DoD awards Northrop Grumman $244.5M engineering services contract, spanning over 5 years
Contract Overview
Contract Amount: $244,521,257 ($244.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2001-09-15
End Date: 2006-12-11
Contract Duration: 1,913 days
Daily Burn Rate: $127.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $244.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Award Fee, which incentivizes contractor performance. 3. Services are classified under Engineering Services (NAICS 541330), a broad category. 4. The contract duration is substantial, indicating a long-term need for these services. 5. Northrop Grumman, a major defense contractor, is the sole awardee. 6. The contract value is significant, reflecting the scale of engineering support required.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging without specific service details. However, the $244.5 million award over approximately five years suggests an average annual value of around $48.9 million. This figure needs to be compared against similar large-scale engineering support contracts within the Department of Defense to assess if it represents a reasonable price for the services rendered. The Cost Plus Award Fee structure allows for performance-based adjustments, which can influence the final cost.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but the fact that it was competed broadly suggests a healthy level of market interest. This approach is generally expected to foster price discovery and potentially lead to more competitive pricing compared to sole-source or limited competition scenarios.
Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing inherent in a full and open competition. This process aims to ensure that the government receives the best value by allowing multiple companies to vie for the contract, driving down costs through market forces.
Public Impact
The primary beneficiaries are likely components within the Department of Defense requiring specialized engineering expertise. Services delivered are expected to encompass a wide range of engineering support, potentially including design, analysis, testing, and integration. The geographic impact is likely concentrated within areas where DoD engineering activities are based, potentially across multiple states. Workforce implications could include the direct employment of engineers and technical staff by Northrop Grumman, as well as potential indirect job creation in supporting industries.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of specific details on the engineering services required makes it difficult to assess true value for money.
- The Cost Plus Award Fee structure, while incentivizing, can lead to cost overruns if not managed tightly.
- Reliance on a single large contractor for extensive engineering services may limit future flexibility or innovation from smaller firms.
Positive Signals
- Awarded through full and open competition, indicating a robust bidding process.
- The Cost Plus Award Fee structure provides incentives for high performance.
- Northrop Grumman is an established defense contractor with a track record in complex engineering projects.
Sector Analysis
Engineering services are a critical component of the defense sector, supporting the development, maintenance, and modernization of military systems. The market for defense engineering services is substantial, dominated by large aerospace and defense contractors. This contract fits within the broader landscape of defense procurement, where significant investments are made in technical expertise to maintain technological superiority. Comparable spending benchmarks would involve analyzing other large-scale engineering support contracts awarded by the DoD.
Small Business Impact
The contract details indicate that small business participation was not a primary set-aside consideration for this specific award (ss: false, sb: false). While Northrop Grumman, as a large prime contractor, may engage small businesses as subcontractors, the direct award does not prioritize small business inclusion. This means the direct economic impact on the small business ecosystem from this specific contract award is likely limited, though subcontracting opportunities could exist.
Oversight & Accountability
Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the relevant Department of Defense program offices. Accountability measures are embedded within the Cost Plus Award Fee structure, which links a portion of the contractor's fee to performance metrics. Transparency is generally maintained through contract awards databases, though detailed performance reports may be less publicly accessible.
Related Government Programs
- Defense Engineering Services
- Aerospace Engineering Support
- Military Systems Development
- Northrop Grumman Defense Contracts
- Department of Defense IT Services
Risk Flags
- Contract duration exceeds typical shorter-term service agreements.
- Cost Plus Award Fee structure requires diligent government oversight to manage costs and ensure value.
- Sole awardee to a large prime contractor may limit visibility into subcontractor performance.
Tags
defense, department-of-defense, northrop-grumman, engineering-services, definitive-contract, cost-plus-award-fee, full-and-open-competition, large-contract, long-term-contract, virginia, usa
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $244.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
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 $244.5 million.
What is the period of performance?
Start: 2001-09-15. End: 2006-12-11.
What specific engineering disciplines and services are covered under this $244.5 million contract?
The provided data indicates the contract falls under NAICS code 541330 (Engineering Services) and is awarded to Northrop Grumman Systems Corporation by the Department of Defense. However, the specific engineering disciplines and detailed services are not itemized in the summary data. Typically, such broad engineering services contracts within the DoD can encompass a wide array of support, including but not limited to systems engineering, design, analysis, testing, integration, logistics engineering, and technical documentation for various defense platforms or programs. Without access to the full contract statement of work, a precise breakdown of services remains unavailable.
How does the Cost Plus Award Fee (CPAF) structure typically function for a contract of this magnitude?
A Cost Plus Award Fee (CPAF) contract reimburses the contractor for allowable costs incurred, plus a fee that is composed of a fixed base fee and an award amount. The award amount is determined by the government based on the contractor's performance against pre-defined criteria and objectives outlined in the contract. For a contract valued at $244.5 million over five years, the award fee component would likely be significant, incentivizing Northrop Grumman to exceed performance expectations in areas such as technical execution, schedule adherence, and cost control. The government's evaluation of performance directly impacts the total fee earned by the contractor.
What is Northrop Grumman's track record with similar large-scale engineering services contracts within the DoD?
Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in providing complex engineering and technical services to the Department of Defense across numerous programs and platforms. They have a well-established track record in areas such as aerospace, defense electronics, and information systems. While specific performance metrics for past contracts are not detailed here, their continued success in securing large-value, long-duration contracts from the DoD suggests a history of meeting or exceeding performance expectations on similar engineering services engagements. Their portfolio includes work on major defense systems requiring sophisticated engineering support.
How does the $244.5 million value compare to historical spending on engineering services by the DoD?
The $244.5 million award represents a significant investment in engineering services. The Department of Defense is one of the largest purchasers of engineering services globally, with annual spending often in the tens of billions of dollars across various categories. A single contract of this size is substantial but falls within the typical range for major defense programs requiring extensive, long-term engineering support. To provide a precise comparison, one would need to analyze historical spending trends for NAICS code 541330 or similar engineering service categories within the DoD budget over the contract's performance period and benchmark it against other awards of similar scope and duration.
What are the potential risks associated with a long-duration (over 5 years) engineering services contract?
Long-duration contracts, such as this five-year award, carry several potential risks. Firstly, the scope of work or technological requirements may evolve significantly over the contract period, potentially leading to scope creep or the need for costly contract modifications. Secondly, there's a risk of contractor complacency or reduced innovation over time if performance incentives are not consistently strong or if competition is limited in subsequent phases. Thirdly, the government's long-term commitment ties up significant funds that might be reallocated if priorities shift. Finally, the extended duration increases the potential impact of unforeseen economic fluctuations or geopolitical changes on the contract's execution and cost.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 12900 FEDERAL SYSTEMS PARK, FAIRFAX, VA, 22033
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2001-09-15
Current End Date: 2006-12-11
Potential End Date: 2006-12-11 00:00:00
Last Modified: 2019-09-25
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