DoD's $70.6M contract for Northrop Grumman's base period FOB installation and integration shows a high cost per day

Contract Overview

Contract Amount: $70,639,562 ($70.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2018-03-05

End Date: 2019-05-31

Contract Duration: 452 days

Daily Burn Rate: $156.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASE PERIOD FOB INSTALL / INTEGRATE&EN

Place of Performance

Location: MADISON, MADISON County, ALABAMA, 35758

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $70.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: BASE PERIOD FOB INSTALL / INTEGRATE&EN Key points: 1. The contract's value of $70.6 million for the base period suggests a significant investment in defense infrastructure. 2. Competition dynamics for this contract were favorable, with full and open competition indicating a robust bidding process. 3. The cost-plus-fixed-fee (CPFF) contract type introduces potential for cost overruns, requiring close monitoring. 4. The duration of 452 days for the base period provides context for the daily expenditure rate. 5. Northrop Grumman Systems Corporation, a major defense contractor, is performing this work. 6. The contract falls under Research and Development in the Physical, Engineering, and Life Sciences category.

Value Assessment

Rating: fair

The base period cost of $70.6 million over 452 days results in a daily rate of approximately $156,282. Benchmarking this against similar large-scale defense infrastructure projects is challenging without more specific details on the scope of 'FOB INSTALL / INTEGRATE&EN'. However, the CPFF contract type inherently carries a higher risk of cost escalation compared to fixed-price contracts, suggesting that value for money may be impacted if costs exceed initial projections. Further analysis would require comparing the delivered capabilities and performance against the total obligated amount.

Cost Per Unit: Approximately $156,282 per day (based on base period value and duration).

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. This level of competition is generally positive for price discovery and can lead to more competitive pricing for the government. The presence of multiple bidders suggests that the market has sufficient capacity and interest to support this type of requirement.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining the best possible price and value by fostering a competitive environment among potential contractors.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring enhanced Forward Operating Base (FOB) capabilities. The contract delivers installation and integration services for FOBs, crucial for military operations and force protection. The geographic impact is likely concentrated in areas where FOBs are established or being upgraded, potentially including overseas contingency operations. Workforce implications may include specialized technical personnel for installation, integration, and project management, potentially creating skilled job opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed diligently.
The specific nature of 'FOB INSTALL / INTEGRATE&EN' is broad and may obscure the true scope and complexity.
Limited information on performance metrics makes it difficult to assess the efficiency of spending.
The duration of the contract period requires sustained oversight to ensure continued value.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Northrop Grumman Systems Corporation is a well-established defense contractor with significant experience.
The contract addresses critical infrastructure needs for military operations.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical and engineering sciences. The market for defense infrastructure, including FOBs, is substantial, driven by ongoing global security needs. Northrop Grumman operates within a competitive landscape of large defense contractors vying for significant government contracts. Spending benchmarks for similar large-scale integration and installation projects can vary widely based on scope, location, and technological requirements.

Small Business Impact

There is no indication of small business set-asides for this specific contract, as it was awarded under full and open competition. However, large prime contractors like Northrop Grumman often engage small businesses as subcontractors. The extent of small business subcontracting would need to be reviewed in the contract's performance details to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting agency, the Defense Information Systems Agency (DISA), and potentially the Department of Defense's Inspector General. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring detailed reporting and auditing of costs. Transparency is facilitated through contract award databases, but detailed performance and cost breakdowns may be subject to security restrictions.

Related Government Programs

Defense Information Systems Agency (DISA) Contracts
Forward Operating Base (FOB) Infrastructure Projects
Northrop Grumman Defense Contracts
Research and Development in Physical Sciences
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Overrun Risk (CPFF Contract Type)
Scope Definition Ambiguity
Performance Measurement Difficulty
Potential for Schedule Delays

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. BASE PERIOD FOB INSTALL / INTEGRATE&EN

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 Information Systems Agency).

What is the total obligated amount?

The obligated amount is $70.6 million.

What is the period of performance?

Start: 2018-03-05. End: 2019-05-31.

What is the specific scope of 'FOB INSTALL / INTEGRATE&EN' and how does it compare to industry standards for similar projects?

The designation 'FOB INSTALL / INTEGRATE&EN' is a broad description that likely encompasses the physical installation of base infrastructure components and the integration of various systems, potentially including communications, power, security, and life support. Without more granular detail, direct comparison to industry standards is difficult. However, typical FOB integration projects involve significant logistical planning, site preparation, hardware deployment, software configuration, and testing. The complexity and cost can vary dramatically based on the geographic location (e.g., austere environments), the specific technologies integrated, and the required security levels. The $70.6 million base period value suggests a substantial undertaking, potentially involving advanced technological systems or extensive physical construction and integration efforts.

How does the daily cost of approximately $156,282 compare to similar large-scale defense infrastructure projects?

The daily cost of approximately $156,282 for this contract's base period is a significant figure. Benchmarking this against similar large-scale defense infrastructure projects requires careful consideration of project scope, location, technological complexity, and contract type. Projects involving the establishment or significant upgrade of Forward Operating Bases (FOBs) can range widely in cost. Factors such as remote or hostile environments, the need for specialized security features, advanced communication systems, and robust life support infrastructure can drive up daily expenditures. While this rate appears high, it might be justified if the project involves cutting-edge technology integration, extensive logistical support in challenging conditions, or critical national security requirements demanding rapid deployment and high performance standards. A more precise comparison would necessitate detailed data on comparable projects' specific deliverables and operational contexts.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this project?

The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility in scope, carries inherent risks for the government. The primary risk is cost overrun, as the contractor is reimbursed for all allowable costs plus a predetermined fixed fee. If the project's costs escalate beyond initial estimates due to unforeseen complexities, inefficiencies, or scope creep, the total expenditure can significantly exceed the planned budget. This necessitates robust government oversight, stringent cost controls, and detailed auditing to ensure that all incurred costs are reasonable, allocable, and necessary. The fixed fee, while incentivizing the contractor to manage costs to some extent, does not provide the same level of cost certainty as a firm-fixed-price contract. Therefore, effective management and monitoring are crucial to mitigate the financial risks associated with CPFF contracts.

What is Northrop Grumman Systems Corporation's track record with similar large-scale defense infrastructure and integration contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in large-scale, complex projects for the U.S. military and other government agencies. They have a well-documented history of delivering sophisticated systems and infrastructure solutions, including command and control systems, communication networks, cybersecurity solutions, and aerospace platforms. Their involvement in projects related to base infrastructure, logistics, and operational support is substantial. While specific details on their track record for 'FOB INSTALL / INTEGRATE&EN' projects would require a deeper dive into contract performance data, their general profile suggests a capability to handle complex integration and installation tasks. Past performance reviews and contract awards databases would provide more specific insights into their success rates, cost performance, and adherence to schedules on similar endeavors.

How has spending on similar FOB installation and integration services evolved over the past five years?

Analyzing spending trends on similar FOB installation and integration services over the past five years requires access to comprehensive federal procurement data, specifically categorized under relevant Product Service Codes (PSCs) and contract descriptions. Generally, spending in this area is influenced by geopolitical conditions, ongoing military operations, and evolving force protection requirements. Periods of heightened global engagement or shifts in military strategy often correlate with increased investment in forward operating capabilities. The nature of FOBs themselves evolves, incorporating more advanced technology for communication, surveillance, and sustainability, which can drive up costs per installation. Without specific data points for this contract's category, it's difficult to provide precise figures, but the overall demand for robust and technologically advanced base infrastructure remains a consistent factor in defense spending.

What are the key performance indicators (KPIs) used to measure the success of this contract, and how is performance being tracked?

Key Performance Indicators (KPIs) for a contract involving 'FOB INSTALL / INTEGRATE&EN' would typically focus on the successful deployment and operational readiness of the installed systems and infrastructure. These could include metrics such as on-time completion of installation milestones, system functionality and reliability (e.g., uptime percentages for integrated communication or power systems), adherence to technical specifications, successful integration of all components, and achievement of required security standards. Performance tracking is usually managed through regular progress reports submitted by the contractor, site inspections, testing and validation exercises, and potentially user feedback from the military units operating at the FOB. The contracting officer's representative (COR) plays a crucial role in monitoring performance against the contract's requirements and ensuring that the delivered capabilities meet the government's needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $72,101,743

Exercised Options: $72,101,743

Current Obligation: $70,639,562

Subaward Activity

Number of Subawards: 167

Total Subaward Amount: $117,287,884

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102808D2023

IDV Type: IDC

Timeline