DoD's $89M R&D Contract with Northrop Grumman: Research and Development in Physical, Engineering, and Life Sciences
Contract Overview
Contract Amount: $89,335,393 ($89.3M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2016-05-13
End Date: 2021-03-01
Contract Duration: 1,753 days
Daily Burn Rate: $51.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: R&D
Official Description: PURCHASE OF SERVICES
Place of Performance
Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $89.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PURCHASE OF SERVICES Key points: 1. Significant investment in R&D services, specifically in physical, engineering, and life sciences. 2. Sole-source award to Northrop Grumman Systems Corporation indicates a lack of competition. 3. Contract duration of 1753 days suggests a long-term project. 4. Cost Plus Incentive Fee (CPIF) pricing structure can incentivize performance but requires careful oversight.
Value Assessment
Rating: questionable
The contract's value of $89.3 million for R&D services is substantial. Without specific benchmarks for similar R&D contracts within the physical, engineering, and life sciences sector, it is difficult to definitively assess its pricing fairness.
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 significantly limits price discovery and may lead to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition for this large R&D contract raises concerns about potential overspending and reduced value for taxpayer funds.
Public Impact
Taxpayers may be paying a premium due to the absence of competitive bidding. The long-term nature of the contract could lock in costs without opportunities for re-evaluation. Potential for innovation and technological advancement, but the cost-effectiveness is uncertain. Lack of transparency in the sole-source award process.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Cost Plus Incentive Fee structure requires robust oversight to manage costs.
- Long contract duration may not reflect current market conditions or needs.
- Lack of small business participation noted.
Positive Signals
- Contract supports critical R&D in physical, engineering, and life sciences.
- Awardee is a major defense contractor with significant capabilities.
- Potential for valuable technological advancements.
Sector Analysis
This contract falls under the Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) sector (NAICS 541712). Spending in this sector is crucial for innovation but can be complex to benchmark due to the unique nature of R&D projects.
Small Business Impact
The data indicates that small businesses were not a factor in this contract award (ss: false, sb: false). This sole-source award to a large corporation missed an opportunity to engage small businesses in R&D efforts.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure that Northrop Grumman is delivering on the R&D objectives efficiently and that costs are reasonable, especially given the CPIF structure.
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
- Sole-source award limits competition.
- Potential for cost overruns due to CPIF structure without competitive pressure.
- Lack of transparency in the procurement process.
- No small business participation.
Tags
research-and-development-in-the-physical, department-of-defense, il, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $89.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PURCHASE OF SERVICES
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 $89.3 million.
What is the period of performance?
Start: 2016-05-13. End: 2021-03-01.
What specific R&D objectives were pursued under this contract, and how do they align with current Department of Defense priorities?
The contract focuses on 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. Without further details, it's challenging to ascertain the specific objectives. However, R&D in these areas is generally critical for advancing military capabilities, improving existing technologies, and exploring novel solutions to defense challenges. Alignment with current priorities would depend on the specific research topics undertaken.
Given the sole-source award, what mechanisms were in place to ensure fair and reasonable pricing and prevent cost overruns?
As a Cost Plus Incentive Fee (CPIF) contract, the pricing is tied to performance targets. However, the sole-source nature bypasses competitive bidding, which is the primary mechanism for ensuring fair pricing. Robust government oversight, including detailed cost analysis, negotiation of incentive targets, and monitoring of contractor performance, would be essential to mitigate risks of inflated costs and ensure value for taxpayer money.
What is the expected return on investment or tangible outcome from this $89 million R&D expenditure?
The return on investment for R&D contracts is often long-term and can be difficult to quantify precisely at the outset. Tangible outcomes could range from new technologies, improved processes, scientific discoveries, or enhanced system capabilities. The CPIF structure aims to incentivize the contractor to achieve these outcomes efficiently. However, the lack of competition makes it harder to guarantee that the $89 million expenditure will yield the best possible return compared to a competitively bid project.
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: WEAPONS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
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: $89,940,644
Exercised Options: $89,940,644
Current Obligation: $89,335,393
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-05-13
Current End Date: 2021-03-01
Potential End Date: 2021-03-01 12:03:00
Last Modified: 2024-09-10
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