Northrop Grumman awarded $308M for program management and system integration services by the Department of Defense

Contract Overview

Contract Amount: $308,165,897 ($308.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2009-11-01

End Date: 2015-06-15

Contract Duration: 2,052 days

Daily Burn Rate: $150.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: PROGRAM MANAGEMENT, SYSTEM INTEGRATION, SUSTAINMENT, TRAINER/TRAINING, AND CONTRACTOR SUPPLIED PARTS.

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $308.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PROGRAM MANAGEMENT, SYSTEM INTEGRATION, SUSTAINMENT, TRAINER/TRAINING, AND CONTRACTOR SUPPLIED PARTS. Key points: 1. Contract focuses on program management, system integration, sustainment, and contractor-supplied parts. 2. Significant duration of 2052 days indicates a long-term need for these services. 3. Cost Plus Award Fee contract type suggests performance incentives are tied to specific award criteria. 4. Awarded as a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 5. The contract is not competitively procured, raising questions about price discovery and potential cost efficiencies. 6. The primary place of performance is Florida, suggesting a concentration of related economic activity in that state.

Value Assessment

Rating: fair

The total award amount of $308 million over approximately 5.6 years suggests a substantial investment. Without specific benchmarks for program management and system integration services of this complexity, a direct value-for-money assessment is challenging. The Cost Plus Award Fee structure allows for flexibility but requires careful monitoring of award criteria to ensure fair pricing and effective performance. Comparison to similar large-scale defense program management contracts would be necessary for a more robust valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when it's deemed in the government's best interest to award to a single entity. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced opportunity to benefit from competitive pricing. The government must rely on robust negotiation and oversight to ensure the price paid is fair and reasonable, without the downward pressure that competition typically provides.

Public Impact

The Department of Defense benefits from continued program management and system integration for critical defense systems. Services include sustainment and contractor-supplied parts, ensuring operational readiness and longevity of defense assets. The primary geographic impact is in Florida, where the contract is performed, potentially supporting local jobs and businesses. The contract supports specialized technical and program management roles within Northrop Grumman Systems Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost Plus Award Fee contracts can be complex to manage and audit effectively.
Sole-source awards require strong justification and oversight to ensure fair pricing.

Positive Signals

Contract addresses critical program management and system integration needs for the DoD.
Long-term nature of the contract suggests stability and continuity of essential services.
Northrop Grumman is a major defense contractor with extensive experience in these areas.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to defense program management and system integration. The market for such services is dominated by large aerospace and defense contractors. Spending in this area is substantial, driven by the complexity and criticality of defense systems. Benchmarks for similar large-scale, long-term program management contracts are often proprietary or difficult to access publicly, but the scale of this award is significant within the defense industrial base.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, Northrop Grumman Systems Corporation, is a large business. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that small businesses would likely participate as subcontractors rather than prime awardees.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Award Fee structure necessitates careful monitoring of performance metrics and award criteria to ensure accountability. Transparency is generally limited for sole-source defense contracts, but reporting requirements within the contract itself would dictate specific accountability measures.

Related Government Programs

Defense Program Management
System Integration Services
Defense Sustainment Contracts
Cost Plus Award Fee Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Award Fee contracts require diligent oversight to manage costs and ensure value.
Long contract duration necessitates ongoing monitoring for performance and potential scope creep.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $308.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PROGRAM MANAGEMENT, SYSTEM INTEGRATION, SUSTAINMENT, TRAINER/TRAINING, AND CONTRACTOR SUPPLIED PARTS.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $308.2 million.

What is the period of performance?

Start: 2009-11-01. End: 2015-06-15.

What is the historical spending trend for this specific contract or similar services provided by Northrop Grumman to the DoD?

Analyzing historical spending requires access to detailed contract databases and specific contract numbers. However, given the $308 million award value and a duration of 2052 days (approximately 5.6 years), the average annual spending would be around $55 million. Northrop Grumman is a major defense contractor with a long history of receiving substantial funding from the DoD across various programs. Without specific historical data for this exact contract line item, it's difficult to establish a precise trend. However, the scale suggests a consistent, long-term requirement for these program management and system integration services, indicative of ongoing support for significant defense systems.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for similar services in the defense sector?

The Cost Plus Award Fee (CPAF) contract type is common in the defense sector for complex projects where performance outcomes are difficult to define precisely upfront or where innovation and flexibility are paramount. Unlike fixed-price contracts, CPAF allows for the reimbursement of actual costs incurred plus a base fee, with an additional award fee contingent upon meeting or exceeding specific performance objectives. This structure incentivizes contractors to perform well by offering potential bonuses. Compared to Cost Plus Fixed Fee (CPFF), CPAF offers greater incentive for performance beyond baseline requirements. However, it also requires robust government oversight to establish fair and objective award criteria and to prevent cost overruns, as the government bears the risk of incurred costs.

What are the specific performance objectives and award criteria used in this CPAF contract?

The specific performance objectives and award criteria for this particular Cost Plus Award Fee contract are not publicly detailed in the provided data. Typically, for program management and system integration services, these criteria would focus on areas such as meeting schedule milestones, staying within cost targets (though costs are reimbursed, efficiency is often rewarded), technical performance of integrated systems, successful sustainment operations, quality of deliverables, and effective risk management. The 'Award Fee' portion is determined by the government's evaluation of the contractor's performance against these pre-defined criteria, often on a periodic basis (e.g., quarterly or annually). The effectiveness of this CPAF structure hinges on the clarity, measurability, and fairness of these criteria.

What is the risk associated with Northrop Grumman's track record in managing large-scale defense integration and sustainment programs?

Northrop Grumman Systems Corporation is a well-established and experienced defense contractor with a significant track record in managing large-scale programs, including system integration and sustainment. While they have successfully executed numerous complex projects, like any major contractor, they have also faced challenges and scrutiny on certain programs regarding cost, schedule, or performance. The risk associated with this specific contract would depend on the particular systems being managed, the complexity of integration, and the specific performance history related to sustainment. The government's oversight mechanisms and the CPAF structure are designed to mitigate risks by incentivizing performance and allowing for adjustments based on contractor execution.

Given this is a sole-source award, what mechanisms are in place to ensure fair and reasonable pricing?

For sole-source contracts, especially those using a Cost Plus Award Fee structure, ensuring fair and reasonable pricing relies heavily on robust government oversight and negotiation. The Defense Contract Management Agency (DCMA) and the contracting officer are responsible for performing cost and price analysis. This involves reviewing the contractor's proposed costs, evaluating their reasonableness based on historical data, industry standards, and independent government estimates. For CPAF, the base fee is negotiated, and the award fee is determined based on performance. The government must meticulously define award criteria and objectively evaluate performance to ensure that any award fee is truly earned and does not inflate the overall cost beyond what is justified by exceptional performance.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2000 W NASA BLVD, MELBOURNE, FL, 32902

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $308,165,897

Exercised Options: $308,165,897

Current Obligation: $308,165,897

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F0960300D0210

IDV Type: IDC

Timeline