Northrop Grumman awarded $3.2M engineering services contract by the Navy, with delivery expected by late 2026

Contract Overview

Contract Amount: $3,198,318 ($3.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2025-12-20

End Date: 2026-12-19

Contract Duration: 364 days

Daily Burn Rate: $8.8K/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 $3.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded via other than full and open competition, raising questions about potential price efficiencies. 2. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 3. Limited competition could lead to higher prices for taxpayers. 4. The duration of the contract is one year, with a potential for extensions. 5. The specific engineering services are not detailed, making performance assessment difficult. 6. Northrop Grumman is a large, established defense contractor with a significant track record.

Value Assessment

Rating: questionable

The contract value of $3.2 million for one year of engineering services appears within a typical range for large defense contractors. However, without detailed service descriptions or benchmarks for comparable 'engineering services' under similar contract types, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure, while common in complex defense work, carries inherent risks of cost escalation compared to fixed-price contracts. The lack of competitive bidding further complicates a direct value comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using other than full and open competition, indicating that the Department of the Navy did not solicit bids from multiple potential offerors. Reasons for sole-source awards often include specific technical requirements, urgency, or a lack of available sources. The absence of a competitive process means that price discovery through market forces was limited, potentially impacting the final negotiated price.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are likely the Department of the Navy, which will receive engineering services to support its operations. The contract will deliver unspecified engineering services, potentially related to naval systems, platforms, or infrastructure. The geographic impact is centered in California, where Northrop Grumman Systems Corporation is located. Workforce implications include employment opportunities for engineers and technical staff at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure can lead to cost overruns.
Lack of detailed service description hinders performance evaluation.
Contract duration is relatively short, potentially leading to follow-on contracts with less oversight.

Positive Signals

Northrop Grumman is a reputable and experienced defense contractor.
The contract is for essential engineering services for the Department of Defense.
The contract has a defined end date, providing some budgetary certainty.

Sector Analysis

Engineering services are a critical component of the defense sector, encompassing design, development, testing, and sustainment of complex military systems. The market for these services is dominated by large aerospace and defense contractors. This contract, valued at $3.2 million, represents a small portion of overall defense engineering spending, which can run into billions annually. Benchmarking this specific award is difficult without knowing the precise nature of the engineering services, but it falls within the typical range for specialized technical support.

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 Systems Corporation, is a large business. There is no explicit information regarding subcontracting plans for small businesses. This suggests that the primary focus of this award is not on fostering small business participation, and the impact on the small business ecosystem is likely minimal unless Northrop Grumman voluntarily includes them in its supply chain.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Navy. As a sole-source award, the negotiation and oversight processes are critical to ensuring fair pricing and adequate performance. Transparency is limited due to the non-competitive nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected during the contract's lifecycle.

Related Government Programs

Defense Engineering Services
Naval Systems Support
Aerospace and Defense Contracting
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of detailed service description

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.2 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 $3.2 million.

What is the period of performance?

Start: 2025-12-20. End: 2026-12-19.

What specific engineering services are being 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 research and development support, system design, technical analysis, testing, or integration services for naval platforms or systems. Without further clarification, it is difficult to assess the scope, complexity, and criticality of the work being performed. This lack of specificity is a common challenge when analyzing broad service contracts and can obscure the true value and risk associated with the procurement.

Why was this contract awarded on a sole-source basis?

The data explicitly states the contract was awarded 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source or limited competition award. The specific justification for this approach is not provided in the abbreviated data. Common reasons for sole-source awards in defense contracting include the existence of unique capabilities held by only one contractor, urgent and compelling needs where competition is impractical, or follow-on work to a previous contract where only the original contractor can perform the subsequent phases. Understanding the official justification is crucial for assessing whether competition was genuinely impossible or if it represents a missed opportunity for better pricing.

What is the typical cost for similar engineering services contracts awarded by the Department of the Navy?

Benchmarking the cost of engineering services is highly dependent on the specific type of service, the complexity of the systems involved, the required expertise, and the contract type. For a one-year contract valued at $3.2 million, this falls within a moderate range for specialized engineering support. However, without knowing the exact deliverables, such as system design, software engineering, or specialized analysis, a direct comparison is difficult. Contracts awarded competitively often yield lower prices than sole-source awards. The 'cost plus fixed fee' structure also means the final cost could exceed the initial $3.2 million if costs escalate, making direct historical comparisons less reliable without detailed context.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract type?

The Cost Plus Fixed Fee (CPFF) contract type, indicated as 'pt': 'COST PLUS FIXED FEE', presents specific risks. While it allows for flexibility in scope and is often used for research and development or services where costs are uncertain, it can incentivize the contractor to increase costs. The 'fixed fee' component is a percentage of the estimated costs, so higher costs lead to a higher fee for the contractor, although the fee itself is fixed. The primary risk for the government is cost overrun, as the total contract cost is not capped upfront. Robust oversight, detailed cost tracking, and clear performance metrics are essential to mitigate these risks and ensure the government receives good value.

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

Northrop Grumman Systems Corporation is a major defense contractor with an extensive history of working with the Department of the Navy and other branches of the U.S. military. They are involved in numerous large-scale programs, including aircraft, shipbuilding, and advanced technology systems. Their track record generally includes the successful delivery of complex systems and services, though like any large contractor, they have also faced scrutiny over cost, schedule, and performance on specific projects. For this particular contract, the lack of competition means that past performance in a competitive bidding environment is not a factor in its award, but their overall capability to deliver engineering services is well-established.

How does the contract duration of 364 days impact the overall value and risk?

A contract duration of 364 days, as indicated by 'dur': 364, is just under one year. This relatively short duration can be both a positive and a negative factor. On the positive side, it allows for more frequent re-evaluation of needs and performance, and potentially a new competitive bidding process for subsequent work. However, it can also lead to inefficiencies if significant ramp-up time is required for the services, or if the short duration necessitates frequent, potentially less competitive, contract extensions or modifications to ensure continuity of essential services. For taxpayers, a short duration might mean less opportunity for long-term cost savings through sustained competitive pressure.

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: $6,492,508

Exercised Options: $6,492,508

Current Obligation: $3,198,318

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