DoD Awards Northrop Grumman $26.7M for R&D, Raising Questions on Value and Competition
Contract Overview
Contract Amount: $26,721,142 ($26.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2004-09-16
End Date: 2008-09-15
Contract Duration: 1,460 days
Daily Burn Rate: $18.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Place of Performance
Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $26.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Significant contract value for R&D services. 2. Full and open competition was cited, but details on price discovery are limited. 3. Potential risks associated with cost-plus fixed-fee contracts. 4. Focus on physical, engineering, and life sciences R&D.
Value Assessment
Rating: questionable
The contract's cost-plus fixed-fee structure can incentivize cost overruns. Without specific benchmarks for similar R&D contracts, assessing value for money is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
While advertised as full and open competition, the effectiveness of this method in achieving competitive pricing for specialized R&D is not detailed. The fixed fee component may limit price negotiation.
Taxpayer Impact: Taxpayer funds are allocated for advanced research, with the ultimate return on investment dependent on the success of the R&D outcomes.
Public Impact
Investment in advanced scientific research with potential for technological breakthroughs. Contract awarded to a major defense contractor, impacting the broader aerospace and defense sector. Long-term contract duration suggests a sustained commitment to the research area.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus fixed-fee contract type
- Limited detail on price discovery
- Lack of specific R&D benchmarks
Positive Signals
- Awarded under full and open competition
- Focus on critical R&D areas
Sector Analysis
This contract falls under Research and Development in the Physical, Engineering, and Life Sciences. Spending in this sector is crucial for technological advancement but can be highly variable in terms of cost and outcome.
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 this specific award.
Oversight & Accountability
The contract's oversight would typically be managed by the Defense Contract Management Agency. Ensuring efficient use of funds and adherence to research objectives is key.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Cost-plus fixed-fee contract type
- Limited transparency on price discovery
- Potential for cost overruns
- Lack of specific R&D performance benchmarks provided
Tags
research-and-development-in-the-physical, department-of-defense, il, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
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 $26.7 million.
What is the period of performance?
Start: 2004-09-16. End: 2008-09-15.
How effectively did the 'full and open competition' process ensure competitive pricing for this specialized R&D effort, given the cost-plus fixed-fee structure?
The effectiveness of 'full and open competition' in ensuring competitive pricing for specialized R&D under a cost-plus fixed-fee (CPFF) contract is often limited. While the initial bidding process may be open, the CPFF structure inherently allows costs to fluctuate, with the contractor receiving a predetermined fixed fee. This can reduce the incentive for aggressive cost control compared to fixed-price contracts. Detailed analysis of the proposals received and the negotiation process would be needed to fully assess price discovery.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D, and how might they impact taxpayer value?
The primary risk of a CPFF contract for R&D is the potential for cost overruns, as the contractor is reimbursed for all allowable costs. While the fixed fee provides some predictability for the contractor's profit, it doesn't cap the total project cost for the government. This can lead to higher overall expenditures than anticipated, potentially diminishing taxpayer value if the R&D outcomes do not justify the increased costs or if the project scope expands significantly.
Given the $26.7 million award and the R&D focus, what metrics could be used to assess the effectiveness and ultimate value of this contract?
Assessing the effectiveness and value of this R&D contract requires looking beyond initial cost. Key metrics could include the successful development of prototypes or technologies, achievement of specific research milestones outlined in the contract, patent applications or issuances, and the potential for the research to lead to future cost savings or operational improvements for the DoD. Independent technical reviews and post-award analysis of the research's applicability are also crucial.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 3
Pricing Type: COST PLUS FIXED FEE (U)
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 600 HICKS RD, ROLLING MEADOW, IL, 60008
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2004-09-16
Current End Date: 2008-09-15
Potential End Date: 2008-09-15 00:00:00
Last Modified: 2024-03-14
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