DoD's $135.6M Northrop Grumman R&D Contract Raises Questions on Competition and Value
Contract Overview
Contract Amount: $135,580,567 ($135.6M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2015-08-28
End Date: 2024-08-20
Contract Duration: 3,280 days
Daily Burn Rate: $41.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: IGF::OT::IGF FOR OTHER FUNCTIONS
Place of Performance
Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $135.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF FOR OTHER FUNCTIONS Key points: 1. Significant R&D spending with a single, large contractor. 2. Lack of competition raises concerns about price discovery. 3. Long contract duration (9 years) may indicate evolving needs or limited market. 4. Potential for cost overruns given Cost Plus Fixed Fee structure.
Value Assessment
Rating: questionable
The $135.6M contract value over 9 years is substantial. Without competitive benchmarking, assessing its value is difficult. The Cost Plus Fixed Fee (CPFF) structure can lead to higher costs if not managed tightly.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer the best price.
Taxpayer Impact: The lack of competition on this large contract likely results in a higher cost to taxpayers than if it had been competed.
Public Impact
Taxpayers may be paying a premium due to the absence of competitive bidding. The long duration suggests critical, potentially ongoing R&D, but the specific outcomes are unclear. Oversight is crucial to ensure the fixed fee remains reasonable and costs are controlled.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Long contract duration
- Lack of small business participation
Positive Signals
- Supports critical R&D for the Department of the Army
- Long-term engagement with a known contractor
Sector Analysis
This contract falls under Research and Development in the Physical, Engineering, and Life Sciences. Spending in this sector can be highly variable and is often characterized by long development cycles and specialized expertise, making competition challenging but not always impossible.
Small Business Impact
The contract data indicates no small business participation (sb: false). This suggests that the prime contractor is handling the entirety of the work, potentially missing opportunities to leverage specialized small business capabilities and innovation.
Oversight & Accountability
Given the sole-source nature and CPFF structure, robust oversight from the Department of the Army is essential. This includes monitoring costs, ensuring adherence to the fixed fee, and verifying the necessity and progress of the R&D efforts.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition
- Cost Plus Fixed Fee structure
- Long contract duration
- No small business participation
- Potential for cost overruns
- Limited transparency on R&D objectives
Tags
research-and-development-in-the-physical, department-of-defense, il, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $135.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF FOR OTHER FUNCTIONS
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 $135.6 million.
What is the period of performance?
Start: 2015-08-28. End: 2024-08-20.
What specific R&D objectives does this contract aim to achieve, and how do they align with current defense priorities?
The contract is for 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. While the specific objectives are not detailed, such R&D typically supports advancements in materials science, engineering processes, or fundamental scientific understanding relevant to defense capabilities. Alignment with current priorities would require further investigation into the Army's strategic R&D roadmap.
What steps were taken to justify a sole-source award, and were alternative competitive strategies considered?
Justification for sole-source awards typically involves demonstrating that only one responsible source can provide the required supplies or services. For R&D, this might be due to unique expertise, proprietary technology, or critical infrastructure. The agency should have documented why Northrop Grumman was the only viable option and explored if any portion could be competed or if a different contract vehicle might have fostered competition.
How is the 'fixed fee' component of this CPFF contract determined and adjusted, and what mechanisms are in place to prevent contractor inefficiency from increasing costs?
In a CPFF contract, the fixed fee is negotiated upfront and represents the contractor's profit. It should be based on factors like complexity, risk, and effort. Mechanisms to prevent inefficiency include performance metrics, milestone reviews, and potentially incentive provisions tied to cost savings or performance. The government must actively monitor progress and costs to ensure the fee remains fair and the contractor is incentivized to perform efficiently.
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
Solicitation ID: W58RGZ14R0001
Offers Received: 1
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: $165,169,787
Exercised Options: $136,189,086
Current Obligation: $135,580,567
Subaward Activity
Number of Subawards: 293
Total Subaward Amount: $288,646,178
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-08-28
Current End Date: 2024-08-20
Potential End Date: 2024-08-20 00:00:00
Last Modified: 2025-09-16
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