DoD's $47.3M U-2 Support Contract Awarded to Northrop Grumman Raises Questions on Competition

Contract Overview

Contract Amount: $47,288,966 ($47.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-06-06

End Date: 2026-03-31

Contract Duration: 1,029 days

Daily Burn Rate: $46.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: U-2 AN/ASQ-230 AND ASSOCIATED DISTRIBUTED COMMON GROUND STATIONS SUPPORT AND SUSTAINMENT

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $47.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: U-2 AN/ASQ-230 AND ASSOCIATED DISTRIBUTED COMMON GROUND STATIONS SUPPORT AND SUSTAINMENT Key points: 1. The contract for U-2 AN/ASQ-230 and associated ground stations support is a significant investment. 2. Northrop Grumman, the sole awardee, faces no direct competition for this specific sustainment effort. 3. The 'NOT COMPETED' status and Cost Plus Fixed Fee pricing structure present potential risks for cost control. 4. This contract falls under Professional, Scientific, and Technical Services, a broad category with varying benchmarks.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee. While common for complex or uncertain scope work, it offers less incentive for cost savings compared to fixed-price contracts. Benchmarking is difficult without detailed cost breakdowns, but the lack of competition suggests potential for inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis ('NOT COMPETED'), indicating no other vendors were considered. This limits price discovery and potentially leads to higher costs for the government as competition is absent. The Air Force likely cited specific reasons for this approach, such as unique capabilities or existing infrastructure.

Taxpayer Impact: The absence of competition for this sole-source award means taxpayers may not be receiving the best possible price for these critical support services.

Public Impact

Ensures continued operational readiness of the U-2 reconnaissance aircraft fleet. Supports advanced intelligence, surveillance, and reconnaissance (ISR) capabilities vital for national security. Potential for increased costs due to lack of competitive bidding impacts taxpayer funds. Highlights reliance on a single contractor for specialized, long-term system sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price discovery.
Cost Plus Fixed Fee pricing may not incentivize cost efficiency.
Long contract duration (over 3 years) increases exposure to potential cost overruns.
Lack of small business participation noted (ss: false, sb: false).

Positive Signals

Supports critical national security assets (U-2 aircraft).
Ensures sustainment of advanced ground station technology.
Awardee is a major defense contractor with established expertise.

Sector Analysis

This contract falls within the 'All Other Professional, Scientific, and Technical Services' category. Spending in this sector can vary widely, but contracts for specialized defense system sustainment often involve significant long-term commitments and require unique technical expertise, justifying higher costs when competition is limited.

Small Business Impact

The data indicates no specific set-aside for small businesses (ss: false, sb: false). This suggests that the prime contract was not awarded to a small business, and there is no explicit indication of subcontracting goals for small businesses within this award notice.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and effective performance. The Department of the Air Force should provide clear justification for the lack of competition and actively monitor costs under the CPFF structure to safeguard taxpayer funds.

Related Government Programs

All Other Professional, Scientific, and Technical Services
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition may lead to higher costs.
CPFF contract type offers limited incentive for cost savings.
Potential for vendor lock-in due to specialized nature of support.
No small business participation noted.
Long contract duration increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. U-2 AN/ASQ-230 AND ASSOCIATED DISTRIBUTED COMMON GROUND STATIONS SUPPORT AND SUSTAINMENT

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 $47.3 million.

What is the period of performance?

Start: 2023-06-06. End: 2026-03-31.

What specific factors justified the sole-source award for the U-2 support contract, and were alternative competitive strategies considered and rejected?

The justification for a sole-source award typically involves factors like unique technical capabilities, proprietary technology, or the need for seamless integration with existing systems. The Department of the Air Force would need to document why Northrop Grumman was the only viable option and demonstrate that market research was conducted to explore potential competition, even if ultimately unsuccessful.

How will the Department of the Air Force ensure cost control and value for money under the Cost Plus Fixed Fee (CPFF) structure, given the absence of competition?

Effective oversight is crucial. This includes rigorous auditing of costs, establishing clear performance metrics, and negotiating the fixed fee based on realistic projections. Regular reviews of the contractor's performance and cost submissions, along with robust communication channels, are essential to manage risks associated with CPFF and sole-source awards.

What is the long-term strategy for U-2 sustainment, and will future requirements be competed to foster greater cost efficiency and innovation?

Understanding the long-term roadmap for the U-2 program is important. If the U-2 is slated for continued service, future sustainment contracts should ideally be competed to leverage market dynamics. This would encourage competitive pricing, drive innovation in support services, and ensure better value for taxpayer investment over the system's lifecycle.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852822R0001

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: $47,288,966

Exercised Options: $47,288,966

Current Obligation: $47,288,966

Subaward Activity

Number of Subawards: 38

Total Subaward Amount: $6,260,735

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852822D0013

IDV Type: IDC

Timeline