Army awards $29.9M R&D contract to Northrop Grumman for engineering change proposals

Contract Overview

Contract Amount: $29,937,365 ($29.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-01-12

End Date: 2024-07-31

Contract Duration: 931 days

Daily Burn Rate: $32.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: THE PURPOSE OF THIS TASK ORDER IS TO DEFINE THE PROGRAMMATIC, ENGINEERING AND TECHNICAL TASKS TO BE ACCOMPLISHED FOR THE SYSTEM DEVELOPMENT FOR THE ARMY ENGINEERING CHANGE PROPOSAL.

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THE PURPOSE OF THIS TASK ORDER IS TO DEFINE THE PROGRAMMATIC, ENGINEERING AND TECHNICAL TASKS TO BE ACCOMPLISHED FOR THE SYSTEM DEVELOPMENT FOR THE ARMY ENGINEERING CHANGE PROPOSAL. Key points: 1. Contract focuses on system development for engineering change proposals, indicating a need for specialized technical expertise. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. A Cost Plus Fixed Fee (CPFF) contract type suggests inherent cost uncertainty, requiring robust oversight. 4. The contract duration of over two years implies a significant, ongoing requirement for these R&D services. 5. This award falls within the Research and Development sector, specifically for physical, engineering, and life sciences. 6. The contractor, Northrop Grumman, is a major defense industry player, suggesting established capabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this Cost Plus Fixed Fee (CPFF) contract is challenging without detailed cost breakdowns and comparison to similar R&D efforts. The lack of competition raises concerns about whether the fixed fee adequately incentivizes cost control. While the total award is substantial, the value proposition hinges on the effective management of R&D costs and the successful delivery of engineering solutions. Further analysis of the contractor's historical performance on similar CPFF contracts would be beneficial.

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 among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency precludes a competitive process. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It is important to understand the justification for this sole-source award to ensure it was appropriate and that the government did not forgo potential cost savings.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates rigorous negotiation and oversight to ensure fair and reasonable pricing.

Public Impact

The U.S. Army benefits from specialized engineering and technical support for its system development needs. Services delivered include programmatic, engineering, and technical tasks crucial for the Army's Engineering Change Proposal process. The geographic impact is primarily within the United States, supporting domestic defense initiatives. Workforce implications include the utilization of specialized R&D personnel by Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed carefully.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor to not fully optimize costs due to fixed fee structure.

Positive Signals

Award to a reputable contractor with significant experience in defense R&D.
Contract addresses a specific programmatic need for system development.
Clear contract end date provides a defined period for service delivery.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically under NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences). This sector is characterized by innovation and specialized scientific expertise. The total federal spending in R&D is substantial, with significant portions allocated to defense-related research. Comparable spending benchmarks would involve analyzing other R&D contracts awarded by the Department of Defense or Army for system development and engineering support, particularly those involving complex technological advancements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no information provided regarding subcontracting plans specifically for small businesses. Given the nature of the work and the prime contractor's size, it is unlikely that small businesses will be significantly involved as direct subcontractors unless specifically mandated or pursued by Northrop Grumman. This could limit opportunities for small businesses to participate in this specific contract's value chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army contracting and program management offices. As a Cost Plus Fixed Fee (CPFF) contract, rigorous financial oversight is crucial to monitor costs against the fixed fee and ensure the contractor is operating efficiently. Transparency regarding cost reporting and progress updates will be key accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Research and Development Contracts
Army System Development Programs
Engineering Change Proposal Support
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THE PURPOSE OF THIS TASK ORDER IS TO DEFINE THE PROGRAMMATIC, ENGINEERING AND TECHNICAL TASKS TO BE ACCOMPLISHED FOR THE SYSTEM DEVELOPMENT FOR THE ARMY ENGINEERING CHANGE PROPOSAL.

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 $29.9 million.

What is the period of performance?

Start: 2022-01-12. End: 2024-07-31.

What is the specific justification for awarding this contract on a sole-source basis to Northrop Grumman?

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as the existence of only one responsible source capable of providing the required services, or in cases of urgent and compelling need where competition is not feasible. Without this specific justification, it is difficult to assess whether the government appropriately bypassed the competitive bidding process. Further investigation into the contract file or agency justifications would be necessary to understand the rationale behind this decision and to determine if it aligns with regulatory requirements and best practices for ensuring fair and reasonable pricing.

How does the Cost Plus Fixed Fee (CPFF) structure impact cost control and value for money in this R&D contract?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for the contractor to control costs (as exceeding costs doesn't increase their profit), it can also lead to less aggressive cost management compared to fixed-price contracts. For R&D, where costs can be inherently unpredictable, CPFF is often used. However, it places a significant burden on the government to meticulously audit costs and ensure they are reasonable and allocable. The value for money is thus heavily dependent on the government's oversight capabilities and the contractor's integrity in managing expenses. Without detailed cost breakdowns and performance metrics, it's challenging to definitively assess the value derived from the $29.9 million expenditure.

What is Northrop Grumman's track record with similar Cost Plus Fixed Fee R&D contracts for the Department of the Army?

Assessing Northrop Grumman's track record on similar contracts requires access to historical contract performance data, such as past performance reviews, cost overrun history, and on-time delivery rates for CPFF R&D contracts with the Department of the Army. As a major defense contractor, Northrop Grumman has extensive experience with various contract types, including CPFF, across numerous programs. However, specific performance metrics for this particular type of R&D work are not provided in the given data. A comprehensive review would involve analyzing their performance on comparable projects, looking for patterns of cost efficiency, successful technical execution, and adherence to contract terms. This information is crucial for evaluating the risk associated with this award and confirming the contractor's capability to deliver effectively within the specified parameters.

What are the potential risks associated with the long duration (over 2 years) of this R&D task order?

The extended duration of this task order, spanning from January 2022 to July 2024 (931 days), introduces several potential risks. Firstly, the longer timeframe increases the likelihood of scope creep or evolving requirements, which, under a CPFF contract, could lead to increased costs if not managed diligently. Secondly, technological advancements or changes in strategic priorities within the Army could render the R&D outcomes less relevant or obsolete by the contract's end. Thirdly, maintaining consistent oversight and engagement from the government team over such an extended period can be challenging due to personnel turnover or shifting agency priorities. Finally, the longer duration means that potential cost efficiencies or better pricing opportunities that might arise in the market over time are locked in at the initial award.

How does this contract align with the Army's broader R&D spending patterns and strategic objectives in system development?

This contract aligns with the Army's consistent investment in Research and Development to maintain technological superiority and modernize its systems. The focus on 'system development for the Army Engineering Change Proposal' suggests a need to refine, update, or improve existing platforms or capabilities through engineering modifications. Such R&D efforts are critical for adapting to evolving threats and operational requirements. Analyzing this contract within the context of the Army's overall R&D budget and specific modernization priorities (e.g., in areas like C5ISR, aviation, or ground vehicles) would reveal its strategic importance. If Engineering Change Proposals are a key mechanism for incremental improvement, then this contract supports a vital process for sustaining and enhancing Army readiness.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 600 HICKS RD, ROLLING MEADOWS, IL, 60008

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

Financial Breakdown

Contract Ceiling: $29,937,365

Exercised Options: $29,937,365

Current Obligation: $29,937,365

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $109,169

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56KGU17D0006

IDV Type: IDC

Timeline