Northrop Grumman awarded $1.73B for airborne radar systems, with a significant portion for sustainment and upgrades

Contract Overview

Contract Amount: $1,726,084,211 ($1.7B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2000-01-11

End Date: 2021-09-30

Contract Duration: 7,933 days

Daily Burn Rate: $217.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200103!000014!5700!GV47 !ESC/JSK !F1962800C0100 !A!N!*!N! !20001211!20031231!938535028!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!ONE HORNET WAY !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS ANGELES !CALIFORNIA!+000020000000!N!N!000000000000!5841!RADAR EQUIPMENT, AIRBORNE !A7 !ELECTRONICS AND COMMUNICATION !3000!NOT DISCERNABLE OR CLASSIFIED !334511!*!*!1! ! ! !*!*!*!B!*!*!A! !D !U!R!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $1.73 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200103!000014!5700!GV47 !ESC/JSK !F1962800C0100 !A!N!*!N! !20001211!20031231!938535028!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!ONE HORNET WAY !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS A… Key points: 1. Contract value indicates a long-term commitment to sustainment and potential future upgrades for critical airborne radar systems. 2. The 'NOT COMPETED' status raises questions about potential cost efficiencies and the availability of alternative solutions. 3. A long contract duration (over 21 years) suggests a need for specialized, long-lifecycle systems, but also carries risks of obsolescence and cost overruns. 4. The 'COST PLUS AWARD FEE' (CPAF) structure incentivizes performance but can lead to higher costs if not carefully managed. 5. The primary product code (334511) points to a specialized manufacturing sector, suggesting high barriers to entry for competitors. 6. The contract's significant value and duration may imply a critical role in national defense or intelligence operations.

Value Assessment

Rating: fair

The total obligated amount of $1.73 billion over a 21-year period is substantial. Benchmarking this against similar long-term sustainment contracts for complex defense systems is challenging due to the unique nature of airborne radar and the extended timeline. The Cost Plus Award Fee (CPAF) structure, while allowing for performance incentives, can sometimes lead to costs exceeding fixed-price contracts if not rigorously managed. Without detailed breakdowns of labor, materials, and overhead, a precise value-for-money assessment is difficult, but the sheer scale suggests significant investment in maintaining and upgrading critical capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the agency's needs, often due to proprietary technology, unique expertise, or urgent requirements. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs for the government compared to a competitive scenario. The specific justification for the sole-source award would be crucial for a complete understanding of the procurement strategy.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the cost savings that typically arise from multiple bidders vying for a contract. This could result in a higher overall expenditure for the government.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which relies on advanced airborne radar systems for its operations. The contract likely supports the sustainment, maintenance, upgrade, and potentially the production of critical airborne radar equipment. Geographic impact is likely concentrated around operational bases where these aircraft are deployed and potentially at Northrop Grumman's facilities in El Segundo, CA. The contract supports a highly specialized workforce within Northrop Grumman, including engineers, technicians, and manufacturing personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices and reduced innovation.
Long contract duration increases risk of cost overruns and technological obsolescence.
Cost Plus Award Fee (CPAF) contracts can incentivize spending if not closely monitored.
Limited transparency due to 'NOT COMPETED' status hinders public scrutiny.
Potential for contractor lock-in due to specialized nature of the equipment.

Positive Signals

Award to a major defense contractor with established expertise in radar systems.
Long-term commitment suggests a critical and enduring need for the capability.
Cost Plus Award Fee structure provides some incentive for contractor performance.
Contract duration implies a stable, long-term supply chain and support infrastructure.

Sector Analysis

This 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 research and development costs, complex manufacturing processes, and significant government procurement. The market is dominated by a few large, established defense contractors. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of airborne radar systems and the long-term sustainment aspect, but multi-billion dollar contracts for such critical defense assets are not uncommon within the sector.

Small Business Impact

There is no indication of a small business set-aside for this contract, and the prime contractor, Northrop Grumman Systems Corporation, is a large aerospace and defense company. Given the specialized nature of airborne radar systems and the 'NOT COMPETED' award, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively sought through a competitive process. The focus is likely on large, specialized suppliers capable of meeting the prime contractor's stringent requirements. The impact on the small business ecosystem is likely minimal unless Northrop Grumman voluntarily engages small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Award Fee (CPAF) contract, there should be specific performance metrics and award criteria established to guide and evaluate the contractor's performance. Inspector General (IG) investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited by the sole-source nature of the award, but contract modifications, performance reports, and audit findings, if not classified, would be subject to review. The long duration necessitates continuous oversight to manage evolving requirements and costs.

Related Government Programs

Airborne Warning and Control System (AWACS)
Joint Surveillance Target Attack Radar System (JSTARS)
Advanced Tactical Targeting and Reconnaissance System (ATARS)
Fighter/Attack Aircraft Radar Systems
Surveillance and Reconnaissance Aircraft Programs

Risk Flags

Sole-source award
Long contract duration
Cost Plus Award Fee structure
Lack of detailed performance metrics in public data
Potential for technological obsolescence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.73 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200103!000014!5700!GV47 !ESC/JSK !F1962800C0100 !A!N!*!N! !20001211!20031231!938535028!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!ONE HORNET WAY !EL SEGUNDO !CA!90245!22412!037!06!EL SEGUNDO !LOS ANGELES !CALIFORNIA!+000020000000!N!N!000000000000!5841!RADAR EQUIPMENT, AIRBORNE !A7 !ELECTRONICS AND COMMUNICATION !3000!NOT DISCERNABLE OR CLASSIFIED !334511!*!*!1! ! ! !*!*!*!B!*!*!A!

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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $1.73 billion.

What is the period of performance?

Start: 2000-01-11. End: 2021-09-30.

What specific airborne radar systems does this contract cover, and what are their primary functions?

The contract primarily covers 'RADAR EQUIPMENT, AIRBORNE' under NAICS code 334511. While the specific system names are not detailed in the provided data, this category typically includes radar systems used for search, detection, navigation, guidance, and targeting on military aircraft. These could range from sophisticated surveillance and reconnaissance radars to fire-control radars for combat aircraft. Given the contract's value and duration, it likely pertains to major platforms requiring advanced, long-lifecycle radar capabilities, such as bombers, reconnaissance aircraft, or specialized electronic warfare platforms. The functions would encompass detecting enemy aircraft, ships, ground targets, providing navigation assistance, and supporting weapon systems.

What is the historical spending pattern for this specific contract or similar airborne radar systems procured by the Air Force?

The provided data indicates a total obligated amount of $1,726,084,211.32 for this contract, with a duration spanning from January 11, 2000, to September 30, 2021 (though the initial award date is 2000-01-11 and end date is 2003-12-31, the data shows a much longer period of activity and obligation). This suggests a significant and sustained investment in airborne radar technology. Historical spending on similar large-scale, long-duration defense contracts for complex systems like airborne radar often runs into billions of dollars over their lifecycle. The Air Force, in particular, invests heavily in advanced sensor technology for its diverse fleet. Without access to specific historical procurement data for this exact contract or comparable systems, it's difficult to provide precise figures, but the trend is generally one of substantial, long-term funding for critical national defense assets.

What are the key performance metrics and award criteria used in the Cost Plus Award Fee (CPAF) structure for this contract?

The provided data does not specify the key performance metrics or award criteria for this Cost Plus Award Fee (CPAF) contract. Typically, CPAF contracts establish objective performance standards related to technical execution, schedule adherence, cost control, and quality. Award fees are then determined based on the contractor's performance against these metrics, often assessed by the government program office. For a contract involving airborne radar systems, metrics could include radar system reliability, operational availability, successful integration of upgrades, meeting specified detection ranges or accuracy, and timely delivery of support services. The 'award' portion implies that the contractor can earn additional profit (fee) beyond the cost reimbursement if they exceed performance expectations.

What is Northrop Grumman's track record with the Department of Defense, particularly in delivering complex radar systems?

Northrop Grumman Systems Corporation is a major defense contractor with a long and extensive track record of delivering complex systems, including radar, to the Department of Defense and other government agencies. They have been involved in numerous high-profile programs across various military branches. Their expertise spans airborne radar, space systems, electronic warfare, and integrated air and missile defense. While specific performance details for every contract are not publicly available, Northrop Grumman is generally recognized as a capable provider of advanced defense technologies. However, like any large contractor, they have faced scrutiny and challenges on specific programs regarding cost, schedule, and performance over the years. Their significant role in this contract underscores their established position in the defense radar market.

What are the potential risks associated with the long duration (over 21 years) of this contract?

The extended duration of this contract, spanning over two decades, presents several potential risks. Firstly, technological obsolescence is a significant concern; radar technology evolves rapidly, and systems procured early in the contract may become outdated before its completion. Secondly, cost escalation is a risk, as unforeseen economic factors, changes in material costs, or extended labor requirements can drive up expenses over such a long period. Thirdly, managing requirements creep can be challenging; as operational needs change, adapting the system and contract accordingly can lead to complexity and increased costs. Finally, maintaining contractor focus and performance over such an extended period requires robust government oversight to prevent complacency or a decline in quality and efficiency.

How does the 'NOT COMPETED' status impact the government's ability to ensure fair pricing and access to innovation?

The 'NOT COMPETED' status significantly limits the government's ability to ensure fair pricing and foster innovation. In a competitive procurement, multiple bidders propose solutions and prices, allowing the government to select the best value based on price, technical merit, and other factors. This process drives down costs and encourages contractors to innovate to win contracts. When a contract is sole-sourced, the government negotiates directly with a single provider, potentially missing out on cost savings achievable through competition. Furthermore, the lack of competitive pressure can reduce the incentive for the sole-source provider to invest in developing novel or more cost-effective solutions, as their business is largely guaranteed.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: ONE HORNET WAY, EL SEGUNDO, CA, 90245

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,809,340,899

Exercised Options: $1,725,810,675

Current Obligation: $1,726,084,211

Actual Outlays: $1,125,755

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline