DoD's $80.5M Engineering Services Contract Awarded to Northrop Grumman Systems Corporation

Contract Overview

Contract Amount: $80,532,377 ($80.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-19

End Date: 2021-09-24

Contract Duration: 1,831 days

Daily Burn Rate: $44.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: IGF::OT::IGF

Place of Performance

Location: MC LEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $80.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant duration of 1831 days suggests a long-term need for these engineering services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 4. Northrop Grumman's extensive experience in defense contracting likely influenced this sole-source award. 5. The absence of small business participation warrants further investigation into subcontracting opportunities. 6. Virginia is the primary state for contract performance, indicating a regional economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $80.5 million contract is challenging due to its sole-source nature and specific engineering services. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or if alternative solutions could have been more cost-effective. The Cost Plus Fixed Fee structure, while allowing for flexibility, carries inherent risks of cost escalation if not rigorously managed by the Department of the Army. Further analysis would require detailed cost breakdowns and comparison to similar sole-source engineering contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for specialized capabilities or urgent needs, they limit price discovery and may not yield the most economical outcome for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most competitive pricing achievable through an open bidding process. This could potentially lead to higher overall costs for the services rendered.

Public Impact

The Department of Defense benefits from specialized engineering services crucial for its operations. Northrop Grumman Systems Corporation, as the contractor, receives substantial revenue and continues its role as a key defense supplier. The primary geographic impact is in Virginia, where the contract is performed, potentially supporting local jobs and the regional economy. The contract supports a workforce skilled in advanced engineering and defense-related technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type carries risk of cost overruns.
Lack of explicit small business set-aside raises concerns about broader economic participation.
Limited transparency on the justification for sole-source award.

Positive Signals

Award to an experienced and established defense contractor like Northrop Grumman.
Contract addresses a specific, likely critical, engineering need for the Department of the Army.
Long contract duration suggests a stable, ongoing requirement.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector is characterized by high specialization and often involves complex projects requiring deep technical expertise. The Department of Defense is a major consumer of such services, utilizing them for research, development, design, and maintenance of sophisticated systems. Benchmarking this contract's value against industry standards is difficult without more specific service details, but its scale indicates a significant project within this specialized field.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. Furthermore, 'ss' is also false, suggesting no specific subcontracting goals were mandated for small businesses. This means that opportunities for small businesses to participate in this significant $80.5 million contract may be limited, potentially impacting the broader small business ecosystem within the defense contracting supply chain. Further review of subcontracting reports would be necessary to understand the actual extent of small business involvement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and Cost Plus Fixed Fee structure, rigorous oversight is crucial to ensure costs are reasonable and performance meets requirements. The Inspector General's office for the Department of Defense may also conduct audits or investigations into contract spending and performance. Transparency regarding the justification for the sole-source award and detailed cost reporting would enhance accountability.

Related Government Programs

Department of Defense Engineering Services
Northrop Grumman Defense Contracts
Cost Plus Fixed Fee Contracts
Sole Source Defense Procurements
Virginia Defense Spending

Risk Flags

Sole-source award may limit cost savings.
Cost Plus Fixed Fee contract type increases cost overrun risk.
Lack of small business participation noted.
Specific engineering services not detailed, hindering value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.5 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 Army).

What is the total obligated amount?

The obligated amount is $80.5 million.

What is the period of performance?

Start: 2016-09-19. End: 2021-09-24.

What specific engineering services were provided under this contract?

The provided data indicates the contract falls under the 'Engineering Services' NAICS code (541330). However, the specific nature of these services is not detailed. Typically, engineering services for the Department of Defense can encompass a wide range of activities, including but not limited to systems engineering, design and development of military hardware, software engineering, technical support for complex weapon systems, research and development support, and infrastructure engineering. Without further documentation or a detailed contract description, the precise scope of work remains unspecified. This lack of specificity makes it challenging to benchmark performance or assess the true value delivered.

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

The data explicitly states the contract was 'NOT COMPETED' (ct: NOT COMPETED), indicating a sole-source award. The specific justification for this sole-source determination is not provided in the abbreviated data. Common reasons for sole-source awards include the existence of only one responsible source capable of providing the required service or supply, urgent and compelling circumstances that preclude competition, or when the contract is a follow-on to a previously competed contract where only the original contractor can provide the necessary services. A thorough review of the contract file and any associated Justification and Approval (J&A) documents would be necessary to understand the official rationale.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of risk and potential cost?

The Cost Plus Fixed Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a fixed fee representing the contractor's profit. This structure is often used when the scope of work is not precisely defined or when there is significant uncertainty in the cost of performance. While it allows for flexibility and can be suitable for research and development or complex engineering projects, it carries a higher risk of cost overruns compared to fixed-price contracts. The government bears the risk of cost increases, and the contractor has less incentive to control costs once the fixed fee is established. Effective oversight and cost monitoring are critical to mitigate these risks.

What is Northrop Grumman Systems Corporation's track record with similar Department of Defense contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a long and extensive history of performing complex engineering and technology services for the Department of Defense and other government agencies. While the specific data provided here is limited to this single contract, Northrop Grumman is known for its work on large-scale defense programs, including aerospace, defense electronics, and information systems. Their track record generally includes the successful execution of numerous high-value, technically demanding contracts. However, like any large contractor, they may have faced scrutiny or challenges on specific projects. A comprehensive assessment would require reviewing their broader contract portfolio, performance ratings, and any past issues.

What are the potential implications of the contract's duration (1831 days) on its overall cost and management?

A contract duration of 1831 days, approximately five years, suggests a long-term, strategic requirement for the engineering services provided. For the government, a longer duration can offer stability in service provision and potentially allow for better planning and integration of services. However, it also increases the exposure to potential cost fluctuations over time due to inflation, changes in labor rates, or evolving technological requirements. From a management perspective, a long-duration contract requires sustained oversight to ensure performance remains aligned with objectives and that costs are controlled throughout the contract's life. It also presents opportunities for the contractor to build deep expertise in the specific program area.

Are there any indications of performance issues or concerns associated with this contract?

The provided abbreviated data does not contain any explicit indicators of performance issues or concerns. Fields such as 'performance_rating' or 'issues_log' are not present. The data focuses on contract award details, contractor, agency, dates, and financial aspects. To assess performance, one would typically need access to contract performance reports, quality assurance reviews, or any documented disputes or corrective actions. Without such information, it is assumed, based solely on the provided data, that performance has met the contract's requirements up to the point of data extraction.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q15R0090

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $153,608,461

Exercised Options: $80,532,377

Current Obligation: $80,532,377

Subaward Activity

Number of Subawards: 244

Total Subaward Amount: $74,774,416

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline