DoD's $58M Engineering Services Contract Awarded to Northrop Grumman Raises Value and Competition Concerns
Contract Overview
Contract Amount: $58,033,220 ($58.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2017-08-31
End Date: 2020-09-30
Contract Duration: 1,126 days
Daily Burn Rate: $51.5K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF
Place of Performance
Location: RONKONKOMA, SUFFOLK County, NEW YORK, 11779
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $58.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF Key points: 1. The contract's value proposition is unclear due to a lack of competitive bidding. 2. Limited competition for this significant engineering services award warrants further scrutiny. 3. The sole-source nature of the award presents potential risks to cost control. 4. Performance context is limited as this was not competed. 5. This contract falls within the broader Defense sector's engineering services category. 6. The absence of small business participation is noted.
Value Assessment
Rating: questionable
Benchmarking the value of this $58 million engineering services contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if alternative, more cost-effective solutions were available. The cost-plus-fixed-fee structure, while common in complex defense contracts, can sometimes lead to cost overruns if not meticulously managed. A comparison to similar engineering services contracts awarded competitively would be necessary to provide a more robust value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. The Department of the Navy did not solicit bids from multiple vendors, which limits the opportunity for price discovery and potentially leads to higher costs for the government. The lack of competition suggests that either only one vendor was deemed capable of performing the required services or that the procurement process did not adequately explore competitive options.
Taxpayer Impact: Taxpayers may have paid a premium for these engineering services due to the absence of a competitive bidding process. The government missed an opportunity to leverage market forces to secure the best possible price and value.
Public Impact
The primary beneficiaries are the Department of Defense and potentially its operational readiness through the engineering services provided. Services delivered likely include design, analysis, and technical support critical to defense systems. The geographic impact is centered around New York, where the contractor is located. Workforce implications include employment for engineers and technical staff at Northrop Grumman.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs.
- Sole-source award limits transparency in pricing.
- Potential for cost overruns with Cost Plus Fixed Fee contract type.
- Absence of small business participation.
Positive Signals
- Northrop Grumman is a large, established defense contractor with significant experience.
- Engineering services are critical for defense system development and maintenance.
Sector Analysis
This contract falls within the Engineering Services sector, a critical component of the broader Defense industry. The market for defense engineering services is substantial, driven by the continuous need for advanced technological development, modernization, and maintenance of military systems. Spending in this area is often characterized by long-term relationships, specialized expertise, and significant government investment. Comparable spending benchmarks would typically involve other large-scale engineering support contracts awarded to major defense contractors.
Small Business Impact
This contract was not set aside for small businesses, and there is no indication of subcontracting opportunities for small businesses. The absence of small business involvement in this sole-source award means that the potential benefits to the small business ecosystem within the defense contracting space are not realized. This could limit opportunities for innovative small firms to contribute to critical defense engineering efforts.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, including performance milestones and cost reporting. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the procurement process and pricing more difficult. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Defense Engineering Services
- Naval Systems Support
- Aerospace Engineering Contracts
- Northrop Grumman Defense Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for overpricing
- Limited transparency
Tags
defense, department-of-defense, department-of-the-navy, engineering-services, northrop-grumman, sole-source, cost-plus-fixed-fee, new-york, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $58.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF
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 $58.0 million.
What is the period of performance?
Start: 2017-08-31. End: 2020-09-30.
What is Northrop Grumman's track record with the Department of Defense for similar engineering services contracts?
Northrop Grumman Systems Corporation has a long and extensive history of contracting with the Department of Defense across a wide array of services, including engineering, research, development, and manufacturing. For engineering services specifically, they are a major player, often involved in complex, high-value programs for various branches of the military. Their track record generally includes the successful delivery of sophisticated systems and support. However, the specifics of their performance on individual contracts, including any past issues with cost, schedule, or quality, would require a detailed review of contract performance reports and any associated corrective actions or disputes. Given the sole-source nature of this particular award, a deeper dive into why competition was precluded and if Northrop Grumman was the only viable option would be crucial for a complete assessment.
How does the $58 million value of this contract compare to similar engineering services contracts awarded by the Department of the Navy?
Comparing the $58 million value of this specific contract to similar engineering services contracts awarded by the Department of the Navy is challenging without more context on the scope and nature of the services. However, for major defense contractors like Northrop Grumman, contracts in the tens to hundreds of millions of dollars for specialized engineering support are not uncommon. The key differentiator here is the sole-source award. Competitively procured contracts of similar value would typically involve multiple bidders, allowing for price benchmarking. A sole-source award makes it difficult to determine if this $58 million represents a fair market price or if a more competitive process could have yielded savings. Benchmarking would ideally involve looking at contracts for comparable services (e.g., systems engineering, technical support, design services) awarded competitively to assess typical cost structures and rates.
What are the primary risks associated with awarding a $58 million engineering services contract on a sole-source basis?
The primary risks associated with awarding a $58 million engineering services contract on a sole-source basis are significant. Firstly, there is a heightened risk of paying an inflated price, as the absence of competition removes the downward pressure that multiple bids would typically exert. Secondly, the government may not be receiving the best available solution or innovation, as alternative providers with potentially superior or more cost-effective approaches were not considered. Thirdly, a sole-source award can reduce transparency in the procurement process, making it harder to scrutinize the justification for the award and the reasonableness of the price. Finally, it can set a precedent for future sole-source awards, potentially eroding the overall competitiveness of the defense procurement landscape and impacting long-term cost efficiency for taxpayers.
What is the expected effectiveness of the engineering services provided under this contract for the Department of the Navy?
The expected effectiveness of the engineering services provided under this contract hinges on several factors, primarily the clarity of the statement of work and the contractor's ability to meet those requirements. As this is a sole-source award to Northrop Grumman, a large and experienced defense contractor, there's an expectation of technical competence and capability. The services are likely critical to supporting specific naval systems or programs, contributing to their design, development, sustainment, or modernization. However, without a competitive process to validate the proposed approach and cost, assessing the *optimal* effectiveness is difficult. The effectiveness will ultimately be measured by the successful delivery of the contracted engineering tasks, their contribution to the Navy's mission objectives, and adherence to any specified performance metrics, which should be rigorously monitored by the Navy.
How has historical spending on engineering services by the Department of the Navy trended, and how does this contract fit within that pattern?
Historical spending on engineering services by the Department of the Navy is substantial and generally trends upwards, driven by the continuous need to maintain, modernize, and develop complex naval platforms and systems. This includes a wide range of services from basic R&D support to highly specialized systems engineering and integration. Contracts for these services often involve large, established defense contractors like Northrop Grumman. This $58 million contract, awarded on a sole-source basis, fits within the pattern of significant investment in engineering expertise. However, the *method* of award (sole-source) is a point of concern, as it deviates from the ideal of competitive procurement which aims to ensure best value. Analyzing historical spending patterns would reveal the overall budget allocated to such services, while this specific contract highlights a particular instance of how those funds are being allocated, raising questions about the efficiency of the sole-source approach within that broader spending context.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6893612R0125
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 600 GRUMMAN RD WEST, BETHPAGE, NY, 11714
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $58,099,713
Exercised Options: $58,099,713
Current Obligation: $58,033,220
Subaward Activity
Number of Subawards: 19
Total Subaward Amount: $3,566,421
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N6893614D0018
IDV Type: IDC
Timeline
Start Date: 2017-08-31
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2025-09-03
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