Northrop Grumman awarded $55.1M for MPIS Engineering Services, a sole-source contract with a 713-day duration
Contract Overview
Contract Amount: $55,134,303 ($55.1M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2015-08-14
End Date: 2017-07-27
Contract Duration: 713 days
Daily Burn Rate: $77.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::CT::IGF MPIS ENGINEERING SERVICES (BASE YEAR)
Place of Performance
Location: BETHPAGE, NASSAU County, NEW YORK, 11714
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $55.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::CT::IGF MPIS ENGINEERING SERVICES (BASE YEAR) Key points: 1. The contract's value of over $55 million for engineering services warrants scrutiny regarding its necessity and efficiency. 2. As a sole-source award, the absence of competitive bidding raises concerns about potential overpricing and reduced value for taxpayer dollars. 3. The contract's duration of 713 days (nearly two years) suggests a long-term need, but the lack of competition limits performance benchmarking. 4. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns, requiring robust oversight to ensure fiscal responsibility. 5. The specific nature of MPIS engineering services suggests a specialized requirement, potentially justifying a sole-source award, but this needs verification. 6. The contractor, Northrop Grumman, is a major defense contractor, implying significant experience but also potential market dominance.
Value Assessment
Rating: questionable
Benchmarking the value of this $55.1 million contract is challenging due to its sole-source nature and the specific 'MPIS Engineering Services' designation. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if alternative, more cost-effective solutions were considered. The 'Cost Plus Fixed Fee' (CPFF) contract type, while common for complex R&D, can lead to higher costs if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure necessitates strong government oversight to prevent unnecessary expenditures and ensure the fixed fee remains appropriate for the scope of work.
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 potential vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when urgent circumstances preclude a full and open competition. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arise from a bidding process. This can potentially lead to higher prices and less favorable terms for the government compared to a competitively awarded contract.
Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure. The government had limited leverage to negotiate the best possible price, potentially resulting in a less efficient use of public funds.
Public Impact
The primary beneficiaries are likely the Department of Defense, specifically entities requiring MPIS engineering services for national security or operational readiness. The services delivered are critical for the development, maintenance, or enhancement of Search, Detection, Navigation, Guidance, Aeronautical, and Nautical Systems. The geographic impact is primarily centered around the contractor's facilities and the operational locations of the systems supported, likely within the United States. Workforce implications include employment for specialized engineers and technical staff at Northrop Grumman, contributing to the defense industrial base.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
- Cost Plus Fixed Fee contract type can incentivize cost escalation if not rigorously overseen.
- Lack of transparency in the procurement process due to sole-source nature makes independent value assessment difficult.
- The specific nature of 'MPIS Engineering Services' is not detailed, hindering understanding of the scope and necessity.
- Contract duration of nearly two years without competition raises questions about long-term planning and flexibility.
Positive Signals
- Northrop Grumman is an established, experienced defense contractor with a track record in complex systems.
- The contract addresses a specific need within the Defense sector, likely related to critical navigation and detection systems.
- The 'Fixed Fee' component of the contract provides some cost certainty compared to purely cost-reimbursement contracts.
- The contract is managed by the Defense Contract Management Agency, suggesting a level of established oversight for defense procurements.
Sector Analysis
The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This is a highly specialized segment of the aerospace and defense industry, characterized by high barriers to entry, significant R&D investment, and long product development cycles. Major players like Northrop Grumman dominate this market due to their technical expertise and existing government relationships. Comparable spending in this sector is substantial, driven by ongoing defense modernization and technological advancements. The market is typically characterized by a mix of large sole-source or limited-competition contracts for unique systems and more competitive bidding for components or sustainment services.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the contractor, Northrop Grumman Systems Corporation, is a large defense prime. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specifics of this contract's subcontracting plan are not detailed here. The absence of a direct small business set-aside means that opportunities for small businesses to directly compete for this prime contract were limited or non-existent. The overall impact on the small business ecosystem would depend on the extent to which Northrop Grumman fulfills its subcontracting goals with qualified small businesses.
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 on behalf of the Department of Defense. The 'Cost Plus Fixed Fee' (CPFF) structure necessitates rigorous oversight of allowable costs and the reasonableness of the fixed fee. Transparency is limited due to the sole-source nature of the award, making public assessment of accountability challenging. Specific Inspector General (IG) jurisdiction would fall under the Department of Defense's IG, who investigates fraud, waste, and abuse in defense spending.
Related Government Programs
- Defense Advanced Research Projects Agency (DARPA) Contracts
- Naval Air Systems Command (NAVAIR) Contracts
- Air Force Materiel Command Contracts
- Intelligence, Surveillance, and Reconnaissance (ISR) Systems Procurement
- Navigation and Guidance Systems Development
- Aerospace Engineering Services
Risk Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of competitive bidding
- Potential for cost overruns
- Limited transparency in pricing
Tags
defense, department-of-defense, northrop-grumman, engineering-services, sole-source, cost-plus-fixed-fee, navigation-systems, detection-systems, new-york, large-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $55.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::CT::IGF MPIS ENGINEERING SERVICES (BASE YEAR)
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 $55.1 million.
What is the period of performance?
Start: 2015-08-14. End: 2017-07-27.
What is the specific nature and scope of the 'MPIS Engineering Services' being procured?
The provided data indicates the contract is for 'MPIS ENGINEERING SERVICES (BASE YEAR)'. MPIS likely refers to a specific system or program within the Department of Defense, potentially related to Maritime Patrol and Interdiction Systems, or a similar acronym for navigation, detection, or guidance systems. The 'engineering services' component suggests activities such as design, development, testing, integration, sustainment, or modification of these systems. Without further details on the specific MPIS program, it is difficult to ascertain the precise scope of work. However, given the contractor (Northrop Grumman) and the sector (Defense), these services are likely highly technical and critical to military operations, possibly involving complex software, hardware, or integrated system engineering.
How does the $55.1 million cost compare to similar engineering services contracts within the defense sector?
Direct comparison of the $55.1 million cost is difficult without knowing the specific scope and duration of 'MPIS Engineering Services' and comparing it to contracts with identical or highly similar requirements. However, for large defense contractors like Northrop Grumman, contracts in the tens of millions of dollars for specialized engineering services are not uncommon, especially for complex systems development or sustainment. The 'Cost Plus Fixed Fee' (CPFF) structure means the total cost can fluctuate based on actual expenses, making a fixed benchmark challenging. Generally, sole-source contracts tend to be higher than competitively bid ones. To assess value, one would need to compare the contractor's proposed labor rates, overhead, and fee against industry standards for comparable roles and the complexity of the MPIS systems.
What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract of this magnitude?
The primary risks associated with this sole-source, CPFF contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, increasing the risk of the government paying a non-competitive price and potentially receiving less value for its money. There's less incentive for the contractor to be highly efficient. Secondly, the CPFF structure, while providing some cost control via the fixed fee, still reimburses the contractor for allowable costs. This creates a risk of cost escalation if the government's oversight of allowable costs is insufficient, as the contractor may have less incentive to control expenses beyond what is necessary to achieve the fixed fee. This combination requires robust government oversight to manage risks effectively.
What is Northrop Grumman's track record with similar sole-source, CPFF contracts for defense engineering services?
Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in sole-source and Cost Plus Fixed Fee (CPFF) contracts across various defense programs. They frequently engage in complex, long-term projects requiring specialized engineering expertise, often in areas like aerospace, defense electronics, and information systems. Their track record typically involves large-scale system development, integration, and sustainment. While specific performance data for all their contracts isn't publicly available, their continued success in securing significant sole-source awards suggests a perceived capability and reliability by the government. However, like many large primes, they have faced scrutiny over contract costs and performance on specific programs in the past, underscoring the need for diligent government oversight regardless of contractor reputation.
How does this contract fit into the broader context of US defense spending on navigation and detection systems?
This contract fits within the significant and ongoing US defense spending allocated to intelligence, surveillance, reconnaissance (ISR), navigation, and detection systems. These capabilities are considered critical for maintaining military superiority, situational awareness, and mission effectiveness across all domains (air, land, sea, space, cyber). The budget for such systems typically runs into billions of dollars annually, encompassing research, development, procurement, and sustainment. Contracts like this one, even if sole-source, represent a necessary investment in maintaining and advancing these technological capabilities, often involving proprietary technologies or specialized expertise that limits competition. Spending in this area is driven by evolving threats and the need for technological advantage.
What are the potential implications of the 713-day duration for program continuity and cost management?
A duration of 713 days (approximately 23.7 months) for the base year of this contract suggests a substantial, ongoing requirement for the MPIS engineering services. For program continuity, this duration implies a stable, long-term need for the contractor's expertise, potentially supporting a critical system lifecycle phase like development, integration, or initial sustainment. From a cost management perspective, a longer duration allows for potential economies of scale and more predictable resource allocation. However, it also extends the period during which costs are incurred, making effective oversight crucial to prevent cost creep over the contract's life. The 'Fixed Fee' component aims to cap the profit, but the 'Cost Plus' element means total expenditure is still subject to allowable cost controls throughout this extended period.
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
Solicitation ID: N0002415R6311
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 925 OYSTER BAY RD, BETHPAGE, NY, 11714
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $75,493,696
Exercised Options: $65,279,447
Current Obligation: $55,134,303
Actual Outlays: $391,165
Subaward Activity
Number of Subawards: 20
Total Subaward Amount: $21,808,173
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-08-14
Current End Date: 2017-07-27
Potential End Date: 2017-07-27 00:00:00
Last Modified: 2024-09-06
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