DoD's $29.9M contract for submarine trainer systems awarded to Northrop Grumman shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $29,911,618 ($29.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-16

End Date: 2025-09-24

Contract Duration: 1,834 days

Daily Burn Rate: $16.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING AND TECHNICAL SERVICES TO NUWCDIVNPT IN SUPPORT OF THE EVOLUTION AND DEPLOYMENT OF SUBMARINE MULTI-MISSION TEAM TRAINER (SMMTT) AND RELATED SUBMARINE COMBAT SYSTEM TRAINER PRODUCTS AND SYSTEMS.

Place of Performance

Location: NEWPORT, NEWPORT County, RHODE ISLAND, 02841

State: Rhode Island Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING AND TECHNICAL SERVICES TO NUWCDIVNPT IN SUPPORT OF THE EVOLUTION AND DEPLOYMENT OF SUBMARINE MULTI-MISSION TEAM TRAINER (SMMTT) AND RELATED SUBMARINE COMBAT SYSTEM TRAINER PRODUCTS AND SYSTEMS. Key points: 1. Contract value of $29.9M over 5 years for critical submarine training systems. 2. Northrop Grumman, a major defense contractor, is the sole awardee. 3. Pricing appears reasonable when benchmarked against similar complex engineering services. 4. The contract supports the Navy's modernization of submarine combat training. 5. Risk indicators are moderate, primarily related to contractor performance and schedule adherence. 6. The contract is positioned within the defense sector's simulation and training sub-sector.

Value Assessment

Rating: good

The contract's total value of $29.9M over approximately five years for specialized engineering and technical services appears to be within a reasonable range for complex defense systems development. Benchmarking against similar contracts for simulation and training systems suggests that the pricing structure, a Cost Plus Fixed Fee (CPFF), is typical for this type of work where scope can evolve. While specific cost breakdowns are not public, the overall value aligns with industry standards for developing and maintaining sophisticated training platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the data shows only one award was made, suggesting that while the opportunity was broadly advertised, only one offeror, Northrop Grumman Systems Corporation, was deemed suitable or submitted a winning proposal. The level of competition, while open, resulted in a single awardee, which can sometimes limit price discovery compared to scenarios with multiple competing bids.

Taxpayer Impact: A full and open competition, even with a single awardee, generally provides a baseline for fair pricing. Taxpayers benefit from the process ensuring that the chosen contractor's price is justifiable against potential alternatives, even if those alternatives did not ultimately win the contract.

Public Impact

Submarine crews will benefit from enhanced and modernized training capabilities. The contract delivers advanced simulation and training products for submarine combat systems. The primary geographic impact is within Rhode Island, where NUWCDIVNPT is located. The contract supports highly skilled engineering and technical jobs within the defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Fixed Fee contracts if not closely managed.
Reliance on a single contractor for critical training system evolution could pose long-term dependency risks.
Schedule slippage could impact the timely delivery of modernized training capabilities to the fleet.

Positive Signals

Award to a large, established defense contractor with a track record in complex systems.
The contract supports a critical capability for submarine force readiness.
The use of full and open competition, even with a single award, suggests a structured procurement process.

Sector Analysis

This contract falls within the defense sector's simulation and training sub-sector, a critical area for maintaining military readiness. The market for defense simulation and training is substantial, driven by the need for realistic and cost-effective training solutions. Companies like Northrop Grumman are key players, offering integrated systems that reduce the need for live training exercises. Spending in this area is often characterized by long-term contracts for development, sustainment, and upgrades of complex platforms.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and there is no explicit mention of small business subcontracting goals. Given the prime contractor is Northrop Grumman, a large aerospace and defense company, there may be opportunities for small businesses to participate as subcontractors. However, the extent of this participation and its impact on the small business ecosystem would depend on the specific subcontracting plan developed by the prime contractor.

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 Naval Sea Systems Command (NAVSEA) and the Naval Undersea Warfare Center (NUWC) Division Newport. The Cost Plus Fixed Fee (CPFF) contract type necessitates robust financial oversight to ensure costs are reasonable and allocable. Transparency is typically maintained through contract reporting mechanisms, and the Inspector General for the Department of Defense would have jurisdiction over potential fraud, waste, or abuse.

Related Government Programs

Submarine Combat Systems
Naval Training Systems
Defense Simulation and Training
Engineering and Technical Services
Northrop Grumman Defense Contracts

Risk Flags

Potential for cost growth under CPFF contract type.
Reliance on a single awardee for critical training system evolution.
Schedule adherence risk for complex system development.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING AND TECHNICAL SERVICES TO NUWCDIVNPT IN SUPPORT OF THE EVOLUTION AND DEPLOYMENT OF SUBMARINE MULTI-MISSION TEAM TRAINER (SMMTT) AND RELATED SUBMARINE COMBAT SYSTEM TRAINER PRODUCTS AND SYSTEMS.

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 $29.9 million.

What is the period of performance?

Start: 2020-09-16. End: 2025-09-24.

What is Northrop Grumman's track record with similar Navy simulation and training contracts?

Northrop Grumman has a significant history of developing and supporting complex simulation and training systems for the U.S. military, including the Navy. They have been involved in various programs related to aircraft, ships, and submarines, providing integrated training solutions. Their experience often includes hardware development, software integration, and lifecycle support. While specific performance metrics for past contracts are not detailed here, their continued selection for such critical programs suggests a generally positive performance history. However, like any large defense contractor, they may have faced challenges or scrutiny on specific projects related to cost, schedule, or technical performance, which would be detailed in individual contract performance reports.

How does the $29.9M value compare to other submarine training system contracts?

The $29.9M total contract value for the Submarine Multi-Mission Team Trainer (SMMTT) and related systems appears to be a moderate investment for a multi-year development and sustainment effort within the defense sector. Contracts for developing advanced simulation and training systems can range widely, from tens of millions to hundreds of millions of dollars, depending on the complexity, scope, and duration. For instance, major platform simulators (like a full-flight simulator for a new aircraft or a complex ship bridge simulator) can easily exceed this amount. Given that this contract supports specific trainer products and systems for submarines, and spans approximately five years, the value seems aligned with industry benchmarks for specialized engineering and technical services in this niche. It is not an exceptionally large contract in the context of major defense procurement but represents a significant investment in a critical capability.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, like this one, revolve around cost control and contractor efficiency. While the fixed fee provides the contractor with an incentive to control costs to maximize profit, the government bears the risk of actual costs exceeding estimates. If the contractor's cost accounting is not rigorous or if unforeseen technical challenges arise, costs can escalate. Effective oversight by the government is crucial to scrutinize allowable costs, ensure efficiency, and prevent contractor inefficiencies from driving up the total price. There's also a risk that the fixed fee, if set too low, might disincentivize the contractor from performing beyond minimum requirements, although this is less common with established contractors on critical programs.

How effective is the current submarine training system, and how will this contract improve it?

The effectiveness of the current submarine training system is not explicitly detailed in the provided data. However, the contract's objective to support the 'evolution and deployment of Submarine Multi-Mission Team Trainer (SMMTT) and related submarine combat system trainer products and systems' implies a need for modernization and enhancement. This suggests that the current systems may be aging, lacking in fidelity, or not fully representative of evolving threats and operational requirements. This contract aims to improve training by developing and deploying updated or new trainer products, likely incorporating more advanced technologies, realistic scenarios, and better integration with combat systems. The goal is to provide submariners with more effective, efficient, and relevant training to ensure combat readiness in a dynamic environment.

What has been the historical spending trend for submarine training systems by the Department of the Navy?

Historical spending trends for submarine training systems by the Department of the Navy generally show a consistent and significant investment. The Navy relies heavily on sophisticated training simulators and trainers to prepare crews for complex submarine operations, given the high cost and risk associated with live training. Spending in this area fluctuates based on modernization cycles, new platform introductions, and evolving technological requirements. Over the past decade, there has been a sustained focus on upgrading legacy systems and developing new capabilities to match advancements in submarine technology and potential adversary capabilities. While specific aggregate figures for 'submarine training systems' are not readily available without deeper database analysis, the consistent need for readiness ensures ongoing budgetary allocation to this critical area, often through multiple individual contracts for development, procurement, and sustainment.

Industry Classification

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

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6660419R3511

Offers Received: 1

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, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $56,362,114

Exercised Options: $53,553,636

Current Obligation: $29,911,618

Actual Outlays: $163,622

Subaward Activity

Number of Subawards: 119

Total Subaward Amount: $64,069,183

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017819D8194

IDV Type: IDC

Timeline