Northrop Grumman awarded $86.6M contract for engineering services, highlighting potential value concerns

Contract Overview

Contract Amount: $86,591,813 ($86.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-03-19

End Date: 2009-03-04

Contract Duration: 1,811 days

Daily Burn Rate: $47.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COMBINATION (TWO OR MORE)

Sector: Defense

Official Description: 200408!043119!2100!W911W4!HQ USAINSCOM, DIR OF CONTRACTING!W911W404C0001 !A!N! !N! ! !20040319!20090417!064683464!008255408!016435559!N!NORTHROP GRUMMAN DEFENSE MISSI!12011 SUNSET HILLS ROAD !RESTON !VA!20190!66672!059!51!RESTON !FAIRFAX !VIRGINIA !+000001143000!N!N!000125000000!B599!OTHER SPECIAL STUDIES & ANALYSES !S1 !SERVICES !000 !* !541330!E! !3! ! ! ! ! !99990909!B!C!Y!A! !A!U!U!2!003!B! !Z!N!Z! ! !N!C!N! ! ! !A!C!A!A!000!A!B!N! ! ! !Y! ! !0001! !

Place of Performance

Location: FORT BELVOIR, FAIRFAX County, VIRGINIA, 22060

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $86.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200408!043119!2100!W911W4!HQ USAINSCOM, DIR OF CONTRACTING!W911W404C0001 !A!N! !N! ! !20040319!20090417!064683464!008255408!016435559!N!NORTHROP GRUMMAN DEFENSE MISSI!12011 SUNSET HILLS ROAD !RESTON !VA!20190!66672!059!51!RESTON !FAIR… Key points: 1. Contract value of $86.6 million over five years suggests a significant investment in engineering services. 2. The contract was awarded under full and open competition, indicating a broad search for qualified bidders. 3. With three bidders, the competition level may have provided some price discovery but could have been more robust. 4. The contract's duration of over 1800 days warrants scrutiny for potential scope creep and evolving needs. 5. Northrop Grumman's extensive experience in defense contracting positions them as a capable, albeit potentially high-cost, provider. 6. The 'Other Special Studies & Analyses' category suggests a focus on specialized, potentially high-value intellectual services.

Value Assessment

Rating: fair

The contract's total value of $86.6 million over approximately five years averages to about $17.3 million annually. Benchmarking this against similar engineering services contracts is challenging without more specific service details. However, the duration and scope suggest a substantial commitment. The 'Other Special Studies & Analyses' category (NAICS 541330) can encompass a wide range of services, making direct cost comparisons difficult. Further analysis would be needed to determine if the pricing reflects competitive market rates for the specific services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. Three bidders participated in this competition. While three bidders indicate some level of competition, it is on the lower end for a contract of this magnitude. A higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government.

Taxpayer Impact: With three bidders, taxpayers may not have received the full benefit of competitive pricing that could have been achieved with a larger pool of interested companies.

Public Impact

The primary beneficiary is likely the Department of the Army, receiving specialized engineering and analytical support. Services delivered likely include complex studies, analyses, and potentially design or development support for defense systems. The geographic impact is primarily centered in Virginia, where Northrop Grumman's offices are located, but the services could support broader defense initiatives. The contract supports a highly skilled workforce in engineering and specialized analysis fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns given the long contract duration and specialized nature of services.
Limited competition (3 bidders) may have resulted in a higher-than-optimal price.
Scope creep is a risk over a five-year period, potentially increasing the total cost beyond initial estimates.
Lack of specific performance metrics makes it difficult to assess the true value and effectiveness of the services.

Positive Signals

Awarded under full and open competition, ensuring a wide search for qualified contractors.
Northrop Grumman is a major defense contractor with a proven track record, suggesting technical capability.
The contract addresses a specific need within the Department of the Army for specialized engineering services.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a broad category encompassing a wide range of professional services. The defense sector, in particular, relies heavily on specialized engineering and analytical support for complex systems development and maintenance. The market for these services is substantial, driven by government procurement needs. Comparable spending benchmarks are difficult to establish without knowing the precise nature of the 'Other Special Studies & Analyses' performed, but significant government contracts in this area often run into tens or hundreds of millions of dollars.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the large contract value and the nature of the services, it is unlikely that small businesses were the primary focus, although they may have participated as subcontractors. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined in the contract's statement of work and performance requirements. Transparency is generally facilitated through contract award databases, but detailed performance and cost data may be less accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Contracts
Army Engineering and Technical Services
Defense System Design and Engineering Support
Specialized Analysis and Consulting Services
Major Defense Acquisition Programs

Risk Flags

Limited Competition
Long Contract Duration
Potential for Scope Creep
Lack of Specific Performance Metrics in Summary Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200408!043119!2100!W911W4!HQ USAINSCOM, DIR OF CONTRACTING!W911W404C0001 !A!N! !N! ! !20040319!20090417!064683464!008255408!016435559!N!NORTHROP GRUMMAN DEFENSE MISSI!12011 SUNSET HILLS ROAD !RESTON !VA!20190!66672!059!51!RESTON !FAIRFAX !VIRGINIA !+000001143000!N!N!000125000000!B599!OTHER SPECIAL STUDIES & ANALYSES !S1 !SERVICES !000 !* !541330!E! !3! ! ! ! ! !999

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 $86.6 million.

What is the period of performance?

Start: 2004-03-19. End: 2009-03-04.

What specific types of 'Other Special Studies & Analyses' were performed under this contract?

The provided data indicates the contract falls under NAICS code 541330 (Engineering Services) and the PSC code B599 (Other Special Studies & Analyses). This broad categorization suggests the services could range from feasibility studies, threat assessments, operational research, system analysis, to policy development and strategic planning. Without access to the detailed Statement of Work (SOW) or contract modifications, the precise nature of these studies remains unspecified. However, given the awarding agency (Department of the Army) and the contractor (Northrop Grumman), it is highly probable that these analyses relate to defense capabilities, technological advancements, or strategic military operations. The significant value and duration imply complex, long-term analytical requirements.

How does the $86.6 million contract value compare to similar engineering services contracts awarded by the Department of the Army?

The $86.6 million total contract value over approximately five years places this contract in the mid-to-large tier for engineering services within the Department of the Army. While the Army awards numerous contracts, those exceeding $10 million annually are generally considered substantial. Contracts for specialized studies and analyses, particularly those involving advanced research or strategic planning, can command high values due to the expertise required. To provide a precise comparison, one would need to analyze contracts with similar NAICS codes (e.g., 541330) and PSC codes (e.g., B599) awarded within a comparable timeframe. However, $86.6 million over five years suggests a significant and ongoing need for specialized engineering support, consistent with major defense initiatives.

What is Northrop Grumman's track record with similar government contracts?

Northrop Grumman is a major defense contractor with an extensive history of performing large-scale, complex contracts for the U.S. government, including the Department of Defense and its various branches like the Army. They have a well-established track record in areas such as aerospace, defense electronics, information systems, and shipbuilding. Their experience likely includes numerous contracts involving engineering services, research and development, and specialized studies and analyses. While specific performance details for this particular contract are not provided, Northrop Grumman's status as a prime contractor on numerous high-value programs indicates a general capability to meet demanding government requirements. However, like any large contractor, they may have also faced scrutiny or performance issues on specific contracts over their long history.

What are the potential risks associated with a contract of this duration and value?

Contracts of this magnitude and duration (approximately five years) carry several inherent risks. Firstly, the risk of 'scope creep' is significant, where the project's requirements may expand beyond the original SOW, leading to increased costs and delays. Secondly, technological obsolescence or changes in strategic priorities could render the services less relevant over the contract's life. Thirdly, contractor performance issues, such as delays, quality deficiencies, or cost overruns, pose a risk to the government's ability to achieve its objectives. Finally, the long-term commitment ties up substantial government funds, potentially limiting flexibility for other critical needs. Effective program management, clear SOWs, and robust oversight are crucial to mitigating these risks.

How does the competition level (3 bidders) impact taxpayer value for this contract?

A competition level of three bidders for a contract valued at $86.6 million suggests a moderate level of competition. While it is better than a sole-source award, it may not be sufficient to drive the most competitive pricing. Ideally, for contracts of this size and scope, a larger number of bidders (e.g., five or more) would typically lead to more aggressive pricing strategies as companies vie for the award. With only three bidders, there is a higher probability that the winning bid reflects a price that is acceptable to the contractor rather than the absolute lowest possible price the market could bear. This could mean taxpayers are paying a premium compared to what might have been achieved in a more robustly competitive environment.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COMBINATION (TWO OR MORE) (2)

Evaluated Preference: NONE

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

Address: 12011 SUNSET HILLS ROAD, RESTON, VA, 11

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline