Northrop Grumman awarded $12.25M for engineering services, highlighting potential value concerns in sole-source contracts

Contract Overview

Contract Amount: $12,250,230 ($12.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-31

End Date: 2020-10-30

Contract Duration: 365 days

Daily Burn Rate: $33.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LABOR

Place of Performance

Location: RONKONKOMA, SUFFOLK County, NEW YORK, 11779

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $12.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LABOR Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 3. Limited competition raises questions about whether the government secured the best possible value. 4. The duration of the contract (365 days) is relatively short, suggesting a focused scope of work. 5. The specific engineering services provided are not detailed, making direct performance benchmarking difficult. 6. The award was a delivery order, implying it's part of a larger contract vehicle.

Value Assessment

Rating: questionable

Benchmarking the value of this $12.25 million contract is challenging due to the lack of competition and specific service details. Cost Plus Fixed Fee contracts, while offering flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed tightly. Without comparable sole-source awards for similar engineering services, it's difficult to definitively assess if the pricing is competitive. The government's ability to negotiate favorable terms is reduced in sole-source situations.

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. This typically occurs when only one contractor possesses the necessary capabilities or when urgency dictates a rapid award. The lack of multiple bidders means there was no competitive pressure to drive down prices or encourage innovative solutions. This limits the government's ability to explore the full range of market offerings.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from competitive bidding processes that typically lead to better pricing and value.

Public Impact

The primary beneficiary is Northrop Grumman Systems Corporation, receiving significant funding for engineering services. The Department of the Navy receives specialized engineering support, crucial for its operational readiness and development. The contract's geographic impact is centered in New York, where the contractor is located. Workforce implications include employment opportunities for engineers and technical staff within Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to suboptimal pricing.
Cost Plus Fixed Fee contract structure may not provide sufficient incentive for cost control.
Lack of detailed service description hinders performance and value assessment.
Limited transparency on the justification for sole-source award.

Positive Signals

Award to an established contractor with presumed expertise in engineering services.
Delivery order suggests integration into a broader, potentially well-managed contract vehicle.
Contract duration is defined, providing a clear timeframe for service delivery.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector supports various government functions, including defense, infrastructure, and research. The market for engineering services is highly specialized, with large defense contractors like Northrop Grumman often holding significant positions due to their technical capabilities and existing relationships with agencies like the Department of Defense. Comparable spending benchmarks are difficult to establish without more specific service details, but the overall federal spending on engineering services is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, Northrop Grumman Systems Corporation, is a large defense prime. There is no explicit information regarding subcontracting plans for small businesses within this specific award. This suggests that the primary contract value will likely flow to the prime contractor, with limited direct benefit to the small business ecosystem unless subcontracting occurs outside the scope of this particular delivery order's explicit data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to internal review and potentially oversight from the Government Accountability Office (GAO) if a protest were filed. Transparency is limited by the sole-source nature and the lack of detailed public reporting on the specific services rendered and the cost breakdown. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Engineering Services
Navy Research and Development Contracts
Professional, Scientific, and Technical Services
Cost-Plus Contract Vehicles

Risk Flags

Sole-source award
Cost-plus contract type
Lack of detailed service description
Potential for higher costs due to limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LABOR

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 $12.3 million.

What is the period of performance?

Start: 2019-10-31. End: 2020-10-30.

What specific engineering services were procured under this contract?

The provided data indicates the contract is for 'Engineering Services' under NAICS code 541330. However, the specific nature of these services is not detailed. This could range from design and development to systems integration, testing, or technical consulting. Without further information, it's impossible to ascertain the precise technical domain or the criticality of the services to the Department of the Navy's mission. This lack of specificity makes it difficult to assess the contractor's performance or the overall value proposition of the award.

What was the justification for awarding this contract on a sole-source basis?

The data explicitly states the contract was 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification document or rationale is not provided. Typically, sole-source awards are justified under circumstances such as the urgency of the need, the unique capabilities of a single contractor, or when a previous competitive process failed to yield adequate results. For a contract valued at $12.25 million, a robust justification would be expected, detailing why no other responsible source could satisfy the requirement. This information is crucial for understanding the necessity of bypassing the competitive process.

How does the Cost Plus Fixed Fee (CPFF) contract type potentially impact cost control?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for the contractor to manage costs (as their profit is capped), it does not directly reward cost savings. If costs escalate, the government still reimburses them, and the contractor's profit remains the same. This structure can sometimes lead to less stringent cost control compared to fixed-price contracts, where the contractor bears the risk of cost overruns. Effective oversight is critical to manage costs under a CPFF arrangement.

What is the track record of Northrop Grumman Systems Corporation with the Department of the Navy?

Northrop Grumman Systems Corporation is a major defense contractor with a long-standing and extensive history of performing work for the Department of the Navy and the broader Department of Defense. They are involved in numerous large-scale programs, including shipbuilding, aerospace systems, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance). While this specific contract is for engineering services, their overall track record suggests significant experience and capability in meeting complex defense requirements. However, the performance on individual contracts can vary, and a detailed review of past performance specific to similar engineering services would be necessary for a comprehensive assessment.

Are there comparable sole-source engineering services contracts awarded by the Navy in recent years?

Identifying directly comparable sole-source engineering services contracts is challenging without more specific details about the scope of work, technical requirements, and duration. Federal procurement data often lacks the granularity to easily match sole-source awards based solely on NAICS code and contract type. However, large sole-source awards for specialized engineering or technical support are not uncommon within the defense sector, particularly when dealing with unique platforms or technologies where a single contractor possesses proprietary knowledge or essential integration capabilities. A deeper dive into contract justifications and service descriptions would be needed to find truly analogous awards.

What are the potential risks associated with this contract's limited competition and contract type?

The primary risks stem from the sole-source nature and the CPFF contract type. Limited competition reduces the government's leverage to negotiate favorable pricing and terms, potentially leading to higher costs than if the contract were competed. The CPFF structure, while providing flexibility, can diminish the contractor's incentive for aggressive cost management, increasing the risk of cost overruns. Additionally, without clear performance metrics tied to the specific engineering services, there's a risk that the delivered value may not fully align with the government's needs or expectations. Effective program management and oversight are crucial to mitigate these inherent risks.

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: $12,250,230

Exercised Options: $12,250,230

Current Obligation: $12,250,230

Actual Outlays: $4,269,978

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $1,827,890

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