Air Force's $32.2M contract for sensor suite support awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $32,259,742 ($32.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2006-09-29

End Date: 2018-09-30

Contract Duration: 4,384 days

Daily Burn Rate: $7.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASIC YEAR FOR SERVICES REQUIRED TO SUPPORT OPEN SKIES SENSOR SUITE PROGRAM

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: BASIC YEAR FOR SERVICES REQUIRED TO SUPPORT OPEN SKIES SENSOR SUITE PROGRAM Key points: 1. The contract's value, while significant, needs benchmarking against similar sensor suite support services. 2. The absence of competition raises concerns about potential overpricing and reduced value for taxpayer funds. 3. The long duration of the contract (over 12 years) warrants scrutiny of its ongoing necessity and cost-effectiveness. 4. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code suggests a focus on hardware, but the 'services required' indicate a broader support role. 5. The contract's performance context is tied to the Open Skies Sensor Suite Program, implying a critical but specialized defense function. 6. The contractor, Northrop Grumman, is a major defense player, suggesting established capabilities but also potential market concentration.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the services provided and comparable market rates for similar sensor suite support. The cost-plus-fixed-fee (CPFF) contract type can sometimes lead to higher costs if not closely managed, as the contractor is reimbursed for allowable costs plus a fixed fee. Given the lack of competition, it's difficult to assess if the pricing reflects fair market value or if taxpayers received optimal value for the funds expended over its extensive duration.

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 responsible source can provide the required services. However, the justification for this sole-source award is not provided, making it difficult to assess the level of competition and its impact on price discovery. The lack of competition suggests that the government may not have explored all available options to secure the best possible pricing and terms.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down costs, potentially leading to higher expenditures for taxpayers. Without a competitive bidding process, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches of the Department of Defense utilizing the Open Skies Sensor Suite Program. The services delivered are crucial for the maintenance, sustainment, and operational readiness of the sensor suite, which supports intelligence, surveillance, and reconnaissance (ISR) missions. The geographic impact is likely global, given the nature of ISR missions, though the direct support services may be concentrated at specific Air Force bases or contractor facilities. Workforce implications include specialized technical personnel required for sensor maintenance and support, likely employed by Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a long-term contract raises concerns about sustained cost-effectiveness and potential for price creep.
The CPFF contract type, while providing flexibility, can incentivize cost increases if not rigorously overseen.
The extended duration (over 12 years) necessitates ongoing justification and performance monitoring to ensure continued value.
Limited transparency into the sole-source justification makes it difficult to fully assess the necessity of awarding to a single vendor.

Positive Signals

Northrop Grumman is an established defense contractor with significant experience in aerospace and defense systems.
The contract supports a critical national security program (Open Skies Sensor Suite), indicating a vital need for the services.
The definitive contract award suggests a structured agreement with defined terms and conditions.
The contract is managed by the Department of the Air Force, a major military branch with established procurement and oversight processes.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, complex supply chains, and significant government procurement. Contracts for specialized equipment support, like sensor suites, are common within this sector. The market for such specialized services is often concentrated among a few large, experienced contractors. Benchmarking this contract's value against other similar support contracts for ISR systems would provide further insight into its cost-effectiveness.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is Northrop Grumman Systems Corporation, a large business. There is no explicit information regarding subcontracting plans for small businesses within this data. The lack of small business involvement in the prime contract suggests that opportunities for small businesses may be limited to lower-tier subcontracts, if any.

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-fixed-fee contract, rigorous financial oversight and auditing would be expected to ensure that allowable costs are reasonable and allocable, and that the fixed fee is earned. Transparency regarding the sole-source justification and ongoing performance metrics would be key indicators of effective oversight.

Related Government Programs

Defense Intelligence and Security Services
Aircraft Maintenance and Repair
Aerospace Systems Manufacturing
Sensor Technology Development
Intelligence, Surveillance, and Reconnaissance (ISR) Programs

Risk Flags

Sole-source award without clear justification.
Long contract duration without re-competition.
Cost-plus-fixed-fee structure requires robust oversight.
Limited transparency into specific services and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. BASIC YEAR FOR SERVICES REQUIRED TO SUPPORT OPEN SKIES SENSOR SUITE PROGRAM

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 $32.3 million.

What is the period of performance?

Start: 2006-09-29. End: 2018-09-30.

What specific services are included under the 'services required to support Open Skies Sensor Suite Program'?

The provided data abbreviates the description to 'BASIC YEAR FOR SERVICES REQUIRED TO SUPPORT OPEN SKIES SENSOR SUITE PROGRAM'. While the NAICS code '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing' might suggest hardware-related services, the description emphasizes 'services required'. This likely encompasses a range of activities such as maintenance, repair, calibration, testing, logistics support, technical documentation, and potentially software updates or integration for the sensor suite. The exact scope would be detailed in the contract's statement of work (SOW), which is not provided here. Understanding the precise nature of these services is crucial for benchmarking costs and assessing performance.

What was the justification for awarding this contract on a sole-source basis?

The provided data explicitly states the contract was 'NOT COMPETED' and identifies the award type as 'SOLE SOURCE'. However, the specific justification for this sole-source award is not included in the data. Typically, sole-source awards are justified under circumstances such as the existence of only one responsible source, urgent and compelling needs, or specific national security requirements that preclude competition. Without this justification, it is impossible to independently verify the necessity of bypassing the competitive bidding process. This lack of transparency limits the ability to assess whether taxpayers received the best possible value.

How does the cost-plus-fixed-fee (CPFF) contract type impact the overall cost and risk for this contract?

The contract utilizes a Cost Plus Fixed Fee (CPFF) structure. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred in performing the contract, plus a predetermined fixed fee representing profit. This structure shifts some of the cost risk to the government, as the final cost is not fixed upfront. While it can be beneficial for complex projects where costs are difficult to estimate precisely, it also necessitates robust government oversight to ensure costs are reasonable and allocable. The fixed fee provides the contractor with an incentive to control costs to maximize their profit margin relative to the fee, but the primary cost risk remains with the government.

What is the historical spending pattern for the Open Skies Sensor Suite Program with Northrop Grumman?

The provided data represents a single contract award with a start date of 2006-09-29 and an end date of 2018-09-30, spanning a duration of 4384 days (approximately 12 years). The basic year obligation was $32,259,741.78. This data point suggests a long-term, potentially sole-source relationship for supporting this specific sensor suite. To understand the full historical spending pattern, one would need to examine all contract actions (modifications, task orders, subsequent contracts) awarded to Northrop Grumman (or other contractors) for the Open Skies Sensor Suite Program over a longer period, including total obligated amounts and the nature of services provided in each instance.

What are the potential risks associated with the long duration of this contract (over 12 years)?

The contract's duration, spanning from late 2006 to late 2018, presents several potential risks. Firstly, the technology supported by the sensor suite may evolve, rendering the original support services less relevant or requiring significant adaptation, which could lead to cost overruns if not managed proactively. Secondly, a prolonged period without re-competition can lead to complacency and reduced incentives for efficiency and innovation on the part of the contractor. Thirdly, the government's ability to adapt to changing requirements or seek more cost-effective solutions from alternative providers is limited. Finally, institutional knowledge and personnel turnover within both the government oversight team and the contractor can impact program continuity and effectiveness over such an extended timeframe.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

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 PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 12011 SUNSET HILLS ROAD, RESTON, VA, 20190

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $33,080,827

Exercised Options: $32,259,742

Current Obligation: $32,259,742

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline