DoD's $117.6M JSTARS E-8C support contract awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $117,650,556 ($117.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-11-01

End Date: 2024-10-31

Contract Duration: 1,095 days

Daily Burn Rate: $107.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

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 $117.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: JSTARS PROGRAM SUPPORT OF THE E-8C Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The Engineering Services sector sees significant investment, but this contract's lack of competition limits benchmarking. 3. Performance risk is moderate given the specialized nature of JSTARS support, but contractor experience is key. 4. The contract duration of 1095 days suggests a long-term need for these specialized engineering services. 5. Limited competition may impact the government's ability to secure the best value over the contract's life. 6. The absence of small business set-asides or subcontracting requirements warrants further investigation into broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The total value of $117.6 million over three years for specialized engineering services for the JSTARS E-8C program suggests a significant investment. Without comparable contracts or market data, it's difficult to definitively assess if the pricing represents fair market value. The cost-plus-fixed-fee (CPFF) structure, while common for complex projects, can incentivize cost overruns if not closely monitored.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or proprietary knowledge required for the service. The lack of competition means the Department of Defense did not benefit from the price reductions and innovation that typically arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. The government had limited leverage to negotiate the lowest possible price, potentially leading to higher overall costs.

Public Impact

The primary beneficiaries are the Department of the Air Force and the personnel operating the JSTARS E-8C aircraft, ensuring continued mission readiness. Services delivered include critical engineering support essential for the maintenance, sustainment, and potential upgrades of the JSTARS platform. The geographic impact is primarily centered in Florida, where the contract is being performed, potentially supporting local technical expertise. Workforce implications include the retention of specialized engineering talent required for this unique intelligence, surveillance, and reconnaissance (ISR) platform.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type requires rigorous oversight to prevent cost overruns.
Lack of small business participation noted, potentially limiting broader economic benefits.
Absence of clear performance metrics in the provided data makes outcome assessment difficult.

Positive Signals

Contract awarded to a known entity (Northrop Grumman) with presumed expertise in JSTARS.
Long-term contract duration (3 years) indicates a stable need and potential for sustained support.
Engineering services are critical for maintaining complex military assets like the E-8C.

Sector Analysis

The JSTARS E-8C program falls within the broader aerospace and defense sector, specifically focusing on intelligence, surveillance, and reconnaissance (ISR) platforms. This sector is characterized by high technological complexity, significant government investment, and often, limited competition due to specialized requirements. Comparable spending benchmarks for similar platform support contracts can vary widely based on system age, complexity, and upgrade status. The engineering services NAICS code 541330 encompasses a wide range of activities, but support for advanced military aircraft represents a niche within this category.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This means that opportunities for small business participation, either as prime contractors or subcontractors, were not explicitly mandated. The sole-source nature of the award further limits the potential for small businesses to engage, as they would likely need to be part of Northrop Grumman's supply chain. This could represent a missed opportunity to foster small business growth within the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny may be heightened to ensure fair pricing and adequate performance. Transparency is limited by the lack of competitive bidding documentation. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected during the contract's performance. The CPFF structure necessitates robust financial oversight to track costs against the fixed fee.

Related Government Programs

JSTARS E-8C Program
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Aerospace Engineering Services
Department of Defense Aircraft Sustainment
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business participation
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $117.7 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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $117.7 million.

What is the period of performance?

Start: 2021-11-01. End: 2024-10-31.

What is Northrop Grumman's track record supporting the JSTARS E-8C program?

Northrop Grumman has a long-standing relationship with the JSTARS program, serving as the prime contractor for the aircraft's development and sustainment. Their historical involvement suggests deep institutional knowledge and technical expertise regarding the E-8C platform. This includes managing complex systems integration, avionics, and mission systems. The company has been instrumental in maintaining the operational readiness of the JSTARS fleet. However, specific performance metrics and past issues related to this particular support contract are not detailed in the provided data, necessitating further review of past performance evaluations and contract modifications.

How does the $117.6 million value compare to similar JSTARS support contracts?

Direct comparison of the $117.6 million value for this three-year contract is difficult without access to historical JSTARS support spending data and details on the scope of work for previous contracts. JSTARS support encompasses a wide range of activities, from depot maintenance to software updates and engineering services. Given the specialized nature of the E-8C platform and its advanced mission systems, costs can be substantial. However, the sole-source nature of this award means it cannot be directly benchmarked against competitively awarded contracts for similar services. A comprehensive analysis would require examining annual spending trends for JSTARS sustainment over the platform's lifecycle.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, the government has less leverage to negotiate favorable terms and prices. Another risk is contractor performance; while Northrop Grumman has extensive experience, any lapse in service could impact the critical JSTARS mission. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost overruns if not meticulously managed and overseen by the government. Finally, there's a risk of technological obsolescence if the engineering services do not adequately address future upgrade requirements or sustainment challenges.

How effective is the Cost Plus Fixed Fee (CPFF) contract type for this type of service?

The CPFF contract type is often used for complex research and development or specialized engineering services where the scope of work is not precisely defined at the outset, or where significant uncertainties exist. For JSTARS program support, where intricate systems require ongoing engineering expertise, CPFF can be appropriate as it allows for flexibility in addressing unforeseen technical challenges. The 'fixed fee' provides the contractor with an incentive to control costs, as their profit is capped. However, the 'cost plus' aspect means the government bears the risk of all allowable costs. Effectiveness hinges heavily on robust government oversight, detailed cost accounting standards, and clear definition of allowable costs to prevent contractor overspending and ensure value for money.

What are the historical spending patterns for JSTARS E-8C program support?

Historical spending patterns for the JSTARS E-8C program support indicate a consistent and significant investment over the platform's operational life. While specific annual figures fluctuate based on modernization efforts, sustainment needs, and operational tempo, the overall trend reflects the high cost associated with maintaining a complex, aging intelligence, surveillance, and reconnaissance (ISR) platform. Funding typically covers depot maintenance, component repair, software updates, engineering services, and logistics support. The total lifecycle cost of such platforms often runs into billions of dollars. This $117.6 million contract represents a portion of that ongoing sustainment expenditure, likely focused on specific engineering and support tasks for a defined period.

What is the potential impact of awarding this contract without competition on future JSTARS sustainment costs?

Awarding this contract without competition could set a precedent for future sole-source awards for JSTARS sustainment, potentially leading to consistently higher costs. Without the pressure of competitive bidding, there is less incentive for the incumbent contractor to offer the most cost-effective solutions. Furthermore, it may deter potential competitors from developing the necessary expertise or infrastructure to challenge for future contracts, thereby entrenching the sole-source provider. This could result in a sustained period of elevated spending for JSTARS support, impacting the overall budget allocated to Air Force readiness and modernization initiatives.

Industry Classification

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

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

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: $193,357,719

Exercised Options: $193,357,719

Current Obligation: $117,650,556

Subaward Activity

Number of Subawards: 190

Total Subaward Amount: $174,889,385

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