Feeling the Heat

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Northrop Grumman Corp., along with several other major defense contractors, got some unwanted attention last week when a House committee report shined a bright light on the government’s sometimes suspect contracting practices.


Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform committee, released a report that found more than half of all government contracts in 2006 were awarded with little or no competition. Though the report does not fault individual companies, it nonetheless could spell trouble for the top contractors, which include Lockheed Martin Corp., Boeing Co. and Northrop, which may face increased competition for future contracts.


The report found that federal government spending reached a record high in 2006 with $412.1 billion awarded in contracts. Of that amount, $206.9 billion just over 50 percent was awarded with limited or no competition.


That proportion was a significant jump over the previous year, when about 38 percent of the $377.5 billion in contracts were awarded without a competitive bid process.


Los Angeles-based Northrop, which earns $30 billion in annual revenue, derives the vast majority of its business from federal contracts. In its 2006 annual report, the defense giant reported $27 billion in revenue from U.S. government contracts.


The committee report also highlighted the growing number of contracts that were found to involve waste, fraud, mismanagement or abuse. In 2006, 189 such cases were uncovered, totaling more than $1 trillion.


The report was based on data compiled by Eagle Eye Inc., a Virginia-based information provider.

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