DoD awards $26.6M to Northrop Grumman for CIRCM LQI Engineering Services, a sole-source contract

Contract Overview

Contract Amount: $26,649,903 ($26.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-04-15

End Date: 2024-09-30

Contract Duration: 899 days

Daily Burn Rate: $29.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: CIRCM LQI ENGINEERING SERVICES FY22

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $26.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: CIRCM LQI ENGINEERING SERVICES FY22 Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Significant duration of 899 days suggests a substantial and ongoing need for these services. 3. The contract type (Cost Plus Incentive Fee) allows for cost overruns but incentivizes performance. 4. Northrop Grumman, a major defense contractor, is well-positioned to provide these specialized engineering services. 5. The contract's value is substantial, indicating a critical role in the Army's aviation systems. 6. Focus on Search, Detection, Navigation, Guidance systems highlights a key area of defense technology.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without comparable bids. The Cost Plus Incentive Fee structure means actual costs could fluctuate. However, the contract duration and the specialized nature of the engineering services suggest a fair, albeit uncompeted, price point for the required expertise. Further analysis would require access to detailed cost breakdowns and performance metrics.

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 only one vendor possesses the necessary specialized skills, technology, or security clearances. The lack of competition means the government did not benefit from price discovery through a bidding process, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, it's harder to ensure the most cost-effective solution was secured.

Public Impact

The U.S. Army benefits from critical engineering support for its aviation systems. Services delivered are essential for the development and maintenance of Search, Detection, Navigation, and Guidance systems. The geographic impact is primarily within Illinois, where the contractor is located, but the services support national defense operations. Workforce implications include specialized engineering roles within Northrop Grumman, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Incentive Fee contracts can lead to cost overruns if not closely managed.
Lack of transparency in the sole-source justification makes it difficult to assess true value.
The long contract duration could indicate potential for scope creep or evolving requirements.

Positive Signals

Award to a major defense contractor with a proven track record in aerospace and defense systems.
The contract addresses critical needs in advanced navigation and guidance technology for military aviation.
Incentive fee structure aims to align contractor performance with program objectives.
The contract supports the development of sophisticated defense systems vital for national security.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on advanced navigation and guidance systems. The market for such specialized engineering services is dominated by a few large, established defense contractors. Spending in this area is driven by the need for technological superiority in military operations. Comparable spending benchmarks would likely involve other large, sole-source or competitively awarded contracts for similar complex system development and sustainment.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the specialized nature of the engineering services and the award to a large prime contractor like Northrop Grumman, the direct impact on small businesses is likely limited to potential subcontracting opportunities. The prime contractor's subcontracting plan, if any, would determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting and program management offices. The Cost Plus Incentive Fee structure necessitates close monitoring of costs and performance to ensure value for money. Transparency is limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms.

Related Government Programs

Department of Defense Research and Development
Army Aviation Systems Modernization
Navigation and Guidance System Development
Defense Contractor Engineering Services

Risk Flags

Sole-source award
Cost Plus Incentive Fee contract type
Lack of detailed public cost breakdown

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. CIRCM LQI ENGINEERING SERVICES FY22

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 $26.6 million.

What is the period of performance?

Start: 2022-04-15. End: 2024-09-30.

What is Northrop Grumman's track record with similar sole-source contracts for the Department of Defense?

Northrop Grumman has a long history of securing sole-source contracts with the Department of Defense, particularly for complex and specialized systems where they possess unique capabilities or are the incumbent provider. These contracts often involve advanced technologies in areas such as aerospace, defense electronics, and information systems. While sole-source awards can raise concerns about competition, they are sometimes deemed necessary for national security reasons or when a specific contractor's expertise is indispensable. Analyzing past performance on similar contracts would involve reviewing their delivery history, cost performance, and adherence to technical specifications to gauge their reliability and efficiency in executing such agreements.

How does the $26.6 million value compare to similar CIRCM LQI engineering services contracts?

Direct comparison of the $26.6 million value for CIRCM LQI engineering services is difficult without access to a broader dataset of similar sole-source or competitively awarded contracts for this specific system or comparable advanced aviation support. However, considering the duration (nearly two years) and the specialized nature of engineering services for advanced defense systems, this value appears substantial. For context, other large sole-source contracts for specialized defense engineering can range from tens to hundreds of millions of dollars, depending on the scope, complexity, and duration. The Cost Plus Incentive Fee structure also implies that the final cost could deviate from the initial estimate, making a precise benchmark challenging.

What are the primary risks associated with this sole-source Cost Plus Incentive Fee contract?

The primary risks associated with this sole-source Cost Plus Incentive Fee (CPIF) contract include: 1. **Cost Overruns:** CPIF contracts allow costs to exceed initial estimates, and without competitive pressure, there's a heightened risk of the contractor not aggressively managing expenses. 2. **Limited Price Discovery:** The sole-source nature means the government didn't benefit from a competitive bidding process, potentially leading to a higher price than achievable through competition. 3. **Scope Creep:** The extended duration and performance-based incentives could lead to the expansion of contract scope beyond the original intent, increasing costs. 4. **Performance Issues:** While incentives are in place, there's still a risk that the contractor may not meet all performance targets, impacting the effectiveness of the supported systems. 5. **Contractor Lock-in:** Reliance on a single provider for critical services can create dependency and limit future flexibility.

How effective is the Cost Plus Incentive Fee (CPIF) structure in ensuring program effectiveness for CIRCM LQI engineering?

The Cost Plus Incentive Fee (CPIF) structure is designed to balance cost control with performance achievement. For CIRCM LQI engineering services, it aims to incentivize Northrop Grumman to meet or exceed specific performance targets (e.g., technical milestones, system reliability) while also managing costs. The fee is adjusted based on the relationship between actual costs and target costs, and performance against target objectives. If the contractor performs well and keeps costs near the target, they earn a higher fee. Conversely, if costs exceed targets or performance is subpar, the fee is reduced. This structure can be effective in aligning contractor incentives with program goals, encouraging efficiency and quality, but its success heavily relies on well-defined performance metrics and robust government oversight to prevent manipulation or unintended consequences.

What are historical spending patterns for CIRCM LQI engineering services or similar support within the Department of the Army?

Historical spending patterns for CIRCM LQI engineering services or similar support within the Department of the Army are not publicly detailed in a way that allows for direct comparison to this specific $26.6 million award. However, general trends in defense spending indicate significant investment in aviation systems, including advanced electronic warfare, navigation, and sensor technologies. Contracts for such specialized engineering support are often substantial and can span multiple years, reflecting the complexity and long lifecycle of military hardware. The Army consistently allocates billions annually to aviation modernization and sustainment, with a portion dedicated to the research, development, and engineering services required for systems like CIRCM. Sole-source awards are not uncommon for highly specialized or legacy systems where incumbent contractors hold unique knowledge.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $26,649,903

Exercised Options: $26,649,903

Current Obligation: $26,649,903

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $6,210,184

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ19D0110

IDV Type: IDC

Timeline