6 million over approximately five years for enterprise network cyber defense appears reasonable given the scope and duration. Benchmarking against similar large-scale cybersecurity contracts within the Department of Defense suggests this falls within expected ranges for comprehensive network protection services. The Cost Plus Fixed Fee (CPFF) structure, while allowing for flexibility, necessitates diligent oversight to ensure costs remain aligned with the fixed fee and deliverable objectives. Without specific per-unit cost data, a direct pricing assessment is challenging, but the overall investment reflects the critical nature of cyber defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 8 bidders suggests a healthy level of competition for this significant cybersecurity requirement. A competitive environment like this generally leads to better price discovery and potentially more innovative solutions as contractors vie for the award. The agency's decision to pursue full and open competition is a positive indicator for achieving value for taxpayer money.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers as it likely drove down costs and encouraged a wider range of technical approaches, ensuring the government receives robust cybersecurity solutions at a competitive price.

Public Impact

The Department of the Navy benefits from enhanced cybersecurity for its enterprise networks, protecting sensitive data and operational capabilities. This contract supports the delivery of advanced cyber defense services, crucial for maintaining military readiness in the digital domain. The geographic impact is likely widespread, covering networks essential to naval operations across various locations. Workforce implications include the employment of highly skilled cybersecurity professionals, engineers, and technical specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can lead to cost overruns if not managed meticulously.
The long duration of the contract may require adjustments for evolving cyber threats and technologies.
Reliance on a single large contractor for critical cyber defense could pose risks if performance falters.

Positive Signals

Awarded through full and open competition, indicating a robust and fair bidding process.
The significant investment signals a strong commitment to national security and cyber resilience.
The contract's focus on enterprise network cyber defense addresses a critical and growing threat landscape.

Sector Analysis

The cybersecurity market within the defense sector is experiencing substantial growth, driven by increasing geopolitical tensions and the proliferation of sophisticated cyber threats. This contract for Enterprise Network Cyber Defense falls within the broader IT services and engineering support categories, which are crucial for maintaining the operational integrity of military networks. Comparable spending benchmarks in this area often run into tens or hundreds of millions of dollars for large-scale, multi-year engagements, reflecting the complexity and criticality of securing defense infrastructure.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, nor is there explicit information regarding subcontracting plans for small businesses. Given the nature and scale of enterprise network cyber defense, it is possible that specialized cybersecurity firms, which may include small businesses, could be involved as subcontractors. However, the primary awardee is a large corporation, suggesting the main contract is not directly aimed at fostering small business participation.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of the Navy's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). Accountability measures would be tied to the Cost Plus Fixed Fee contract terms, performance metrics, and delivery schedules. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details of cyber defense are often classified.

Related Government Programs

DoD Cybersecurity Initiatives
Naval Network Operations
Information Technology Services
Cybersecurity Engineering Support
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost growth.
Long contract duration necessitates adaptability to evolving cyber threats and technologies.
Reliance on a single large contractor for critical cyber defense may pose strategic risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENTERPRISE NETWORK CYBER DEFENSE

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 $70.6 million.

What is the period of performance?

Start: 2019-04-03. End: 2024-08-30.

What is Northrop Grumman's track record with similar large-scale cyber defense contracts for the Department of Defense?

Northrop Grumman has a long-standing and extensive track record of providing complex systems integration, defense technology, and cybersecurity solutions to the Department of Defense and other federal agencies. They are a major defense contractor with significant experience in areas such as network security, intelligence, surveillance, and reconnaissance (ISR), and electronic warfare. Their portfolio includes numerous large contracts for developing, implementing, and maintaining critical defense infrastructure, including cybersecurity systems. While specific details of past cyber defense contracts are often sensitive, their overall performance history with the DoD suggests a capability to handle large, complex, and mission-critical programs like this one. Performance reviews and past performance evaluations from previous contracts would be key indicators of their reliability and effectiveness in delivering on cyber defense requirements.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for cybersecurity services, and what are the implications for value?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined at the outset or when there is a high degree of uncertainty in the costs of performance, such as in research and development or complex system integration. In this structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government to adapt to changing requirements but carries a higher risk of cost growth if not managed diligently. For cybersecurity services, FFP might be preferred for well-defined tasks, while CPFF is suitable for evolving threats and adaptive defense strategies. The implication for value is that while CPFF can ensure the government obtains necessary services even with evolving needs, it requires robust oversight to prevent cost overruns and ensure the fixed fee remains a fair profit for the work performed. The government must actively manage the scope and costs to realize good value.

What are the primary risks associated with a long-duration contract (1976 days) for enterprise network cyber defense?

A long-duration contract for enterprise network cyber defense, such as this 1976-day award, presents several key risks. Firstly, the threat landscape in cybersecurity evolves rapidly; a five-year plan might become outdated before its completion, requiring significant adaptation and potentially costly modifications. Secondly, technology advancements can render current solutions obsolete, necessitating upgrades or replacements that may not be adequately accounted for in the original contract. Thirdly, contractor performance can degrade over time, or key personnel might leave, impacting the quality and consistency of services. Finally, long-term reliance on a single contractor for critical infrastructure can create dependencies and reduce the government's agility in responding to new opportunities or changing strategic priorities. Mitigating these risks requires built-in flexibility, regular performance reviews, and mechanisms for contract modification or re-competition.

How does this contract's value compare to overall federal spending on cybersecurity and IT services?

The $70.6 million awarded to Northrop Grumman for Enterprise Network Cyber Defense is a significant sum, but it represents a fraction of the total federal spending on cybersecurity and IT services. The U.S. federal government invests billions of dollars annually in IT modernization, cybersecurity, and related services across all agencies. For context, the Department of Defense alone typically has a budget in the hundreds of billions for IT and cyber operations. This specific contract, while substantial for a single award, fits within the broader pattern of significant federal investment required to maintain and defend complex digital infrastructures against sophisticated threats. It highlights the ongoing commitment to bolstering cyber defenses within a critical agency like the Navy, but it is not an outlier in the context of overall federal IT and cybersecurity expenditures.

What are the potential implications of this contract on the broader cybersecurity market, particularly for smaller, specialized firms?

This contract, awarded to a large prime contractor like Northrop Grumman, primarily impacts the market by defining the requirements and standards for enterprise network cyber defense within the Department of the Navy. While the prime contractor will likely manage the overall program, there is potential for smaller, specialized cybersecurity firms to participate as subcontractors. These smaller firms might offer niche expertise in areas such as threat intelligence, incident response, vulnerability assessment, or specific security technologies. The success of such subcontracting relationships depends on the prime contractor's strategy and the government's encouragement of small business participation. If well-managed, this contract could create opportunities for smaller firms to gain experience and revenue. However, if the prime contractor handles most of the work internally or through other large partners, the direct impact on the broader small business ecosystem might be limited.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6600118R3502

Offers Received: 8

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $71,729,544

Exercised Options: $71,729,544

Current Obligation: $70,604,460

Actual Outlays: $15,199,825

Subaward Activity

Number of Subawards: 323

Total Subaward Amount: $1,007,494,238

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4091

IDV Type: IDC

Timeline