DoD awards Northrop Grumman $25.3M for EW Systems, raising cost concerns
Contract Overview
Contract Amount: $25,361,828 ($25.4M)
Contractor: Northrop Grumman Technical Services, Inc.
Awarding Agency: Department of Defense
Start Date: 2006-09-13
End Date: 2011-09-08
Contract Duration: 1,821 days
Daily Burn Rate: $13.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: 200612!000508!5700!FA8523!WR-ALC-LSK EW SYSTEMS !F0960303D0002 !A!N! !Y!0099 ! !20060913!20110131!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!1 RANCHO CARMEL DR !SAN DIEGO !CA!92128!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000000700000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !541330!E! !5!B!S! ! ! !99990909!B! ! !A! !D!N!V!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128
Plain-Language Summary
Department of Defense obligated $25.4 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC. for work described as: 200612!000508!5700!FA8523!WR-ALC-LSK EW SYSTEMS !F0960303D0002 !A!N! !Y!0099 ! !20060913!20110131!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!1 RANCHO CARMEL DR !SAN DIEGO !CA!92128!66000!073!06!SAN DIEGO !SAN … Key points: 1. The contract value is $25.3 million, awarded to Northrop Grumman. 2. This is a sole-source contract, limiting competition. 3. The cost-plus-incentive-fee structure may lead to cost overruns. 4. The sector is Defense, specifically electronics and communication equipment.
Value Assessment
Rating: questionable
The contract's cost-plus-incentive-fee structure, combined with a lack of competition, raises concerns about potential cost overruns and value for money compared to similar defense electronics contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The lack of competition and potentially inefficient pricing structure could result in taxpayers paying more than necessary for these electronic warfare systems.
Public Impact
Taxpayers may be overpaying due to the sole-source nature of the contract. The Department of Defense is acquiring critical electronic warfare systems. The contract duration of over 4 years suggests a significant, long-term need. The awardee, Northrop Grumman, is a major defense contractor.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus-incentive-fee contract type
- Lack of transparency in pricing
Positive Signals
- Award to a major defense contractor
- Acquisition of critical EW systems
Sector Analysis
This contract falls within the Defense sector, specifically for electronic warfare systems. Spending in this area is critical for national security, but often involves complex, high-cost systems with limited competition.
Small Business Impact
There is no indication that small businesses were involved in this contract, as it was awarded directly to a large prime contractor, Northrop Grumman.
Oversight & Accountability
The contract was awarded by the Department of Defense, with oversight likely provided by the Defense Contract Management Agency. However, the sole-source nature and contract type warrant close scrutiny.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- Cost-plus-incentive-fee contract type carries risk of cost overruns.
- Potential for inflated pricing due to lack of competitive pressure.
- Lack of transparency regarding the specific justification for sole-sourcing.
- High contract value increases potential financial impact of inefficiencies.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $25.4 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC.. 200612!000508!5700!FA8523!WR-ALC-LSK EW SYSTEMS !F0960303D0002 !A!N! !Y!0099 ! !20060913!20110131!121713036!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!1 RANCHO CARMEL DR !SAN DIEGO !CA!92128!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000000700000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !541330!E! !5!B!S! ! ! !999
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 $25.4 million.
What is the period of performance?
Start: 2006-09-13. End: 2011-09-08.
What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or circumstances where only one source can meet the requirement. Without this justification, the government risks paying inflated prices. Steps to ensure fair pricing might include historical cost analysis, should-cost modeling, or independent government cost estimates, though their effectiveness is diminished without competitive pressure.
How does the cost-plus-incentive-fee structure impact the government's ability to control costs for these EW systems?
Cost-plus-incentive-fee (CPIF) contracts share costs and profits based on performance against targets. While intended to incentivize efficiency, CPIF can lead to cost growth if targets are not well-defined or if the contractor has significant leverage. The government bears the risk of cost overruns, and the contractor profits from meeting or exceeding targets, potentially at a higher overall cost to the taxpayer.
What is the long-term strategic value of these EW systems, and how does this contract contribute to the DoD's overall electronic warfare capabilities?
Electronic warfare systems are crucial for modern military operations, encompassing jamming, deception, and electronic intelligence gathering. This contract likely supports the development or sustainment of critical capabilities. Understanding the specific EW functions and their role in the broader defense strategy would clarify the long-term value and necessity of this investment.
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: COST PLUS INCENTIVE FEE (V)
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 2411 DULLES CORNER PARK STE 800, HERNDON, VA, 20171
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: F0960303D0002
IDV Type: IDC
Timeline
Start Date: 2006-09-13
Current End Date: 2011-09-08
Potential End Date: 2011-09-08 00:00:00
Last Modified: 2017-06-26
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