DoD's $35.6M contract for ASQ-230 sensor support awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $35,646,532 ($35.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2016-12-23

End Date: 2022-07-30

Contract Duration: 2,045 days

Daily Burn Rate: $17.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF SUPPORT AND SERVICES FOR ASQ-230 SENSOR.

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $35.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF SUPPORT AND SERVICES FOR ASQ-230 SENSOR. Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract's duration of 2045 days (over 5 years) suggests a long-term need for these specialized services. 3. Northrop Grumman, a major defense contractor, is the sole recipient, indicating a lack of broad market engagement. 4. The 'Cost Plus Fixed Fee' (CPFF) contract type can incentivize cost overruns if not closely monitored. 5. The absence of small business set-asides or subcontracting requirements may limit opportunities for smaller firms. 6. Performance context is limited without specific details on the ASQ-230 sensor's operational use and criticality.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific ASQ-230 sensor system. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The CPFF structure requires rigorous oversight to ensure costs remain reasonable and that the fixed fee is appropriate for the services rendered. The awarded amount of $35.6 million over approximately 5.6 years suggests a significant investment in maintaining and supporting this critical defense asset.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not solicit bids from multiple potential contractors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means there was no direct price comparison through bidding, potentially leading to less favorable pricing for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, the government lacked leverage to negotiate the lowest possible price, and the contractor faced no direct incentive to offer cost savings.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, ensuring the continued operational readiness of the ASQ-230 sensor system. Services delivered include support and sustainment for the ASQ-230 sensor, crucial for various military operations. The geographic impact is likely concentrated within Air Force operational bases and potentially Northrop Grumman's facilities in California, where the contractor is located. Workforce implications include the employment of specialized engineers, technicians, and support staff at Northrop Grumman to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed effectively.
Lack of transparency in the justification for sole-source award.
No indication of small business participation or subcontracting goals.

Positive Signals

Award to a known, established defense contractor (Northrop Grumman) suggests a level of trust and existing relationship.
Contract addresses a specific, likely critical, defense system (ASQ-230 sensor).
Long-term contract duration indicates a sustained need and commitment to the system's support.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing and support of advanced sensor systems. The North American Industry Classification System (NAICS) code 334511 covers Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. Spending in this area is substantial within the DoD, driven by the need for cutting-edge technology to maintain military superiority. Comparable spending benchmarks would involve other contracts for similar complex electronic systems and their sustainment.

Small Business Impact

This contract does not appear to have any specific small business set-aside provisions, nor is there an explicit mention of subcontracting requirements for small businesses. The award to a large prime contractor like Northrop Grumman suggests that any small business involvement would likely be through subcontracts awarded by the prime. Without clear subcontracting goals, the direct impact on the small business ecosystem for this specific contract may be limited, potentially missing opportunities to foster innovation and competition among smaller specialized firms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the CPFF structure, rigorous financial oversight and performance monitoring are crucial to ensure costs are controlled and the fixed fee is justified. Transparency regarding the sole-source justification and ongoing performance metrics would be key accountability measures. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

DoD Sensor Systems Procurement
Air Force Avionics and Navigation Systems
Northrop Grumman Defense Contracts
Cost Plus Fixed Fee Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF SUPPORT AND SERVICES FOR ASQ-230 SENSOR.

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 $35.6 million.

What is the period of performance?

Start: 2016-12-23. End: 2022-07-30.

What is the specific function and criticality of the ASQ-230 sensor system that necessitates a sole-source contract for its support?

The ASQ-230 sensor system is a critical component for the U.S. Air Force, likely integrated into various aircraft platforms to provide advanced search, detection, navigation, and guidance capabilities. While specific operational details are often classified, such systems are vital for intelligence, surveillance, reconnaissance (ISR), and combat effectiveness. The sole-source award suggests that Northrop Grumman, as the original manufacturer or a highly specialized entity, possesses unique technical knowledge, proprietary data, or intellectual property essential for the system's sustainment, repair, and potential upgrades. This exclusivity often makes competitive procurement infeasible or prohibitively expensive due to the need for extensive technology transfer and re-qualification processes.

How does the 'Cost Plus Fixed Fee' (CPFF) contract type compare to other pricing arrangements for similar defense support services in terms of risk and value?

The CPFF contract type shares the risk between the government and the contractor. The government agrees to pay the contractor's actual costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or when there's uncertainty about the costs involved, such as in research and development or complex system support. Compared to fixed-price contracts, CPFF offers less cost certainty for the government and can incentivize cost overruns if not rigorously monitored, as the contractor is reimbursed for all allowable costs. However, it can be advantageous when innovation or flexibility is paramount. For defense support services, a well-managed CPFF contract can ensure necessary technical expertise is available, but it requires robust oversight to prevent excessive spending and ensure the fixed fee remains appropriate for the effort.

What is Northrop Grumman's track record with similar sole-source, long-term support contracts for complex defense systems?

Northrop Grumman is a major defense contractor with extensive experience in sole-source, long-term support contracts for complex systems across various military branches. The company is known for its work on advanced avionics, electronic warfare systems, and integrated platforms. Their track record typically involves managing large, multi-year sustainment programs that require deep technical expertise and close collaboration with the government. While specific performance data for individual contracts is often proprietary or found in government performance evaluations (like CPARS), Northrop Grumman generally maintains a significant presence in the defense sustainment market. However, the nature of sole-source awards means that comparisons are often based on the contractor's overall reputation and past performance on similar, though not necessarily identical, programs.

What are the potential implications of awarding this contract without competition on future procurement strategies for similar sensor technologies?

Awarding this contract without competition could set a precedent for future procurements related to the ASQ-230 sensor or similar technologies if the sole-source justification is based on enduring proprietary rights or unique capabilities. This might discourage potential competitors from investing in developing alternative solutions or capabilities, thereby reinforcing the incumbent's market position. To mitigate this, the Air Force could explore strategies such as requiring Northrop Grumman to provide greater access to technical data or facilitate technology transfer to foster future competition, or actively invest in independent research and development to create alternative solutions. Without such measures, future procurements may continue to be limited in scope and potentially less cost-effective.

How does the $35.6 million contract value compare to historical spending on ASQ-230 sensor support or comparable systems?

Direct historical spending comparisons for the ASQ-230 sensor system are difficult without access to specific program budget data, which is often sensitive. However, $35.6 million spread over approximately 5.6 years (2045 days) equates to an average annual spend of roughly $6.36 million. This figure needs to be contextualized by the system's complexity, operational tempo, and the scope of support required (e.g., maintenance, repair, upgrades, logistics). For complex avionics and sensor systems within the DoD, annual sustainment costs can range from a few million to tens of millions of dollars, depending on the platform and technology. Therefore, this contract value appears within a plausible range for supporting a specialized, high-value defense system, though its 'fairness' is obscured by the lack of competition.

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

Solicitation ID: FA852816R0102

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 6379 SAN IGNACIO AVE, SAN JOSE, CA, 95119

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

Financial Breakdown

Contract Ceiling: $35,646,532

Exercised Options: $35,646,532

Current Obligation: $35,646,532

Subaward Activity

Number of Subawards: 454

Total Subaward Amount: $540,771,311

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852817D0013

IDV Type: IDC

Timeline