DoD's $23M contract for ASQ-230 support awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $22,958,193 ($23.0M)

Contractor: Northrop Grumman Space & Mission Systems Corp.

Awarding Agency: Department of Defense

Start Date: 2015-10-01

End Date: 2021-05-31

Contract Duration: 2,069 days

Daily Burn Rate: $11.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF ASQ-230 SUPPORT AND SERVICES

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95119

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $23.0 million to NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP. for work described as: IGF::OT::IGF ASQ-230 SUPPORT AND SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and lack of market pressure. 2. The duration of the contract (2069 days) suggests a long-term need for these specialized support services. 3. Northrop Grumman, a major defense contractor, is the sole recipient, indicating a concentrated relationship. 4. The contract type (Cost Plus Fixed Fee) can incentivize cost increases, requiring robust oversight. 5. Lack of competition limits opportunities for other capable firms and potentially higher value for the government. 6. The absence of small business set-asides suggests this contract did not target smaller enterprises.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, can lead to higher costs if not managed diligently. Comparing this to similar sole-source support contracts for complex defense systems would be necessary to assess if the pricing is reasonable, but such data is not readily available in this context. The lack of competition inherently reduces the government's leverage in price negotiation.

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. This typically occurs when only one vendor possesses the necessary capabilities, or for reasons of urgency or national security. The lack of multiple bidders means there was no direct price comparison or market discovery through competition, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing the award, the government missed an opportunity to secure potentially lower prices or more innovative solutions from a wider pool of vendors.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other Department of Defense entities relying on the ASQ-230 system. Services delivered include support and sustainment for the ASQ-230 system, crucial for its operational readiness. The geographic impact is likely concentrated where the ASQ-230 system is deployed, with California noted as the contractor's state. Workforce implications include employment for specialized technical and support personnel at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
Cost-plus contract type can incentivize cost escalation without strong oversight.
Lack of competition may stifle innovation from other market players.
No small business participation noted, potentially excluding smaller, agile firms.

Positive Signals

Northrop Grumman is an established defense contractor with likely deep expertise in the ASQ-230 system.
Contract provides essential support, ensuring operational readiness of a critical defense system.
Long contract duration suggests a stable, ongoing need, allowing for workforce planning.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on system support and sustainment. The market for such specialized services is often dominated by a few large, established prime contractors due to the high technical barriers to entry and security requirements. Comparable spending benchmarks would involve analyzing other sole-source sustainment contracts for complex defense avionics or mission systems, which are typically high-value and long-term.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans involving small businesses. The sole-source nature of the award, combined with the specialized technical requirements of the ASQ-230 system, likely made it unsuitable for a small business set-aside. This means the direct economic benefits to the small business ecosystem from this specific contract are likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force contracting and program management offices. Given the Cost Plus Fixed Fee structure, rigorous financial oversight, including regular audits of incurred costs and progress reviews, would be essential to ensure value for money. Transparency is limited due to the sole-source nature, but contract performance reports and milestone achievements should be monitored.

Related Government Programs

Defense Logistics Agency (DLA) support contracts
Air Force sustainment and maintenance programs
Avionics and mission systems procurement
Northrop Grumman defense contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.0 million to NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP.. IGF::OT::IGF ASQ-230 SUPPORT AND SERVICES

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $23.0 million.

What is the period of performance?

Start: 2015-10-01. End: 2021-05-31.

What is the specific nature of the ASQ-230 system and its criticality to Air Force operations?

The ASQ-230 system is related to search, detection, navigation, guidance, and aeronautical/nautical systems. While specific details are often classified, such systems are typically integral to the operational capabilities of military aircraft, enabling functions like target acquisition, navigation, and situational awareness. Its criticality lies in ensuring the effectiveness and safety of air missions. The substantial contract value and long duration suggest it is a vital component for ongoing Air Force operations, likely supporting a fleet of aircraft where maintaining system performance and reliability is paramount.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the requirement. For complex defense systems like the ASQ-230, this could be due to proprietary technology, unique manufacturing capabilities, extensive prior development investment by the contractor, or specific integration requirements with existing platforms. The Department of Defense would have had to document the justification for not competing the award, citing reasons such as urgency, lack of alternatives, or the need for specialized expertise possessed exclusively by Northrop Grumman. Without access to the specific justification documentation, the precise reasons remain speculative.

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

The primary risk with a CPFF contract is that the contractor is reimbursed for all allowable costs plus a fixed fee representing their profit. This structure can incentivize the contractor to incur higher costs, as their profit margin (the fixed fee) remains constant regardless of the total cost. While the fixed fee provides some incentive for efficiency, it is less potent than in fixed-price contracts. Effective oversight is crucial to scrutinize allowable costs, prevent cost overruns, and ensure the government receives good value. Without stringent monitoring, costs can escalate beyond initial expectations.

How does the $23 million contract value compare to historical spending on ASQ-230 support?

The provided data indicates a total award amount of $22,958,192.7 for this specific contract, which ran from October 1, 2015, to May 31, 2021 (2069 days). To compare this to historical spending, one would need access to historical contract databases or budget documents detailing previous expenditures on ASQ-230 support, potentially from earlier contract vehicles or different award types. Without that comparative data, it's impossible to determine if this $23 million represents an increase, decrease, or stable level of spending compared to prior periods for similar support services.

What is Northrop Grumman's track record with similar defense support contracts?

Northrop Grumman is a major defense contractor with extensive experience in providing support, sustainment, and systems integration for a wide array of military platforms and technologies. They have a long history of holding large, complex contracts across various branches of the U.S. military. Their track record typically involves managing intricate supply chains, providing technical expertise, and ensuring the operational readiness of sophisticated defense systems. While specific performance metrics for this particular ASQ-230 contract are not detailed here, Northrop Grumman's overall standing suggests they possess the scale and capability to handle such requirements, though oversight is always necessary to ensure performance and cost control.

Are there any potential performance risks identified for this contract?

Performance risks for a contract of this nature, especially one involving specialized system support, can include technical challenges in maintaining aging or complex equipment, supply chain disruptions for necessary parts, potential degradation of system performance over time, and the contractor's ability to retain skilled personnel. Given the sole-source award and CPFF structure, there's also a risk that performance incentives might be weaker compared to a competitively bid fixed-price contract. The long duration (over 5 years) also increases the possibility of unforeseen technical obsolescence or evolving operational requirements that the current contract may not fully address without modification.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 6377 SAN IGNACIO AVE, SAN JOSE, CA, 95119

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,958,193

Exercised Options: $22,958,193

Current Obligation: $22,958,193

Subaward Activity

Number of Subawards: 112

Total Subaward Amount: $526,348,883

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852812D0013

IDV Type: IDC

Timeline