DoD's $104M R&D contract for MH-60R airframes awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $104,385,281 ($104.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-09-10

End Date: 2008-03-31

Contract Duration: 1,298 days

Daily Burn Rate: $80.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200412!005189!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04C0288 !A!N! !N! ! !20040910!20050930!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!ONE RANCHO CARMEL !SAN DIEGO !CA!92128!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000052501035!N!N!000000000000!AC14!RDTE/AIRCRAFT-DEMO/VALID !A1A!AIRFRAMES AND SPARES !191 !MH-60R !541710!E! !3! ! ! ! ! !99990909!B! ! !N!Z!D!N!U!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $104.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200412!005189!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04C0288 !A!N! !N! ! !20040910!20050930!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!ONE RANCHO CARMEL !SAN DIEGO !CA!92128!66000!073!06!SAN DIEGO !SAN … Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Lack of competition raises concerns about price discovery and potential overpayment. 3. The contract duration of nearly 4 years suggests a significant R&D effort. 4. Awarded to a large, established defense contractor, potentially limiting opportunities for smaller firms. 5. The specific focus on MH-60R airframes highlights a niche but critical defense capability.

Value Assessment

Rating: questionable

The total award amount of $104,385,281.48 for R&D on MH-60R airframes is substantial. Without a competitive bidding process, it is difficult to benchmark the value for money. The cost-plus-fixed-fee (CPFF) contract type, while common for R&D, can lead to higher costs if not closely managed, as the contractor is reimbursed for all allowable costs plus a fixed fee. The lack of comparative contract data for similar R&D efforts on specific airframe components makes a direct price assessment challenging.

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 indicates that the agency likely identified a single source believed to be uniquely capable of fulfilling the requirement. The absence of multiple bidders means there was no opportunity for price competition, which could lead to less favorable pricing for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure to drive down costs. The government did not benefit from the potential cost savings that often arise from a competitive procurement process.

Public Impact

The primary beneficiary is the Department of Defense, specifically the branch utilizing the MH-60R helicopter. The contract delivers research and development services aimed at improving or validating airframe components for the MH-60R. The geographic impact is primarily within California, where Northrop Grumman's facility is located. The contract supports specialized engineering and technical roles within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type carries inherent risks of cost overruns if not rigorously managed.
Lack of transparency in the justification for a sole-source award.
Limited visibility into the specific R&D activities and their ultimate impact on aircraft performance.

Positive Signals

Award to a large, experienced contractor like Northrop Grumman suggests a high likelihood of technical execution.
Focus on R&D for a critical platform (MH-60R) indicates investment in national security capabilities.
The contract specifies a fixed fee, providing some level of cost predictability for the fee component.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on aircraft components. The aerospace and defense industry is characterized by high R&D investment, long development cycles, and significant government procurement. Comparable spending benchmarks for R&D on specific helicopter airframes are difficult to ascertain publicly due to the proprietary nature of such work and the specialized requirements of defense platforms. However, R&D contracts of this magnitude are not uncommon within the defense sector for advanced technology development.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans for small businesses in the provided data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus was on leveraging their established capabilities. This could limit direct opportunities for small businesses to participate in this specific R&D effort, although they might be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. Accountability measures are inherent in the CPFF structure, requiring the contractor to justify all costs incurred. Transparency is limited due to the sole-source nature and the proprietary R&D focus, but contract award data is publicly available.

Related Government Programs

MH-60R Seahawk Program
Naval Aviation Research and Development
Aerospace Engineering Services
Defense Contractor R&D Spending

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200412!005189!2100!W58RGZ!USA AVIATION AND MISSILE COMMAND!W58RGZ04C0288 !A!N! !N! ! !20040910!20050930!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!ONE RANCHO CARMEL !SAN DIEGO !CA!92128!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000052501035!N!N!000000000000!AC14!RDTE/AIRCRAFT-DEMO/VALID !A1A!AIRFRAMES AND SPARES !191 !MH-60R !541710!E! !3! ! ! ! ! !999

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 $104.4 million.

What is the period of performance?

Start: 2004-09-10. End: 2008-03-31.

What specific R&D activities were undertaken under this contract for the MH-60R airframes?

The provided data indicates the contract was for 'Research and Development in the Physical, Engineering, and Life Sciences' with a Product Service Code (PSC) of AC14, specifically 'RDTE/AIRCRAFT-DEMO/VALID'. While the exact nature of the R&D is not detailed, it likely involved activities such as design validation, performance testing, material research, or integration of new technologies related to the airframe structure or systems of the MH-60R helicopter. Given the 'DEMO/VALID' designation, it could pertain to demonstrating the feasibility of new designs or validating existing ones under specific conditions. Further details would typically be found in the contract's Statement of Work (SOW), which is not publicly available in this dataset.

How does the $104M award compare to other R&D contracts for similar helicopter platforms?

Directly comparing this $104 million R&D contract for MH-60R airframes to 'similar' helicopter platforms is challenging due to several factors. Firstly, R&D costs are highly variable depending on the scope, technological novelty, and specific components being addressed. Secondly, the MH-60R is a specialized naval helicopter, and its R&D needs may differ significantly from other military or commercial platforms. Publicly available data often lacks the granularity to isolate R&D spending on specific airframe components for comparable platforms. However, within the broader defense R&D landscape, contracts in the tens to hundreds of millions of dollars are not unusual for significant technology development efforts on major weapon systems.

What are the risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to Northrop Grumman, present specific risks for the government. The primary risk is that the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. If the contractor's costs exceed initial estimates, the government still pays those costs along with the fixed fee. This can lead to the total contract price being higher than initially anticipated, especially if cost-saving efficiencies are not pursued aggressively by the contractor. Effective oversight and robust cost accounting standards are crucial to mitigate these risks and ensure that costs are reasonable and allocable.

What is the significance of the 'sole-source' award designation for this contract?

The 'sole-source' designation signifies that the Department of Defense did not conduct a competitive bidding process for this contract. This implies that the agency determined, likely through market research or prior experience, that only one responsible source was capable of providing the required R&D services for the MH-60R airframes. While this can be justified in cases of unique capabilities or urgent needs, it generally leads to higher prices for the government compared to a competitive procurement. It also bypasses the opportunity to explore innovative solutions or cost reductions that might emerge from multiple bidders.

What is Northrop Grumman's track record with similar R&D contracts for defense platforms?

Northrop Grumman is a major defense contractor with extensive experience in research, development, and production of complex aerospace and defense systems, including rotary-wing aircraft components. While specific R&D contract performance details are often not publicly disclosed in detail, the company's long-standing presence and significant role in various defense programs suggest a substantial track record. They have been involved in numerous large-scale government contracts, often involving advanced technologies and long-term development cycles. Their ability to secure sole-source awards, as seen here, often stems from perceived unique capabilities or established relationships within the defense acquisition ecosystem.

How has federal spending on helicopter R&D evolved over the years, and where does this contract fit?

Federal spending on helicopter R&D, particularly within the Department of Defense, fluctuates based on strategic priorities, technological advancements, and platform modernization needs. Historically, significant investments have been made in areas like improved avionics, engine efficiency, survivability, and airframe integrity. This $104 million contract for MH-60R airframe R&D, awarded in 2004, fits within a period where the US military was actively engaged in ongoing conflicts and modernizing its fleet. The MH-60R itself is a critical platform for naval operations, and R&D funding ensures its continued relevance and effectiveness. While specific year-over-year R&D spending figures for helicopters are not readily available in aggregate, such contracts represent a portion of the overall defense R&D budget allocated to aviation systems.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: ONE RANCHO CARMEL, SAN DIEGO, CA, 92128

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline