DoD's $193M engineering services contract with Northrop Grumman awarded without competition

Contract Overview

Contract Amount: $192,981,936 ($193.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2005-07-01

End Date: 2020-11-23

Contract Duration: 5,624 days

Daily Burn Rate: $34.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: CARSON, LOS ANGELES County, CALIFORNIA, 90746

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $193.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, potentially leading to higher costs than fixed-price contracts. 2. Long duration of over 15 years suggests a sustained need for these engineering services. 3. The contract's value of $193 million indicates a significant investment in specialized engineering capabilities. 4. Sole-source award raises questions about the availability of competitive alternatives and potential cost efficiencies. 5. The 'CA' (California) state code might indicate the primary performance location or contractor's base. 6. Lack of small business participation noted, suggesting limited opportunities for smaller firms in this specific award.

Value Assessment

Rating: questionable

Benchmarking the value of this $193 million engineering services contract is challenging without specific service details and comparable contract data. However, the cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain scope work, inherently carries a higher risk of cost overruns compared to fixed-price contracts. The long duration of over 15 years also suggests a substantial, ongoing requirement. Without competitive bidding, it's difficult to ascertain if the pricing reflects optimal value for the government.

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 unique capabilities or proprietary technology required for the service, or in cases of urgent need. The absence of competition means there were no other bidders to compare against, limiting the government's ability to leverage market forces for price discovery and potentially optimal service terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits opportunities for other qualified businesses to secure government contracts.

Public Impact

The Department of Defense benefits from specialized engineering services essential for its operations. This contract likely supports critical defense systems and infrastructure requiring advanced engineering expertise. Performance is likely concentrated in California, potentially impacting the local economy and workforce. Highly skilled engineers and technical personnel are employed to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending compared to fixed-price arrangements.
Long contract duration may indicate a lack of readily available alternative solutions or evolving requirements.
Absence of small business set-aside suggests limited opportunities for smaller, specialized firms.

Positive Signals

Northrop Grumman is a major defense contractor with extensive experience, suggesting a high likelihood of successful performance.
The sustained nature of the contract indicates a critical and ongoing need for these specific engineering services.
Engineering services are vital for maintaining and advancing complex defense systems.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized engineering services supporting government defense needs is substantial, often characterized by high barriers to entry due to security clearances, specialized knowledge, and established relationships. Comparable spending benchmarks are difficult to establish without knowing the precise nature of the engineering services, but large-scale, long-term engineering support contracts for defense agencies typically represent significant investments.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business participation (sb: false). This means that opportunities for small businesses to subcontract or directly compete for these specific engineering services were likely minimal or non-existent. For the broader small business ecosystem, this represents a missed opportunity to foster growth and innovation within the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Defense's contracting officers and the Defense Contract Management Agency (DCMA). Accountability measures would be embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is often limited for sole-source defense contracts, but contract awards are generally reported in federal databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Engineering Support
Aerospace Engineering Services
Northrop Grumman Defense Contracts
Department of Defense IT and Engineering
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $193.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $193.0 million.

What is the period of performance?

Start: 2005-07-01. End: 2020-11-23.

What specific engineering services are being provided under this contract, and how do they align with current DoD priorities?

The provided data indicates the contract is for 'Engineering Services' (nd: 'Engineering Services') with the North American Industry Classification System (NAICS) code 541330. However, the specific nature of these services is not detailed. These could range from systems engineering, design, testing, and integration for various defense platforms (e.g., aircraft, ships, ground vehicles, C4ISR systems). Given the Department of Defense (DoD) context, these services likely support the development, sustainment, or modernization of critical military capabilities, aligning with ongoing efforts in areas such as advanced weaponry, cybersecurity, and strategic deterrence. Without more granular information, the exact alignment with current priorities remains speculative but is presumed to be essential for national security.

How does the $193 million contract value compare to similar engineering services contracts awarded by the DoD?

Comparing the $193 million value requires context on the scope and duration of 'similar' contracts. For large, sole-source, long-duration (over 15 years) engineering services contracts within the defense sector, $193 million is a substantial but not unprecedented figure. Major defense contractors like Northrop Grumman often secure large-value contracts for complex systems integration, research and development, and sustainment. However, without knowing the specific deliverables, the level of complexity, and the duration of comparable contracts, a precise benchmark is difficult. The cost-plus-fixed-fee (CPFF) structure also suggests that the final cost could fluctuate, making direct comparisons to fixed-price contracts less meaningful.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude and duration?

The primary risks associated with this contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs and reduced innovation compared to a competed contract. Taxpayers may not be receiving the best possible value. Secondly, the Cost-Plus-Fixed-Fee (CPFF) structure shifts some financial risk to the government. While the contractor's profit is fixed, they are reimbursed for allowable costs, which can incentivize less stringent cost control than in fixed-price contracts. Overruns in allowable costs directly increase the total expenditure. The long duration (over 15 years) increases the risk of scope creep, evolving requirements that may not be optimally addressed under the original contract terms, and potential contractor complacency. Finally, reliance on a single source can create strategic vulnerabilities if the contractor faces performance issues or financial instability.

What is Northrop Grumman's track record with similar large-scale engineering services contracts for the DoD?

Northrop Grumman is a major defense contractor with a long history of performing large-scale engineering and systems integration services for the Department of Defense (DoD). They are involved in numerous high-value contracts across various defense platforms, including aerospace, naval systems, and C4ISR. Their track record generally includes successful delivery on complex programs, often characterized by significant technical challenges and long program lifecycles. However, like any large contractor, they have also faced scrutiny and challenges on specific programs regarding cost, schedule, and performance. For this specific $193 million contract, the long duration and sole-source award suggest a deep, established relationship and likely specialized capabilities that the DoD deems essential and difficult to replicate.

How has federal spending on engineering services like those provided by Northrop Grumman evolved over the past decade?

Federal spending on engineering services, particularly within the defense sector, has remained substantial over the past decade, driven by the need to maintain and modernize complex military systems, develop new technologies, and support ongoing operations. While specific figures for NAICS code 541330 (Engineering Services) fluctuate annually based on budget allocations and program needs, the overall trend indicates consistent, significant investment. Factors influencing this spending include geopolitical tensions, technological advancements (e.g., AI, cyber, hypersonics), and the lifecycle management of existing platforms. Contracts like this one, awarded to major prime contractors, represent a significant portion of this spending, often involving specialized expertise not readily available elsewhere within the government or through smaller firms.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1800 GLENN CURTISS ST, CARSON, CA, 90746

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $94,894

Exercised Options: $94,894

Current Obligation: $192,981,936

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline