DoD's $18.5M contract with Northrop Grumman for engineering services shows questionable value and limited competition
Contract Overview
Contract Amount: $18,466,694 ($18.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2018-10-31
End Date: 2019-10-30
Contract Duration: 364 days
Daily Burn Rate: $50.7K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF
Place of Performance
Location: POINT MUGU NAWC, VENTURA County, CALIFORNIA, 93042
Plain-Language Summary
Department of Defense obligated $18.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF Key points: 1. The contract's value proposition is unclear given the lack of detailed performance metrics and benchmarking. 2. Competition was limited, raising concerns about potential overpricing and reduced innovation. 3. The cost-plus-fixed-fee structure may incentivize cost overruns. 4. The contract duration of 364 days is standard, but the lack of competition limits long-term value assessment. 5. This contract falls within the broader engineering services sector for defense procurement. 6. Oversight mechanisms need to be robust to ensure accountability for this sole-source award.
Value Assessment
Rating: questionable
The total award amount of $18.5 million for engineering services over 364 days appears high without clear performance benchmarks or comparisons to similar sole-source contracts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services, carries inherent risks of cost escalation. Without detailed breakdowns of labor categories, rates, and overhead, it is difficult to ascertain if the fixed fee is reasonable or if the overall cost represents good value for the taxpayer. Benchmarking against industry standards for similar engineering support in the defense sector is crucial but not readily available.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically justified when only one vendor possesses the unique capabilities or proprietary knowledge required for the service. However, the lack of competition limits the government's ability to solicit competitive bids, potentially leading to higher prices and less favorable terms than could be achieved in an open market. The absence of a competitive process means price discovery is significantly constrained.
Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings and efficiencies that typically arise from competitive bidding processes. This can result in higher overall expenditure for the same or similar services.
Public Impact
The primary beneficiaries are the Department of the Navy and potentially the broader Department of Defense, receiving specialized engineering support. The services delivered are critical for maintaining and advancing naval engineering capabilities. The geographic impact is likely concentrated around the contractor's facilities and naval bases where the engineering support is applied. The contract supports a specialized workforce within Northrop Grumman, contributing to high-skill employment in the engineering sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially increasing costs.
- Cost-plus-fixed-fee contract type carries risk of cost overruns.
- Lack of detailed performance metrics makes value assessment difficult.
- Limited transparency on specific engineering tasks performed.
Positive Signals
- Awarded to a large, established defense contractor with a known track record.
- Contract addresses specific, potentially unique, engineering needs of the Navy.
- Fixed fee component provides some cost certainty compared to pure cost-plus contracts.
Sector Analysis
The defense engineering services sector is a significant segment of the federal procurement landscape, characterized by complex technical requirements and high barriers to entry. Companies like Northrop Grumman are major players, often holding specialized knowledge and facilities essential for national defense. Spending in this area is driven by the need for advanced technological development, maintenance, and sustainment of military assets. Benchmarks for similar contracts are often proprietary or difficult to compare due to the unique nature of defense requirements.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman, is a large business. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the extent to which this contract benefits small businesses.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Inspector General's office for the Department of Defense may also conduct audits or investigations into contract performance and costs, particularly given the sole-source nature and CPFF structure. Transparency is limited by the lack of publicly available detailed performance reports and cost breakdowns. Accountability relies heavily on the government's ability to monitor contractor performance and costs effectively.
Related Government Programs
- Defense Engineering Services
- Naval Systems Support Contracts
- Northrop Grumman Defense Contracts
- Cost-Plus-Fixed-Fee Contracts
Risk Flags
- Sole-source award lacks competitive justification.
- Cost-plus-fixed-fee structure poses cost overrun risks.
- Limited transparency on specific services and performance metrics.
- Potential for suboptimal value due to lack of competition.
Tags
defense, department-of-the-navy, northrop-grumman-systems-corporation, engineering-services, sole-source, cost-plus-fixed-fee, california, delivery-order, large-business, fy2019
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.5 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 $18.5 million.
What is the period of performance?
Start: 2018-10-31. End: 2019-10-30.
What is Northrop Grumman's track record with similar sole-source engineering contracts for the Department of Defense?
Northrop Grumman Systems Corporation has a long history of securing sole-source and competitively awarded contracts with the Department of Defense across various domains, including aerospace, defense, and information systems. Their track record often involves complex, high-value projects requiring specialized expertise. While specific details on past sole-source engineering services contracts are not provided here, their extensive experience suggests a capacity to deliver on technical requirements. However, the nature of sole-source awards means that direct comparisons of value-for-money against competitive bids are inherently limited. Audits and performance reviews by government oversight bodies would provide a more granular assessment of their past performance on similar sole-source engagements.
How does the $18.5 million cost compare to similar engineering services contracts awarded by the Navy in the last five years?
Directly comparing the $18.5 million award to similar sole-source engineering services contracts for the Navy is challenging without access to a comprehensive database of contract specifics, including the scope of work, duration, and pricing structures. However, for large defense contractors like Northrop Grumman, contracts in the multi-million dollar range for specialized engineering support are not uncommon, especially for critical systems or platforms. The cost-plus-fixed-fee (CPFF) structure, used here, can lead to higher total costs compared to fixed-price contracts if not managed diligently. Benchmarking would ideally involve analyzing contracts with similar North American Industry Classification System (NAICS) codes (e.g., 541330 - Engineering Services) awarded under similar circumstances (sole-source, CPFF) to assess if the pricing is within an acceptable range, considering the specific technical requirements and market conditions.
What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this engineering service?
The primary risk associated with the Cost Plus Fixed Fee (CPFF) contract type for this engineering service is the potential for cost overruns. While the fixed fee provides the contractor with a defined profit margin, the government bears the risk of all allowable costs exceeding initial estimates. This can incentivize contractors to be less diligent in cost control, as their profit is guaranteed regardless of the final cost. For the government, this means the total expenditure can be higher than anticipated, potentially impacting budget predictability. Effective oversight, detailed cost tracking, and robust negotiation of the fixed fee are crucial to mitigate these risks and ensure value for money.
What specific engineering services are being procured under this contract, and how is their necessity justified?
The provided data indicates the contract is for 'Engineering Services' under NAICS code 541330, awarded by the Department of the Navy. However, the specific nature of these engineering services is not detailed. Justification for necessity in a sole-source award typically stems from unique technical requirements, proprietary knowledge, or the need for continuity of support for a specific system where only one contractor can provide the required expertise. Without further documentation (e.g., Justification for Other Than Full and Open Competition - JOFOC), the precise services and their critical necessity remain unspecified. This lack of detail hinders a thorough assessment of the contract's purpose and value.
What are the historical spending patterns for engineering services by the Department of the Navy with Northrop Grumman?
Historical spending patterns between the Department of the Navy and Northrop Grumman for engineering services are extensive, reflecting the long-standing relationship between the two entities. Northrop Grumman is a major defense contractor, and the Navy frequently procures a wide array of engineering, technical, and support services from them. Analyzing past spending would reveal trends in contract types (e.g., CPFF, FFP), award values, and the specific domains of engineering support provided. This contract's $18.5 million value and sole-source nature should be viewed within this broader context of historical procurement, considering whether it represents a continuation of existing support, an expansion, or a new requirement. A detailed analysis would require access to historical contract databases to identify patterns and anomalies.
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 AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6893616R0069
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 925 OYSTER BAY RD, 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: $18,943,760
Exercised Options: $18,943,760
Current Obligation: $18,466,694
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N6893619D0007
IDV Type: IDC
Timeline
Start Date: 2018-10-31
Current End Date: 2019-10-30
Potential End Date: 2019-10-30 00:00:00
Last Modified: 2025-05-12
More Contracts from Northrop Grumman Systems Corporation
- 200506!000026!5700!fa8214!oo-Alc/Pkme/Lmke !F4261098C0001 !A!N! !Y! !p01502!20041213!20050701!001563738!004179453!016435559!n!northrop Grumman Space & Missi!888 S 2000 E !clearfield !ut!84015!13850!011!49!clearfield !davis !utah !-000001960000!n!n!000000000000!l014!tech REP Svcs/Guided Missiles !A2 !missile and Space Systems !302 !minuteman III GRP !541330!E! !3! ! !C! ! !20200930!B! ! !A! !a!n!l!2!002!b! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! — $10.0B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-7) — $8.5B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-2) — $5.4B (Department of Defense)
- First DDT and E, Ares I-X, and Flight Tests. First Stage Will BE a Five Segment, Solid Rocket Booster Derived From the Space Shuttle Program (SSP) Solid Rocket Booster (srb)/Reusable Solid Rocket Motor (rsrm). the Contractor Shall Furnish the Necessary Management, Engineering, Labor, Facilities, Tools, Equipment, and Materials Required for First Stage Development, Qualification, Certification and Acceptance Program. Activities Include: Redesign and Testing of the Motor to Incorporate the Fifth Segment and Production of Five Full Scale Ground Static Test Motors: TWO Development Motors (dms)-And Three Qualification Motors (QMS); Structural Test Article (STA), Ground Vibration Test Motors (gvtms) and Other Development Testing; Redesign of the Avionics, Deceleration, Separation, and Flight Termination System (FTS) Subsystems; Ares I-X: Simulated Ares I Outer Mold Line/Mass Properties Using Modified Srb/Rsrm; and Three Flight Test Vehicles. TAS::80 0124::TAS — $4.4B (National Aeronautics and Space Administration)
- Federal Contract — $4.4B (Department of Defense)
View all Northrop Grumman Systems Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)