DoD's $16.7M Range Operations Contract Awarded to Northrop Grumman Raises Value and Competition Concerns
Contract Overview
Contract Amount: $16,723,763 ($16.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2010-07-01
End Date: 2012-02-29
Contract Duration: 608 days
Daily Burn Rate: $27.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: RANGE OPERATIONS AND SUPPORT SERVICES
Place of Performance
Location: FORT HOOD, BELL County, TEXAS, 76544
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $16.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: RANGE OPERATIONS AND SUPPORT SERVICES Key points: 1. The contract's value proposition is questionable given the lack of competitive bidding and the cost-plus-fixed-fee structure. 2. Limited competition for this significant contract may have led to suboptimal pricing for taxpayers. 3. The sole-source award presents a risk indicator for potential cost overruns and reduced innovation. 4. Performance context is limited due to the absence of comparative contract data. 5. This contract falls within the facilities support services sector, a common area for government contracting. 6. The duration of the contract (over 600 days) suggests a substantial operational requirement. 7. The absence of small business set-asides or subcontracting requirements is noted.
Value Assessment
Rating: questionable
The total award of $16.7 million for facilities support services lacks a clear benchmark due to its sole-source nature. Without competitive bids, it is difficult to assess if the pricing is optimal or if taxpayers received the best value. The cost-plus-fixed-fee (CPFF) contract type, while allowing for flexibility, can sometimes incentivize higher costs compared to fixed-price contracts, especially when competition is absent. Further analysis would require benchmarking against similar range operations and support services contracts awarded competitively.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This significantly limits the opportunity for price discovery and potentially leads to higher costs for the government. The absence of a competitive process means that the government did not benefit from the potential for multiple bidders to offer lower prices or more innovative solutions. The rationale for this sole-source award is not provided but is a key factor in assessing the overall value.
Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most cost-effective solution. The lack of competition removes a key mechanism for ensuring competitive pricing and potentially leads to higher overall government spending.
Public Impact
Military personnel and training operations at the specified Texas facility benefit from the continuity of range operations and support services. Essential services such as facility maintenance, safety, and operational support for training ranges are delivered. The geographic impact is concentrated in Texas, supporting regional military readiness. The contract supports a workforce involved in specialized range operations and facility management.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition raises concerns about fair pricing and potential cost inefficiencies.
- Cost-plus-fixed-fee structure in a sole-source award can lead to reduced cost control.
- Absence of small business participation or subcontracting requirements limits broader economic impact.
- Limited transparency regarding the justification for the sole-source award.
Positive Signals
- Northrop Grumman is a large, established defense contractor with significant experience.
- The contract ensures continued operational support for critical military training infrastructure.
- The fixed fee component of the CPFF contract provides some level of cost predictability for the contractor's profit.
Sector Analysis
This contract falls under the Facilities Support Services sector (NAICS code 561210), which encompasses a broad range of services for the operation and maintenance of government facilities. The defense sector, in particular, relies heavily on such services to ensure the readiness and operational capability of its installations. Comparable spending in this sector can vary widely based on the scale and complexity of the facilities managed. The $16.7 million award is a moderate-sized contract within this domain, but its sole-source nature warrants scrutiny.
Small Business Impact
This contract does not appear to have included small business set-asides, nor is there an indication of subcontracting requirements for small businesses. This means that the primary awardee, Northrop Grumman, is likely performing the majority of the work. Consequently, the direct economic benefit to the small business ecosystem from this specific contract is likely minimal. Future contracts of this nature could explore opportunities for small business participation to foster broader economic impact and competition.
Oversight & Accountability
Oversight for this contract would typically fall under the purview of the Department of the Army contracting officers and program managers. Given the sole-source nature, robust oversight is crucial to ensure that costs are reasonable and that the contractor is meeting all performance requirements. Transparency regarding the justification for the sole-source award and ongoing performance metrics would enhance accountability. Inspector General involvement would be contingent on specific performance issues or allegations of fraud, waste, or abuse.
Related Government Programs
- Range Operations and Maintenance Contracts
- Facilities Management Services
- Department of Defense Support Services
- Northrop Grumman Defense Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Cost-plus-fixed-fee contract type
- No small business participation noted
Tags
defense, department-of-the-army, northrop-grumman-systems-corporation, facilities-support-services, definitive-contract, cost-plus-fixed-fee, sole-source, range-operations, texas, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $16.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. RANGE OPERATIONS AND SUPPORT 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 $16.7 million.
What is the period of performance?
Start: 2010-07-01. End: 2012-02-29.
What is the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis to Northrop Grumman Systems Corporation?
The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can satisfy the agency's needs, often due to unique capabilities, urgent requirements, or lack of adequate competition. For a contract of this magnitude ($16.7 million) for range operations and support services, the Army would need to document why other qualified contractors could not be considered. This could involve factors like specialized equipment, proprietary technology, or specific security clearances required for the operation of sensitive training ranges. Without this documentation, it is difficult to fully assess the necessity and fairness of the award process.
How does the cost-plus-fixed-fee (CPFF) structure of this contract compare to typical contract types for similar range operations and support services?
Cost-plus-fixed-fee (CPFF) contracts are common in government contracting, particularly for services where the scope of work may evolve or is difficult to define precisely upfront, such as complex research and development or extensive support services. For range operations, a CPFF contract allows flexibility in adapting to changing training needs or unforeseen operational challenges. However, compared to fixed-price contracts, CPFF contracts carry a higher risk of cost overruns for the government, as the contractor is reimbursed for all allowable costs plus a predetermined fixed fee. In a competitive environment, fixed-price contracts often drive better value. The CPFF structure here, combined with the sole-source award, warrants close monitoring of costs to ensure they remain reasonable and aligned with the services provided.
What is Northrop Grumman Systems Corporation's track record with similar range operations and support services contracts for the Department of Defense?
Northrop Grumman Systems Corporation is a major defense contractor with extensive experience across various defense programs, including logistics, operations, and support services. While specific details on their performance for 'range operations and support services' are not in the provided data, their general profile suggests they possess the technical and managerial capabilities to execute such contracts. However, the success of any contract also depends on the specific contract terms, oversight, and performance metrics. A deeper dive into their past performance ratings on similar contracts, particularly those involving facility operations and specialized support, would provide a more comprehensive assessment of their reliability and effectiveness in this domain.
What are the potential risks associated with awarding a $16.7 million contract for facilities support services without competition?
The primary risk associated with awarding a $16.7 million contract without competition is the potential for inflated costs and reduced value for taxpayers. Without the pressure of competing bids, the sole-source contractor may not be incentivized to offer the most competitive pricing. Furthermore, the absence of competition can limit innovation, as alternative solutions or more efficient methods proposed by other firms are not considered. There's also a risk of complacency from the awarded contractor, potentially leading to less rigorous performance standards if oversight is not exceptionally strong. Finally, it raises questions about whether the government fully explored all available options and secured the best possible deal.
How has historical spending on range operations and support services by the Department of the Army trended over the past five years?
The provided data focuses on a single contract and does not offer historical spending trends for range operations and support services by the Department of the Army. To analyze historical spending patterns, one would need access to broader contract databases and budget information. Such an analysis would typically involve aggregating spending across multiple contracts within this service category over several fiscal years. Key trends to look for would include increases or decreases in overall spending, shifts in contract types (e.g., more fixed-price vs. cost-reimbursement), changes in the number and size of awarded contracts, and the prevalence of competitive versus sole-source awards. This broader context is essential for evaluating whether the current $16.7 million award is consistent with historical investment or represents a significant deviation.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services
Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATION OF SHIPS, SMALL CRAFTS, PONTOONS AND FLOATING DOCKS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W9115110R0019
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 12900 FEDERAL SYSTEMS PARK DR, FAIRFAX, VA, 22033
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $17,735,710
Exercised Options: $17,735,710
Current Obligation: $16,723,763
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2010-07-01
Current End Date: 2012-02-29
Potential End Date: 2012-02-29 00:00:00
Last Modified: 2017-04-26
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