DoD awards $136.6M Global Hawk sustainment contract to Northrop Grumman, raising concerns about competition
Contract Overview
Contract Amount: $136,585,085 ($136.6M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2008-10-01
End Date: 2009-09-30
Contract Duration: 364 days
Daily Burn Rate: $375.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST NO FEE
Sector: Defense
Official Description: GLOBAL HAWK SUSTAINMENT BRIDGE CONTRACT (SBC)
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $136.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: GLOBAL HAWK SUSTAINMENT BRIDGE CONTRACT (SBC) Key points: 1. Contract value: $136.6 million for sustainment services. 2. Sole source award to Northrop Grumman, limiting competition. 3. Risk of inflated costs due to lack of competitive bidding. 4. Sector: Defense, specifically engineering services for unmanned aerial vehicles.
Value Assessment
Rating: questionable
The contract's cost-plus-incentive-fee structure, combined with a sole-source award, suggests potential for cost overruns. Benchmarking against similar sustainment contracts for complex defense systems is difficult without competitive data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded sole-source, meaning there was no competition. This significantly limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The lack of competition may result in taxpayers paying more than necessary for Global Hawk sustainment services.
Public Impact
Taxpayers may be overpaying for essential defense system maintenance. Limited visibility into the true cost-effectiveness of the Global Hawk program. Potential for reduced innovation due to the absence of competitive pressure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
- Limited transparency
Positive Signals
- Ensures continuity of essential sustainment services
- Leverages existing contractor expertise
Sector Analysis
This contract falls within the Defense sector, specifically for engineering services related to the sustainment of the Global Hawk unmanned aerial vehicle. Defense sustainment contracts can be substantial, and competitive bidding is crucial for cost efficiency.
Small Business Impact
No information is provided regarding small business participation in this sole-source contract. Typically, sole-source awards offer fewer opportunities for small businesses compared to competitively awarded contracts.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure costs are reasonable and performance meets requirements. Robust auditing and performance monitoring are essential.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competitive bidding
- Potential for cost overruns
- Limited price transparency
- Reliance on a single contractor
- Questionable value for taxpayer money
Tags
engineering-services, department-of-defense, ca, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $136.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. GLOBAL HAWK SUSTAINMENT BRIDGE CONTRACT (SBC)
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 $136.6 million.
What is the period of performance?
Start: 2008-10-01. End: 2009-09-30.
What is the justification for awarding this contract sole-source, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities or urgent needs. Without further documentation, it's unclear if Northrop Grumman's capabilities are truly unique or if alternative competitive strategies were explored and deemed unfeasible. This lack of transparency raises questions about the government's commitment to achieving the best value for taxpayers.
How does the cost-plus-incentive-fee structure mitigate risks associated with a sole-source award?
A cost-plus-incentive-fee (CPIF) contract aims to control costs by incentivizing the contractor to stay within target cost and performance parameters. However, in a sole-source scenario, the effectiveness of these incentives is diminished without a competitive baseline. The government must meticulously monitor costs and performance to ensure the incentives are driving efficiency rather than masking inefficiencies.
What measures are in place to ensure the long-term cost-effectiveness of Global Hawk sustainment beyond this bridge contract?
This contract is a 'sustainment bridge,' implying a need for a more comprehensive long-term strategy. Measures should include thorough market research for future competitive procurements, exploring alternative sustainment models, and potentially investing in organic government capabilities to reduce reliance on sole-source contracts and ensure future cost-effectiveness.
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: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST NO FEE (S)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 90
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $137,446,494
Exercised Options: $137,446,494
Current Obligation: $136,585,085
Contract Characteristics
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852809D0001
IDV Type: IDC
Timeline
Start Date: 2008-10-01
Current End Date: 2009-09-30
Potential End Date: 2009-09-30 00:00:00
Last Modified: 2014-08-29
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