DoD awards Northrop Grumman $87M for E-8C JSTARS sustainment, raising concerns over sole-source contract
Contract Overview
Contract Amount: $86,991,393 ($87.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2022-11-01
End Date: 2023-10-31
Contract Duration: 364 days
Daily Burn Rate: $239.0K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: E-8C JOINT SURVEILLANCE TARGET ATTACK RADAR SYSTEM (JOINT STARS OR JSTARS) WEAPON SYSTEM FOLLOW-ON SUPPORT AND SUSTAINMENT
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32904
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $87.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: E-8C JOINT SURVEILLANCE TARGET ATTACK RADAR SYSTEM (JOINT STARS OR JSTARS) WEAPON SYSTEM FOLLOW-ON SUPPORT AND SUSTAINMENT Key points: 1. The contract focuses on sustainment and follow-on support for the E-8C JSTARS. 2. Northrop Grumman Systems Corporation is the sole awardee, indicating a lack of competition. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 4. The total award amount is substantial at $86.99 million. 5. The specific sector is Other Aircraft Parts and Auxiliary Equipment Manufacturing.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee contract type, while common for complex systems, offers less incentive for cost control compared to fixed-price contracts. Benchmarking against similar sustainment contracts for complex aircraft systems is difficult without more detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, meaning Northrop Grumman was the only provider considered. This lack of competition limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The absence of competition for a significant contract like this may result in taxpayers paying more than necessary for sustainment services.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. The E-8C JSTARS is a critical intelligence, surveillance, and reconnaissance (ISR) platform, making its sustainment vital for national security. The long-term reliance on a single contractor for sustainment could stifle innovation and reduce flexibility in future support options.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
- Potential for cost overruns
Positive Signals
- Ensures continued operational capability of a key ISR asset
- Northrop Grumman has existing expertise with the JSTARS platform
Sector Analysis
The Department of Defense's spending on aircraft parts and auxiliary equipment manufacturing is substantial. This contract falls within that broad category, focusing on the sustainment of a specific, high-value platform.
Small Business Impact
This contract was awarded to a large corporation, Northrop Grumman Systems Corporation. There is no indication of any subcontracting opportunities for small businesses within this award.
Oversight & Accountability
The Department of the Air Force awarded this contract. Oversight will be crucial to ensure cost control and performance under the Cost Plus Fixed Fee structure, especially given the sole-source nature.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits competition.
- Cost Plus Fixed Fee contract type can lead to cost overruns.
- Lack of transparency in pricing due to non-competitive nature.
- Potential for vendor lock-in.
- No small business participation noted.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, fl, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $87.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. E-8C JOINT SURVEILLANCE TARGET ATTACK RADAR SYSTEM (JOINT STARS OR JSTARS) WEAPON SYSTEM FOLLOW-ON 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 $87.0 million.
What is the period of performance?
Start: 2022-11-01. End: 2023-10-31.
What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure fair pricing?
The justification for a sole-source award typically involves unique capabilities or proprietary technology held by the contractor. The Department of Defense should have documented this justification. To ensure fair pricing, robust negotiation tactics, independent cost estimates, and thorough review of the contractor's proposed costs are essential, even in a sole-source scenario.
What are the long-term risks associated with relying solely on Northrop Grumman for E-8C JSTARS sustainment?
Long-term risks include potential price escalation without competitive pressure, reduced innovation in sustainment practices, and vendor lock-in, making it difficult to switch providers or adopt new technologies. It could also limit the government's leverage in future contract negotiations and potentially impact the platform's modernization roadmap if the sole provider's strategic interests diverge.
How does the Cost Plus Fixed Fee structure impact the government's ability to control costs for this sustainment contract?
The Cost Plus Fixed Fee (CPFF) structure reimburses the contractor for allowable costs plus a predetermined fixed fee. While the fee is fixed, the total cost can still escalate if allowable costs increase significantly. This structure provides less incentive for the contractor to control costs compared to fixed-price contracts, placing a greater burden on government oversight to scrutinize costs and prevent overruns.
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
Solicitation ID: FA852921R0006
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904
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: $87,865,394
Exercised Options: $87,865,394
Current Obligation: $86,991,393
Subaward Activity
Number of Subawards: 6
Total Subaward Amount: $482,535
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852923D0001
IDV Type: IDC
Timeline
Start Date: 2022-11-01
Current End Date: 2023-10-31
Potential End Date: 2023-10-31 00:00:00
Last Modified: 2024-04-17
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