DoD's $396.7M Northrop Grumman Contract for Navigation Systems: A Decade-Long Sole Source Award
Contract Overview
Contract Amount: $396,707,346 ($396.7M)
Contractor: Northrop Grumman Space & Mission Systems Corp.
Awarding Agency: Department of Defense
Start Date: 2003-04-10
End Date: 2012-03-31
Contract Duration: 3,278 days
Daily Burn Rate: $121.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95153
Plain-Language Summary
Department of Defense obligated $396.7 million to NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP. for work described as: Key points: 1. Significant long-term award to a single vendor, raising questions about competition. 2. The contract spans over a decade, indicating a sustained need for these specialized systems. 3. High value suggests critical national security or operational importance. 4. Focus on navigation and guidance systems points to a key technological area for the Air Force.
Value Assessment
Rating: questionable
The contract's value of $396.7 million over nearly a decade makes direct per-unit cost comparisons difficult without detailed breakdowns. The Cost Plus Award Fee (CPAF) structure allows for performance-based incentives but can also lead to higher costs if not tightly managed.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive bidding process. The rationale for sole-sourcing is not provided but may relate to proprietary technology or unique capabilities.
Taxpayer Impact: The lack of competition for a contract of this magnitude represents a significant potential cost to taxpayers, as market forces were not leveraged to ensure the best possible price.
Public Impact
Impacts national security by providing critical navigation and guidance systems for Air Force operations. Potential for technological advancements in aeronautical and nautical systems manufacturing. Long-term reliance on a single contractor could affect future market dynamics for similar systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Long contract duration
- Cost-plus contract type
Positive Signals
- Sustained capability for critical systems
- Potential for performance incentives
Sector Analysis
This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. Spending in this area is crucial for defense capabilities, and benchmarks are often set by the unique requirements of military applications rather than commercial standards.
Small Business Impact
The contract was awarded to Northrop Grumman, a large defense contractor, and there is no indication of small business participation. This suggests that the scope and nature of the work were likely beyond the capabilities or capacity of small businesses.
Oversight & Accountability
The long duration and sole-source nature of this contract warrant close oversight to ensure cost control and performance. The Department of Defense's contracting officers and auditors would be responsible for monitoring expenditures and contractor performance against award fee criteria.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- Long contract duration may indicate a lack of market alternatives or potential for complacency.
- Cost-plus contract type can incentivize spending if not managed tightly.
- Lack of transparency regarding the justification for sole-sourcing.
- Potential for contractor lock-in and reduced future flexibility.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $396.7 million to NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP.. See the official description on USAspending.
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 $396.7 million.
What is the period of performance?
Start: 2003-04-10. End: 2012-03-31.
What was the justification for awarding this contract on a sole-source basis, and were alternative solutions considered?
The justification for sole-source awards typically involves factors such as unique technical capabilities, proprietary data, or urgent national security needs that cannot be met by other sources. Without specific documentation, it's difficult to ascertain the exact reasons. However, the extended duration and specialized nature of navigation and guidance systems might suggest a reliance on Northrop Grumman's proprietary technology or established expertise.
How were costs controlled and performance measured under the Cost Plus Award Fee (CPAF) structure over the contract's 9-year duration?
Under a CPAF contract, the contractor receives cost reimbursement plus a fee that is composed of a base amount and an award amount. The award amount is contingent upon meeting or exceeding specific performance objectives. Effective oversight would involve rigorous monitoring of costs, regular performance reviews against defined metrics, and objective assessment of the contractor's achievements to determine the award fee.
What is the long-term strategic impact of a decade-long sole-source contract on the competitive landscape for navigation and guidance systems?
A long-term sole-source contract can stifle competition by creating a barrier to entry for potential competitors and reducing incentives for innovation from outside the incumbent. This can lead to higher prices and potentially slower technological advancement in the long run. It may also limit the government's options and flexibility in future procurements for similar systems.
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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
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 (UEI: 967356127)
Address: 6377 SAN IGNACIO AVENUE, SAN JOSE, VA, 95153
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2003-04-10
Current End Date: 2012-03-31
Potential End Date: 2012-03-31 00:00:00
Last Modified: 2016-11-08
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