Northrop Grumman awarded $14.7M for engineering technical services, raising questions about competition and value

Contract Overview

Contract Amount: $14,706,878 ($14.7M)

Contractor: Northrop Grumman Technical Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-09-21

End Date: 2009-10-01

Contract Duration: 1,471 days

Daily Burn Rate: $10.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200511!000597!5700!FA8509!WR-ALC/LUK !F0960303D0002 !A!N! !Y!0069 ! !20050921!20060320!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!1 RANCHO CARMEL DR !SAN DIEGO !CA!92128!80508!153!13!WARNER ROBINS !HOUSTON !GEORGIA !+000002200000!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !000 !* !541330!E! !5!B!S! ! !C!20121231!B! ! !A! !D!N!Y!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.7 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC. for work described as: 200511!000597!5700!FA8509!WR-ALC/LUK !F0960303D0002 !A!N! !Y!0069 ! !20050921!20060320!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!1 RANCHO CARMEL DR !SAN DIEGO !CA!92128!80508!153!13!WARNER ROBINS !HOUS… Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract type (Time and Materials) can lead to cost overruns if not closely managed. 3. Limited competition raises concerns about whether the government received the best possible value. 4. The duration of the contract (over 4 years) suggests a long-term need for these services. 5. The specific services provided are critical for defense systems, indicating a high-stakes procurement. 6. The contractor has a significant presence in the aerospace and defense sector.

Value Assessment

Rating: questionable

The contract's value of $14.7 million for engineering technical services over approximately four years warrants scrutiny. Without competitive bidding, it's difficult to benchmark the pricing against market rates or similar contracts. The Time and Materials (T&M) contract type, while flexible, carries inherent risks of cost escalation if not meticulously monitored. The absence of a clear ceiling price or detailed performance metrics makes a definitive value assessment challenging, suggesting potential for overpayment if contractor hours and rates are not rigorously justified.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Technical Services, Inc., was solicited. This approach bypasses the competitive bidding process, which typically involves multiple vendors vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently limit price discovery and can reduce the government's leverage in negotiating favorable terms. The lack of competition means taxpayers do not benefit from the cost savings that often arise from a competitive environment.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most cost-effective solution. The absence of competition removes a key mechanism for driving down prices and ensuring the government pays a fair market rate.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically entities relying on the engineering and technical services provided. Services delivered are crucial for the maintenance, development, or sustainment of defense systems, potentially impacting national security. The geographic impact is centered around the contractor's location in San Diego, California, and the operational sites of the supported defense programs. Workforce implications include employment for engineers, technicians, and support staff at Northrop Grumman, contributing to the skilled labor market in the aerospace and defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Time and Materials contract type offers less cost certainty compared to fixed-price contracts.
Lack of detailed performance metrics in the provided data makes assessing efficiency difficult.
Long contract duration without clear competitive re-evaluation could entrench higher costs.

Positive Signals

Award to a large, established contractor like Northrop Grumman suggests access to specialized expertise.
The contract supports critical defense functions, indicating a recognized need for these services.
The contract is managed by the Defense Contract Management Agency, implying some level of oversight.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on engineering and technical services for defense systems. The market for such services is characterized by high barriers to entry, specialized knowledge requirements, and significant government spending. Comparable spending benchmarks are difficult to establish without more detailed service descriptions and competitive data, but the overall defense procurement budget runs into hundreds of billions annually, with significant portions allocated to R&D, systems integration, and technical support.

Small Business Impact

The data indicates this contract was not set aside for small businesses and was awarded to a large prime contractor, Northrop Grumman. There is no explicit information on subcontracting plans for small businesses within this specific award. Large prime contracts in the defense sector often include subcontracting goals, but the extent to which small businesses will benefit from this particular $14.7 million award remains unclear without further details on subcontracting requirements and performance.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Time and Materials nature of the contract necessitates rigorous oversight of labor hours, rates, and material costs to prevent overruns. Transparency is limited by the sole-source nature of the award; however, contract modifications, performance reports, and payment data would typically be subject to internal government review and potentially Inspector General audits if specific concerns arise.

Related Government Programs

Defense Engineering Services
Aerospace Technical Support
Northrop Grumman Contracts
Sole-Source Defense Procurements
Time and Materials Contracts

Risk Flags

Sole-source award
Time and Materials contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.7 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC.. 200511!000597!5700!FA8509!WR-ALC/LUK !F0960303D0002 !A!N! !Y!0069 ! !20050921!20060320!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!1 RANCHO CARMEL DR !SAN DIEGO !CA!92128!80508!153!13!WARNER ROBINS !HOUSTON !GEORGIA !+000002200000!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !000 !* !541330!E! !5!B!S! ! !C!201

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN TECHNICAL SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $14.7 million.

What is the period of performance?

Start: 2005-09-21. End: 2009-10-01.

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

Northrop Grumman, as a major defense contractor, has a long history of holding numerous contracts with the Department of Defense, including those awarded on a sole-source basis and utilizing Time and Materials (T&M) pricing. Analyzing their specific track record with sole-source T&M contracts requires delving into historical contract databases to identify patterns in contract value, duration, performance history, and any instances of cost overruns or disputes. Generally, T&M contracts are used when the scope of work is not clearly defined or is expected to change, allowing flexibility but demanding robust government oversight to control costs. Northrop Grumman's experience suggests they are capable of performing complex technical services, but the effectiveness and value derived from such contracts are heavily dependent on the government's ability to manage and monitor contractor performance and expenditures closely.

How does the $14.7 million value compare to other engineering technical services contracts awarded by the Department of Defense?

The $14.7 million value for this specific engineering technical services contract is moderate within the context of overall Department of Defense (DoD) spending. The DoD procures a vast array of services, with contract values ranging from thousands to billions of dollars. Contracts for specialized engineering and technical support can vary significantly based on the complexity of the systems involved, the duration of the support, and the specific expertise required. While $14.7 million is a substantial sum, it is not exceptionally large compared to major weapon system development or sustainment contracts. However, when considered in isolation, especially without competitive bidding, its value proposition relative to market rates for similar services needs careful assessment. Benchmarking would require identifying comparable contracts for similar services, duration, and scope, ideally those awarded through full and open competition.

What are the primary risks associated with a sole-source Time and Materials contract for engineering technical services?

The primary risks associated with a sole-source Time and Materials (T&M) contract for engineering technical services are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing as the contractor faces no direct market alternatives. This lack of competition can result in the government paying more than it would in a competitive scenario. Secondly, the T&M pricing structure carries inherent risks of cost escalation. Since payment is based on actual labor hours and material costs incurred, there is less incentive for the contractor to control costs or improve efficiency compared to fixed-price contracts. Without stringent oversight, monitoring, and potentially a ceiling price, T&M contracts can lead to significant cost overruns and a lack of budget certainty for the government.

What is the typical duration for engineering technical services contracts in the defense sector, and how does this contract's duration compare?

Engineering technical services contracts in the defense sector can vary widely in duration, often aligning with the lifecycle of the systems they support, which can range from a few months for specific projects to many years for sustainment and modernization efforts. Contracts can be awarded for a base period with multiple option periods, allowing flexibility. This particular contract has a duration of approximately 1471 days (around 4 years), from its start date of 2005-09-21 to its end date of 2009-10-01. This duration is not uncommon for providing ongoing technical support or services related to complex defense systems, suggesting a sustained need for Northrop Grumman's expertise during that period. However, the length also underscores the importance of ensuring value and performance throughout its term, especially given the sole-source and T&M nature.

What specific types of engineering technical services does Northrop Grumman provide under this contract, and how critical are they?

The provided data indicates the contract is for 'ENGINEERING TECHNICAL SERVICES' and falls under the Product Service Code (PSC) R425, which generally covers Engineering and Technical Services. While the specific breakdown of services isn't detailed in the raw data, Northrop Grumman is a major defense contractor known for a wide range of capabilities, including systems engineering, integration, testing, logistics support, and program management for complex defense platforms. Given the 'Defense' sector classification and the contractor's profile, these services are likely critical to the operation, maintenance, upgrade, or development of specific military systems, potentially impacting readiness, technological superiority, or mission effectiveness. The criticality implies that disruptions in these services could have significant operational consequences for the end-users within the military.

Are there any historical spending patterns or trends related to this type of service or contractor that provide context for this award?

Analyzing historical spending patterns for Northrop Grumman and similar engineering technical services contracts within the Department of Defense (DoD) is crucial for context. Northrop Grumman consistently ranks among the top DoD contractors, receiving billions annually across various service and product categories. Their portfolio often includes significant spending on engineering, research, development, and sustainment services. Without specific historical data tied to this exact contract or a very closely related predecessor, it's difficult to pinpoint precise trends. However, the defense sector generally sees sustained, high levels of spending on technical services due to the complexity and long lifecycles of military systems. The use of sole-source and T&M contracts, while sometimes necessary, has been a recurring area of scrutiny regarding cost efficiency within the DoD's overall spending.

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

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2411 DULLES CORNER PARK STE 800, HERNDON, VA, 11

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Parent Contract

Parent Award PIID: F0960303D0002

IDV Type: IDC

Timeline