Northrop Grumman's $148.7M DoD contract for P3I Block 2, Phase 1 Development shows significant R&D investment
Contract Overview
Contract Amount: $148,738,769 ($148.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2012-08-23
End Date: 2022-05-13
Contract Duration: 3,550 days
Daily Burn Rate: $41.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: R&D
Official Description: IGF::CT::IGF P3I BLK 2, PH 1 DEVELOPMENT
Place of Performance
Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $148.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::CT::IGF P3I BLK 2, PH 1 DEVELOPMENT Key points: 1. This contract represents a substantial investment in research and development, indicating a focus on advanced technological capabilities. 2. The long duration of the contract (3550 days) suggests a complex, multi-year development effort. 3. Awarded under full and open competition, it implies a robust market for this type of specialized R&D service. 4. The cost-plus incentive fee structure incentivizes the contractor to manage costs effectively while achieving performance goals. 5. The specific NAICS code (541712) points to a highly specialized area within physical, engineering, and life sciences R&D. 6. The contract's value, while significant, needs to be benchmarked against similar large-scale R&D initiatives for a complete value assessment.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging without direct comparisons to similar large-scale, multi-year R&D efforts in advanced defense systems. The cost-plus incentive fee (CPIF) structure aims to align contractor and government interests, but the ultimate value depends on the successful achievement of technical milestones and cost efficiencies. The total obligated amount of $148.7 million over nearly a decade suggests a significant investment, but a detailed cost breakdown and comparison to industry standards for similar research phases would be necessary for a more definitive value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple capable contractors had the opportunity to bid. This competitive process is generally expected to foster price discovery and encourage the selection of the most advantageous offer based on technical merit and cost. The number of bidders is not specified, but the 'full and open' designation suggests a healthy level of market interest and capability for this specialized R&D requirement.
Taxpayer Impact: A competitive award process for complex R&D ensures that taxpayer funds are likely being used to secure the best possible technological solutions at a reasonable price, minimizing the risk of overpayment.
Public Impact
The primary beneficiaries are the Department of Defense and potentially the warfighter, who will gain access to advanced technological capabilities developed under this contract. The contract supports the development of specific technologies related to P3I (Program Protection Plan Implementation) for Block 2, Phase 1. The geographic impact is primarily centered around the contractor's operations in Colorado, but the ultimate deployment of the technology will be nationwide or global. This contract likely supports a highly skilled workforce of scientists, engineers, and technical specialists within Northrop Grumman and its potential subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The long contract duration and CPIF structure could lead to cost overruns if not rigorously managed and monitored.
- The specialized nature of the R&D may limit the number of truly competitive bids in the future, potentially increasing costs for subsequent phases.
- Assessing the true 'value for money' is difficult without detailed performance metrics and independent technical evaluations.
- The complexity of the technology being developed presents inherent risks of technical challenges and schedule delays.
Positive Signals
- Awarded through full and open competition, suggesting a robust market and potential for competitive pricing.
- The CPIF contract type incentivizes contractor performance and cost control, aligning interests with the government.
- Northrop Grumman is a major defense contractor with a track record in complex R&D programs.
- The contract addresses a specific, critical need within the Department of Defense's modernization efforts.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on advanced physical and engineering sciences. The market for defense R&D is characterized by high barriers to entry, significant government investment, and a focus on innovation and technological superiority. Comparable spending benchmarks would involve other large-scale, multi-year R&D contracts awarded by the DoD for next-generation systems or technologies. The size of this contract suggests it is a significant project within its specific technological domain.
Small Business Impact
There is no indication that this contract included specific small business set-asides. As a large, complex R&D effort awarded to a major prime contractor, the primary focus is likely on specialized technical capabilities. However, Northrop Grumman may engage small businesses as subcontractors to fulfill specific components or services, contributing to the broader small business ecosystem within the defense industrial base.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices. Accountability measures are embedded in the Cost Plus Incentive Fee (CPIF) structure, which links contractor payment to performance and cost targets. Transparency is generally maintained through contract reporting requirements, though specific technical details of R&D may be sensitive. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.
Related Government Programs
- Department of Defense Research and Development Programs
- Advanced Technology Development Contracts
- Program Protection Plan Implementation
- Next-Generation Defense Systems
Risk Flags
- Long contract duration may increase risk of scope creep or obsolescence.
- CPIF structure requires careful monitoring to ensure cost control and performance.
- Specialized R&D may limit future competition.
- Technical risks inherent in developing advanced technologies.
Tags
department-of-defense, department-of-the-army, research-and-development, definitive-contract, cost-plus-incentive-fee, full-and-open-competition, northrop-grumman, colorado, large-contract, technology-development, program-protection
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $148.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::CT::IGF P3I BLK 2, PH 1 DEVELOPMENT
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 $148.7 million.
What is the period of performance?
Start: 2012-08-23. End: 2022-05-13.
What is Northrop Grumman's track record with similar large-scale R&D contracts for the Department of Defense?
Northrop Grumman is a major defense contractor with extensive experience in large-scale research and development programs for the Department of Defense. They have a history of developing complex systems across various domains, including aerospace, defense electronics, and information systems. While specific details of past R&D contracts are often proprietary, their portfolio includes numerous high-value, multi-year efforts aimed at advancing technological capabilities. Their performance on such contracts is generally evaluated based on meeting technical milestones, adhering to schedules, and managing costs within the awarded contract structures. The DoD's selection of Northrop Grumman for this significant P3I development contract suggests confidence in their past performance and technical expertise in relevant areas.
How does the $148.7 million value compare to other R&D contracts in the physical, engineering, and life sciences sector?
The $148.7 million value for this contract is substantial and falls within the upper range for individual R&D awards, particularly for a specific phase of a larger program. The NAICS code 541712 covers a broad spectrum of R&D, but contracts of this magnitude are typically associated with foundational research, system development, or advanced technology integration for major defense or aerospace programs. For context, other large R&D contracts in this sector can range from tens of millions to billions of dollars, depending on the scope, duration, and technological complexity. This particular contract's value suggests a significant, multi-year effort focused on a critical technological advancement, likely representing a key component of a broader defense initiative.
What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for R&D?
The primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for R&D involve balancing cost control with performance achievement. While CPIF incentivizes the contractor to reduce costs below a target by sharing in the savings, there's a risk that the contractor might cut corners on quality or technical rigor to meet cost targets, potentially compromising the R&D outcome. Conversely, if costs exceed the target, the government shares in the overruns, up to a ceiling. Another risk is the complexity of defining appropriate performance incentives and target costs for novel R&D, which can be inherently unpredictable. Effective oversight is crucial to ensure that the incentives align with the government's objectives and that the R&D progresses as intended without sacrificing technical integrity.
What does the long contract duration (3550 days) imply about the nature of the P3I Block 2, Phase 1 development?
The contract duration of 3550 days, approximately 9.7 years, strongly implies that the P3I Block 2, Phase 1 development is a highly complex, long-term undertaking. Such extended timelines are typical for advanced research and development projects that involve significant technological innovation, iterative design processes, extensive testing, and integration with existing or future systems. It suggests that the project is not a straightforward procurement but rather a developmental effort requiring sustained investment and expertise over many years. This duration also indicates that the program protection plan implementation is likely a foundational element for a system that will have a long service life, requiring robust security and resilience from its inception.
How does the 'full and open competition' award impact the potential for future cost savings or innovation?
Awarding this contract through 'full and open competition' suggests that the initial selection process likely yielded competitive proposals, potentially leading to favorable pricing and innovative technical approaches. This competitive environment encourages multiple contractors to leverage their unique capabilities and propose cost-effective solutions. For future phases or related procurements, the data generated from this competitive award can serve as a benchmark. It also signals to the market that the government is open to diverse solutions, which can foster continued innovation. However, the highly specialized nature of R&D means that subsequent competition might be limited if only a few entities possess the requisite advanced expertise, potentially impacting future cost savings.
What is the significance of the NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences) in this context?
The NAICS code 541712 signifies that this contract is focused on fundamental research and applied research and development activities within the physical sciences (e.g., physics, chemistry, materials science), engineering disciplines (e.g., electrical, mechanical, aerospace engineering), and life sciences (excluding biotechnology, which has its own codes). In the context of this Department of Defense contract for P3I development, it indicates that the work involves scientific discovery, experimentation, and the creation of new knowledge or technologies that have practical applications, likely related to enhancing the security, resilience, or performance of defense systems. This code points to a high level of technical sophistication and innovation being pursued.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: W9113M12R0015
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 6120 LONGBOW DR, BOULDER, CO, 80301
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $150,052,335
Exercised Options: $150,052,335
Current Obligation: $148,738,769
Subaward Activity
Number of Subawards: 5703
Total Subaward Amount: $1,043,384,288
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-08-23
Current End Date: 2022-05-13
Potential End Date: 2022-05-13 00:00:00
Last Modified: 2025-12-31
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