DoD awards Northrop Grumman $14.7M engineering services contract, with limited competition

Contract Overview

Contract Amount: $14,723,466 ($14.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-03-22

End Date: 2025-03-21

Contract Duration: 364 days

Daily Burn Rate: $40.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES

Place of Performance

Location: POINT MUGU NAWC, VENTURA County, CALIFORNIA, 93042

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Limited competition suggests potential for higher costs compared to a fully open market. 3. The contract duration of one year with a fixed fee structure provides some cost predictability. 4. Awarded as a delivery order, indicating it's part of a larger, potentially pre-existing agreement. 5. The specific engineering services are not detailed, making a precise value assessment difficult. 6. Northrop Grumman's extensive experience in defense contracting is a positive signal for execution capability.

Value Assessment

Rating: fair

The contract value of $14.7 million for one year of engineering services is difficult to benchmark without specific service details. Given the limited competition, it's plausible that the pricing may not reflect the most cost-effective options available in a broader market. However, Northrop Grumman is a major defense contractor, and their rates are generally in line with industry standards for complex defense projects. Further analysis would require understanding the scope of work and comparing it to similar specialized engineering services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under a limited competition framework, meaning that not all eligible contractors were solicited. The specific justification for this limited competition is not provided in the data. Typically, limited competition is used when only one or a few sources can fulfill the requirement due to specialized capabilities or urgency. The lack of broad solicitation likely reduced the number of bids received, potentially impacting price discovery and the government's ability to secure the lowest possible price.

Taxpayer Impact: Limited competition can lead to higher costs for taxpayers as it restricts the pool of potential bidders, thereby reducing downward pressure on prices.

Public Impact

The Department of the Navy benefits from specialized engineering services crucial for its operations. This contract supports advanced engineering capabilities within the defense sector. The services are likely to be performed in California, contributing to the local economy and workforce. It enables the Navy to maintain and advance its technological superiority in defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for taxpayers.
Lack of detailed service scope hinders a comprehensive value-for-money assessment.
The contract is a delivery order, suggesting it might be part of a larger, less transparent framework.

Positive Signals

Awarded to a reputable and experienced defense contractor, Northrop Grumman.
The contract duration provides a defined period for service delivery.
The fixed fee component offers some level of cost control.

Sector Analysis

Engineering services within the defense sector are critical for the design, development, and maintenance of complex military systems. This contract falls under the broader category of professional, scientific, and technical services, a significant segment of federal spending. The market is dominated by large aerospace and defense contractors like Northrop Grumman, who possess the specialized expertise and security clearances required for such work. Benchmarking this specific award is challenging without more detail on the engineering discipline, but similar contracts for specialized defense engineering can range from millions to billions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Northrop Grumman is a large prime contractor, and there is no information provided regarding subcontracting plans for small businesses. This suggests that the primary focus is on the prime contractor's capabilities, and the direct impact on the small business ecosystem through this specific award is likely minimal unless subcontracting opportunities are actively pursued and disclosed.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the cost-plus-fixed-fee (CPFF) structure, which requires the contractor to manage costs within the fixed fee while being reimbursed for allowable expenses. Transparency is limited by the 'limited competition' award and the lack of detailed public information on the scope of work. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Engineering Services
Naval Systems Development
Aerospace Engineering Support
Professional, Scientific, and Technical Services

Risk Flags

Limited competition may lead to higher costs.
Lack of detailed scope of work hinders value assessment.
Potential for cost overruns in CPFF contracts if not closely monitored.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENGINEERING SERVICES

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 $14.7 million.

What is the period of performance?

Start: 2024-03-22. End: 2025-03-21.

What specific engineering services are being procured under this contract?

The provided data classifies the contract under NAICS code 541330 for 'Engineering Services' and lists the data description as 'ENGINEERING SERVICES'. However, it does not specify the particular engineering disciplines or the exact nature of the services. These could range from structural engineering for naval vessels, aerospace engineering for aircraft systems, systems engineering for complex defense platforms, or specialized software engineering. Without this detail, it is impossible to assess the technical scope, identify comparable projects, or evaluate the appropriateness of the cost.

How does the $14.7 million value compare to similar engineering services contracts awarded by the Department of the Navy?

Benchmarking the $14.7 million value requires comparing it to contracts for similar engineering services, which is difficult without knowing the specific services. However, for context, the Department of the Navy awards numerous engineering services contracts annually. Larger, more comprehensive contracts for major platform development or sustainment can easily exceed hundreds of millions or even billions of dollars. Smaller, more specialized contracts for specific analyses, design modifications, or technical support might fall within the multi-million dollar range. Given Northrop Grumman's status as a major defense contractor, this value suggests a significant but not necessarily massive scope of work, likely focused on a particular system or component.

What are the primary risks associated with a 'limited competition' award for engineering services?

The primary risk associated with a limited competition award is the potential for reduced price competition, which can lead to higher costs for the government compared to a fully open and competitive process. This lack of competition can also reduce the incentive for the contractor to innovate or offer the most cost-effective solutions. Furthermore, it raises concerns about whether the government truly obtained the best value, as alternative solutions or more competitive pricing from other qualified vendors were not explored. Transparency is also reduced, making it harder for the public and oversight bodies to scrutinize the procurement.

What is Northrop Grumman's track record with the Department of the Navy for engineering services?

Northrop Grumman Systems Corporation is a major defense contractor with a long and extensive history of performing engineering services for the Department of the Navy and other branches of the U.S. military. They are involved in numerous large-scale programs, including shipbuilding, aerospace systems, and advanced technologies. While specific performance metrics for this particular delivery order are not available, their consistent selection for complex and critical defense projects suggests a generally strong track record. However, like any large contractor, they may have faced past performance issues on specific contracts, which would typically be assessed during a more thorough review.

What is the historical spending pattern for 'Engineering Services' (NAICS 541330) by the Department of the Navy?

The Department of the Navy consistently spends billions of dollars annually on engineering services, as captured by NAICS code 541330. This spending supports a wide array of activities, from research and development to the design, modification, and sustainment of naval platforms and systems. Historical data shows a steady demand for these services, driven by the need to maintain technological superiority, modernize aging fleets, and develop new capabilities. Spending fluctuates based on major acquisition programs, modernization initiatives, and specific operational requirements. The $14.7 million for Northrop Grumman represents a small fraction of the Navy's total annual expenditure in this broad category.

How does the Cost Plus Fixed Fee (CPFF) contract type influence cost control and contractor incentive?

The Cost Plus Fixed Fee (CPFF) contract type reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves a high degree of uncertainty, making it difficult to estimate costs accurately upfront. For cost control, the government monitors the contractor's costs to ensure they are allowable and reasonable. For contractor incentive, the fixed fee provides an incentive to control costs, as any savings below the estimated cost do not increase the fee, and cost overruns do not increase the fee either. However, the primary incentive is to complete the work, as the fee is fixed regardless of the final cost.

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: $27,554,801

Exercised Options: $27,554,801

Current Obligation: $14,723,466

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