DoD's JSTARS E-8C support contract awarded to Northrop Grumman for over $272M, with no competition

Contract Overview

Contract Amount: $27,214,173 ($27.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-11-01

End Date: 2025-10-09

Contract Duration: 1,803 days

Daily Burn Rate: $15.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JSTARS PROGRAM SUPPORT OF THE E-8C

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $27.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: JSTARS PROGRAM SUPPORT OF THE E-8C Key points: 1. Significant investment in critical intelligence, surveillance, and reconnaissance (ISR) capabilities. 2. Sole-source award raises questions about potential overpayment and lack of market-driven pricing. 3. Long contract duration (5 years) suggests a stable, long-term need for these services. 4. Contract performance will be closely watched given the high dollar value and single bidder. 5. Engineering services are essential for maintaining advanced military platforms like the E-8C. 6. Geographic concentration in Florida for contract performance.

Value Assessment

Rating: questionable

The contract's value of over $272 million for JSTARS program support is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition suggests that the government may not be achieving the best possible value, as there was no pressure from competing firms to offer lower prices or more innovative solutions. Further analysis would be needed to assess if the pricing is reasonable for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Systems Corporation, was considered. This typically occurs when a contract is a follow-on to a previous sole-source award, or when only one source possesses the necessary capabilities or proprietary knowledge. The absence of competition limits the government's ability to explore alternative solutions and potentially secure more favorable pricing through a bidding process.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without multiple bids, there is less assurance that the price reflects the most cost-effective option available in the market.

Public Impact

The primary beneficiaries are the U.S. Air Force and other Department of Defense entities relying on the E-8C JSTARS aircraft for intelligence, surveillance, and reconnaissance. Services delivered include crucial engineering support necessary for the operational readiness and sustainment of the JSTARS fleet. The contract's performance is geographically centered in Florida, indicating a concentration of related economic activity and workforce in that state. This contract supports a specialized workforce of engineers and technical personnel required for advanced aerospace and defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source nature limits opportunities for new entrants and innovation.
Long-term reliance on a single contractor could create vendor lock-in.
Potential for cost overruns if not rigorously managed due to lack of price pressure.

Positive Signals

Ensures continuity of essential support for a critical ISR platform.
Leverages established expertise of Northrop Grumman with the JSTARS system.
Provides a stable, predictable funding stream for vital engineering services.
Contract structure (firm fixed price) aims to control costs once negotiated.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government procurement. Contracts like this for specialized engineering support are common for maintaining sophisticated military platforms. The JSTARS program itself represents a substantial investment in airborne battle management and ground surveillance capabilities. Benchmarking this contract's value is challenging without comparable sole-source engineering support contracts for similar ISR aircraft.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is Northrop Grumman Systems Corporation a small business. The implications for small businesses would primarily be through potential subcontracting opportunities if Northrop Grumman chooses to engage them. However, the sole-source nature of the prime contract limits the visibility and potential for small businesses to compete directly for this significant portion of defense spending.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides some cost control, but rigorous monitoring of scope, quality, and delivery is still essential. Transparency regarding the justification for the sole-source award and ongoing performance metrics would be key accountability measures. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

JSTARS Program
E-8C Aircraft Sustainment
ISR Platform Support
Aerospace Engineering Services
Department of Defense Procurement

Risk Flags

Sole-source award lacks competitive pricing pressure.
High contract value requires diligent oversight.
Long contract duration necessitates performance monitoring.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. JSTARS PROGRAM SUPPORT OF THE E-8C

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $27.2 million.

What is the period of performance?

Start: 2020-11-01. End: 2025-10-09.

What is the historical spending trend for JSTARS program support, and how does this award compare?

Historical spending data for the JSTARS program support, particularly for engineering services provided by Northrop Grumman, would be crucial for context. Without access to specific historical contract values and durations, it's difficult to definitively state how this $272 million award compares. However, given the platform's age and ongoing operational needs, it's plausible that similar levels of investment have been made previously. A trend analysis would reveal if spending is increasing, decreasing, or remaining stable, which could indicate evolving program needs or cost efficiencies. The current award's five-year duration suggests a sustained commitment to the platform's support.

What specific engineering services are included under this contract, and what is their criticality?

The contract specifies 'Engineering Services' for the JSTARS program's E-8C aircraft. This broad category likely encompasses a range of critical activities such as systems engineering, software engineering, hardware engineering, logistics support analysis, technical data management, and potentially modifications or upgrades to the aircraft's mission systems. The criticality stems from the E-8C's role as a key Intelligence, Surveillance, and Reconnaissance (ISR) platform. Ensuring the continued operational readiness, reliability, and effectiveness of these complex aircraft relies heavily on the specialized engineering expertise provided under this contract. Any lapse in these services could directly impact the platform's availability and mission success.

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

The justification for a sole-source award typically falls under specific exceptions to full and open competition outlined in federal acquisition regulations. For the JSTARS program support, common justifications might include: 1) Follow-on contract: If this award is a continuation of a previous sole-source contract where Northrop Grumman is the only source with the necessary knowledge of the system's intricacies. 2) Unique capabilities: Northrop Grumman may possess unique technical data, intellectual property, or specialized facilities essential for supporting the E-8C that no other contractor has. 3) Urgency or specialized nature: In rare cases, the specialized nature of the engineering support required might limit the pool of capable contractors to just one. A formal Justification and Approval (J&A) document would detail the specific rationale and market research conducted to support this sole-source determination.

How does the firm fixed-price (FFP) contract type mitigate risk for the government?

A Firm Fixed-Price (FFP) contract type is generally advantageous for the government as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs incurred. This incentivizes the contractor to manage their resources efficiently and control costs to maximize their profit margin. For the government, it provides budget certainty and predictability, as the total cost is known upfront. While the initial price negotiation is critical, the FFP structure helps prevent cost overruns that can plague other contract types, such as cost-plus contracts, especially in service-based agreements like this one.

What are the potential long-term implications of relying on a single contractor for critical JSTARS support?

The long-term reliance on a single contractor, Northrop Grumman in this case, for critical JSTARS support carries several implications. Firstly, it can lead to vendor lock-in, making it difficult and potentially costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. Secondly, the lack of ongoing competition can stifle innovation, as the contractor may have less incentive to develop novel or more cost-effective solutions. Thirdly, it concentrates institutional knowledge within one company, which could be a vulnerability if that company undergoes significant changes or decides to exit the market. Finally, it places a significant burden on government oversight to ensure fair pricing and adequate performance without the natural checks and balances of a competitive market.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2000 W NASA BLVD, MELBOURNE, FL, 32902

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,979,001

Exercised Options: $28,979,001

Current Obligation: $27,214,173

Subaward Activity

Number of Subawards: 104

Total Subaward Amount: $91,024,317

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F0960300D0210

IDV Type: IDC

Timeline