DoD's $70M Northrop Grumman Contract for Engineering Services Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $69,955,576 ($70.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2023-04-11
End Date: 2026-06-30
Contract Duration: 1,176 days
Daily Burn Rate: $59.5K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: ENGINEERING SERVICES RGS-A TASK ORDER 2
Place of Performance
Location: BOULDER, BOULDER County, COLORADO, 80301
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $70.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES RGS-A TASK ORDER 2 Key points: 1. Significant contract value of $69.9M for engineering services. 2. Awarded to Northrop Grumman Systems Corporation under full and open competition. 3. Contract duration is substantial at 1176 days, ending in June 2026. 4. The 'COST PLUS FIXED FEE' pricing structure warrants close examination for potential cost overruns.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee (CPFF) structure can lead to higher costs than fixed-price contracts if not managed tightly. Benchmarking against similar engineering service contracts is crucial to determine if the $70M price tag represents fair value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the CPFF structure might incentivize cost escalation, potentially impacting the final price discovery and overall value for taxpayers.
Taxpayer Impact: The substantial value of this contract means that any inefficiencies or cost overruns directly impact taxpayer funds. Ensuring competitive pricing and efficient execution is paramount.
Public Impact
Taxpayers are funding a large-scale engineering services contract with potential cost risks. The long duration of the contract raises questions about long-term necessity and potential for scope creep. Oversight is critical to ensure the fixed fee remains appropriate and costs are controlled. The specific engineering services provided are not detailed, limiting public understanding of the expenditure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee pricing structure
- Long contract duration
- Lack of specific service details
Positive Signals
- Full and open competition awarded
- Established contractor
Sector Analysis
This contract falls under Engineering Services (NAICS 541330), a broad category often involving complex technical solutions. Spending in this sector can vary widely, but large contracts like this require robust justification and oversight to ensure efficiency.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large prime contractor. There is no indication of small business participation in the provided data, suggesting potential missed opportunities for small business engagement.
Oversight & Accountability
Given the CPFF structure and significant value, rigorous oversight by the Department of the Navy is essential. This includes monitoring costs, ensuring adherence to the scope of work, and verifying the reasonableness of the fixed fee.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for cost overruns due to CPFF structure
- Lack of detailed service description
- Long contract duration may indicate inflexibility
- No clear small business participation
Tags
engineering-services, department-of-defense, co, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $70.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES RGS-A TASK ORDER 2
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 $70.0 million.
What is the period of performance?
Start: 2023-04-11. End: 2026-06-30.
What specific engineering services are being procured, and how do they align with current DoD priorities?
The provided data lacks specifics on the engineering services. Understanding the exact nature of these services is crucial for assessing their necessity and alignment with Department of Defense objectives. Without this detail, it's difficult to determine if the $70M expenditure is strategically justified or if it represents a routine requirement.
How will the Cost Plus Fixed Fee structure be managed to prevent cost overruns and ensure value for money?
The CPFF structure requires stringent oversight to control costs. The Department of the Navy must implement robust monitoring mechanisms, including regular audits and performance reviews, to ensure Northrop Grumman operates efficiently and within reasonable cost parameters. The fixed fee should be periodically reviewed for appropriateness based on performance and market conditions.
What mechanisms are in place to ensure the competitive pricing remains effective throughout the contract's duration?
While awarded under full and open competition, the CPFF nature necessitates ongoing vigilance. The government should track industry benchmarks and competitor pricing for similar services. Any significant deviations from expected cost trends should trigger a review of the contract's pricing structure and potentially renegotiation of the fixed fee.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N6600123RGS02
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 6120 LONGBOW DR, BOULDER, CO, 80301
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $69,955,576
Exercised Options: $69,955,576
Current Obligation: $69,955,576
Subaward Activity
Number of Subawards: 29
Total Subaward Amount: $38,790,033
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N6600122D0057
IDV Type: IDC
Timeline
Start Date: 2023-04-11
Current End Date: 2026-06-30
Potential End Date: 2026-06-30 00:00:00
Last Modified: 2025-10-09
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