Northrop Grumman awarded $52.9M for engineering services, highlighting significant defense sector investment
Contract Overview
Contract Amount: $52,892,367 ($52.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2024-05-29
End Date: 2026-06-30
Contract Duration: 762 days
Daily Burn Rate: $69.4K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES RGS-A TASK ORDER 3
Place of Performance
Location: BOULDER, BOULDER County, COLORADO, 80301
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $52.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES RGS-A TASK ORDER 3 Key points: 1. Contract value represents a substantial commitment to specialized engineering expertise. 2. Competition dynamics suggest a robust market for advanced engineering solutions. 3. Performance risk appears moderate given the fixed-fee structure and established contractor. 4. This award aligns with broader Department of Defense modernization efforts. 5. The engineering services sector is critical for national security and technological advancement. 6. Task order structure allows for phased delivery and adaptive project management.
Value Assessment
Rating: good
The $52.9 million award to Northrop Grumman for engineering services appears reasonable within the context of large-scale defense contracts. Benchmarking against similar specialized engineering services for the Department of Defense suggests that pricing is competitive, especially considering the complexity and critical nature of the work. The cost-plus-fixed-fee (CPFF) contract type allows for flexibility while maintaining cost control, indicating a focus on value for money.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. This level of competition is generally favorable for price discovery and ensures that the government receives proposals from a wide range of capable contractors. The specific number of bidders is not provided, but the 'full and open' designation suggests a healthy competitive environment.
Taxpayer Impact: Full and open competition typically leads to more favorable pricing for taxpayers by fostering a competitive environment that drives down costs and encourages innovation.
Public Impact
The Department of the Navy benefits from advanced engineering support for its critical programs. Specialized engineering services will contribute to the development and maintenance of defense systems. The contract's impact is primarily within the defense industrial base, supporting high-skilled jobs. Geographic impact is concentrated in areas where Northrop Grumman and its subcontractors operate.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns inherent in cost-plus contracts if not closely monitored.
- Dependence on a single large contractor could limit future competitive opportunities.
- Scope creep could increase the final cost beyond initial projections.
Positive Signals
- Award to a well-established contractor with a proven track record in defense.
- Fixed-fee component provides a degree of cost certainty for the government.
- Task order structure allows for flexibility and adaptation to evolving needs.
- Full and open competition suggests a competitive pricing environment.
Sector Analysis
The engineering services sector is a vital component of the defense industrial base, providing essential expertise for the design, development, and sustainment of complex military systems. This contract falls within a market segment characterized by high barriers to entry, significant R&D investment, and long-term government relationships. Comparable spending benchmarks in this area often run into tens or hundreds of millions of dollars for major system development and support.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. While the prime contractor is a large corporation, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Northrop Grumman's procurement practices and the specific requirements of the engineering tasks.
Oversight & Accountability
Oversight will likely be managed by the Department of the Navy contracting officers and program managers, ensuring adherence to contract terms and performance standards. The cost-plus-fixed-fee structure necessitates diligent financial oversight to manage allowable costs and ensure the fixed fee is earned appropriately. Transparency is generally maintained through contract reporting requirements, though specific details may be sensitive.
Related Government Programs
- Department of Defense Engineering Services
- Naval Systems Engineering Support
- Aerospace and Defense Contracting
- Northrop Grumman Defense Contracts
Risk Flags
- Cost Overrun Potential (CPFF)
- Contractor Performance Monitoring
- Scope Creep Risk
Tags
defense, department-of-defense, department-of-the-navy, engineering-services, northrop-grumman, cost-plus-fixed-fee, full-and-open-competition, task-order, delivery-order, professional-services, large-contract, national-security
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $52.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES RGS-A TASK ORDER 3
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 $52.9 million.
What is the period of performance?
Start: 2024-05-29. End: 2026-06-30.
What is Northrop Grumman's track record with similar Department of Defense engineering contracts?
Northrop Grumman Systems Corporation has a long and extensive history of performing complex engineering services for the Department of Defense across various branches, including the Navy. They are a major defense contractor involved in numerous large-scale programs, often focusing on aerospace, defense electronics, and information systems. Their track record typically includes successful delivery on high-stakes projects, though like any large contractor, they have also faced scrutiny on specific contracts regarding cost and performance. For this specific type of engineering support, their experience is substantial, often involving advanced technological development and integration critical to national security objectives. Past performance reviews and contract closeouts would provide more granular detail on their success rates and any challenges encountered.
How does the $52.9 million value compare to typical engineering service contracts for the Navy?
The $52.9 million value for this task order is significant but falls within the typical range for specialized engineering services awarded by the Department of the Navy, especially for complex systems or long-duration support. The Navy frequently awards contracts in the tens to hundreds of millions of dollars for engineering, research, development, and technical support. Factors influencing this value include the scope of work, the level of technical expertise required, the duration of the contract, and the specific systems being supported. Compared to broader platform acquisition contracts, this is a focused engineering effort, but its value reflects the critical nature of the services provided and the specialized knowledge of the contractor.
What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract type?
The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, such as this one, revolve around cost control and contractor incentive. For the government, the main risk is that the contractor may not be sufficiently incentivized to control costs, as the fee is fixed regardless of the actual costs incurred (within allowable limits). This can lead to potential cost overruns if the contractor's actual costs exceed initial estimates, although the government still pays the actual allowable costs. For the contractor, the risk lies in underestimating the costs, as their profit is capped by the fixed fee. Effective oversight, detailed cost tracking, and clear definition of allowable costs are crucial to mitigate these risks for the government.
What does the 'full and open competition' designation imply for program effectiveness?
The 'full and open competition' designation implies that the government sought proposals from all responsible sources and that the award was made to the source whose proposal represented the best value to the government. This process is designed to foster innovation and ensure that the most capable and cost-effective solutions are considered. For program effectiveness, this means the selected contractor, Northrop Grumman, was chosen through a rigorous evaluation process that likely considered technical merit, past performance, and price. This competitive approach increases the likelihood that the program will receive high-quality engineering services tailored to its specific needs, thereby enhancing overall program effectiveness and mission accomplishment.
How does this contract fit into the broader context of Department of Defense engineering services spending?
This $52.9 million award is one component within the vast landscape of Department of Defense engineering services spending, which annually totals billions of dollars. The DoD relies heavily on external engineering expertise for everything from conceptual design and research to sustainment and modernization of complex weapon systems. Contracts like this one support specific technological advancements, platform upgrades, or specialized analyses crucial for maintaining military readiness and technological superiority. Its value is significant for the specific task order but represents a fraction of the overall DoD engineering services budget, which is distributed across numerous agencies, programs, and contractors.
What are the potential implications of this contract on future competition for similar services?
Awarding a significant task order to a major incumbent like Northrop Grumman can have mixed implications for future competition. On one hand, it validates their capabilities and may position them favorably for subsequent related work. On the other hand, the 'full and open competition' process ensures that other capable firms also had a chance, and their proposals might have been considered for future opportunities. If this contract is part of a larger, multi-year program, subsequent task orders might follow a similar competitive path or could potentially be sole-source if justified. The government's strategy for future competition will depend on evolving needs, market dynamics, and strategic sourcing goals.
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: N6600122R0024
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: $63,341,112
Exercised Options: $52,892,367
Current Obligation: $52,892,367
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $2,794
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: 2024-05-29
Current End Date: 2026-06-30
Potential End Date: 2026-09-30 00:00:00
Last Modified: 2025-12-23
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