DoD's $90M Northrop Grumman contract for test equipment support awarded without competition

Contract Overview

Contract Amount: $9,035,972 ($9.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-08-07

End Date: 2026-08-31

Contract Duration: 754 days

Daily Burn Rate: $12.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COMMON MUNITIONS BUILT-IN-TEST REPROGRAMMING EQUIPMENT (CMBRE) CONTRACTOR LOGISTICS SUPPORT (CLS) AND PRODUCTION CONTRACT.

Place of Performance

Location: NORTHRIDGE, LOS ANGELES County, CALIFORNIA, 91324

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $9.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: COMMON MUNITIONS BUILT-IN-TEST REPROGRAMMING EQUIPMENT (CMBRE) CONTRACTOR LOGISTICS SUPPORT (CLS) AND PRODUCTION CONTRACT. Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. The firm-fixed-price structure aims to control costs, but lacks competitive pressure for savings. 3. Potential risks include vendor lock-in and limited opportunities for innovation from other firms. 4. This contract supports critical Air Force testing capabilities, indicating a high-stakes operational need. 5. The duration of 754 days suggests a long-term requirement for this specialized support. 6. Focus on logistics and production for test equipment highlights a niche but vital defense segment.

Value Assessment

Rating: questionable

The contract's value of $90.4 million for logistics and production support of test equipment is substantial. Without a competitive bidding process, it is difficult to benchmark the value for money. The firm-fixed-price (FFP) type contract is generally preferred for cost control, but the absence of competition means there's no market pressure to ensure the lowest possible price. Comparisons to similar contracts for test equipment support are limited due to the sole-source nature of this award. The pricing effectiveness hinges entirely on Northrop Grumman's internal cost structures and negotiation leverage.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach is typically used when a unique capability or product is required, or when there is insufficient time to conduct a full competition. The lack of multiple bidders means there was no opportunity for price discovery through market competition, potentially leading to higher costs for the government compared to a competed contract. The justification for sole-source procurement would need to be robust to ensure fair pricing.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, there is less assurance that the government secured the best possible price for these essential logistics and production services.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the availability of critical test equipment. Services delivered include contractor logistics support and production for Common Munitions Built-In-Test Reprogramming Equipment (CMBRE). The geographic impact is likely concentrated around Air Force bases and facilities where this equipment is utilized. Workforce implications may include continued employment for specialized technicians and engineers at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of competition may stifle innovation and prevent other companies from offering improved solutions.
Dependence on a single contractor can create vendor lock-in and reduce future flexibility.
The specific nature of the equipment may limit the pool of qualified alternative providers.

Positive Signals

Contract awarded to an established provider with a known track record in defense systems.
Firm-fixed-price contract type provides cost certainty for the government once awarded.
Support for critical test equipment ensures operational readiness for the Air Force.
The contract duration suggests a stable, long-term requirement being met.

Sector Analysis

This contract falls within the broader defense manufacturing and support sector, specifically focusing on specialized electronic test and measurement equipment. The market for such niche defense components is often characterized by a limited number of highly specialized contractors. Northrop Grumman is a major player in this space. Comparable spending benchmarks are difficult to establish without knowing the specific technical requirements and the competitive landscape for this particular equipment, but defense logistics and sustainment contracts can represent significant portions of agency budgets.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of subcontracting plans for small businesses (sb: false). This suggests that the primary contractor, Northrop Grumman, will likely perform the majority of the work. Consequently, there may be limited direct opportunities for small businesses to participate in this specific contract, either as prime contractors or through mandated subcontracting. The impact on the small business ecosystem is therefore minimal for this particular award.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring Northrop Grumman to deliver specified goods and services. Transparency is generally limited for sole-source awards, with justifications often being internal or classified. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) support contracts
Air Force sustainment and maintenance programs
Electronic warfare systems support
Avionics testing and calibration services
Munitions production and lifecycle support

Risk Flags

Sole-source award lacks competitive pricing.
Potential for vendor lock-in.
Limited transparency on cost justification.
No explicit small business subcontracting requirements noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. COMMON MUNITIONS BUILT-IN-TEST REPROGRAMMING EQUIPMENT (CMBRE) CONTRACTOR LOGISTICS SUPPORT (CLS) AND PRODUCTION CONTRACT.

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 $9.0 million.

What is the period of performance?

Start: 2024-08-07. End: 2026-08-31.

What is Northrop Grumman's track record with similar sole-source contracts for test equipment?

Northrop Grumman Systems Corporation has a long history of supporting U.S. military programs, including extensive work on avionics, electronic warfare, and munitions systems. While specific data on their sole-source contracts for test equipment is not publicly detailed here, their established position as a prime contractor suggests they have successfully navigated such awards previously. Sole-source awards are often granted based on a contractor's unique capabilities, proprietary technology, or existing system integration expertise, which Northrop Grumman possesses across various defense platforms. The Air Force's decision to award this contract without competition implies a reliance on Northrop Grumman's specific knowledge and infrastructure related to the Common Munitions Built-In-Test Reprogramming Equipment (CMBRE).

How does the $90.4 million value compare to typical spending on similar test equipment support contracts?

Benchmarking the $90.4 million value against similar test equipment support contracts is challenging without more specific details on the scope of services and the complexity of the equipment involved. However, for specialized, mission-critical systems like munitions test equipment, such contract values are not uncommon, especially when they encompass logistics, maintenance, repair, and production over a multi-year period (754 days in this case). The absence of competition means a direct price-to-price comparison with other potential vendors is impossible. Typically, competed contracts for similar sustainment services might yield lower prices due to market forces, but the unique nature of CMBRE support could justify this expenditure if Northrop Grumman is the sole qualified provider.

What are the primary risks associated with awarding this contract on a sole-source basis?

The primary risks associated with this sole-source award include potential overpayment due to lack of competitive pricing, vendor lock-in, and reduced opportunities for innovation. Without competing bids, the government cannot be certain it has obtained the most cost-effective solution. Vendor lock-in means the Air Force may be dependent on Northrop Grumman for future support, upgrades, or sustainment, potentially at higher prices. Furthermore, the absence of competition can stifle innovation, as other companies are not incentivized to develop alternative or improved solutions for CMBRE support. There's also a risk that the contractor may not prioritize cost efficiency as rigorously as they would under competitive pressure.

How effective is the firm-fixed-price (FFP) contract type in managing costs for this sole-source award?

The firm-fixed-price (FFP) contract type is generally effective in providing cost certainty for the government, as the price is set and not subject to upward adjustments based on the contractor's actual costs. This shifts the risk of cost overruns to the contractor, Northrop Grumman. However, in a sole-source scenario, the FFP structure's effectiveness in achieving the *lowest possible* price is diminished. While it caps the government's liability, the initial negotiated price might be higher than it would be in a competitive environment. The FFP structure here primarily ensures budget predictability rather than guaranteeing optimal value for money, which remains a concern due to the lack of competition.

What is the historical spending pattern for CMBRE contractor logistics support and production?

Detailed historical spending patterns for this specific Common Munitions Built-In-Test Reprogramming Equipment (CMBRE) Contractor Logistics Support (CLS) and Production contract are not provided in the available data. However, the current award of approximately $90.4 million over 754 days (roughly two years) suggests a significant, ongoing requirement. Defense contracts for specialized equipment sustainment often involve multi-year commitments and substantial funding, reflecting the high cost of maintaining advanced military technology. Without prior contract data, it's impossible to determine if this award represents an increase, decrease, or stable level of spending compared to previous periods or similar systems.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 9401 CORBIN AVE, NORTHRIDGE, CA, 91324

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: $9,035,972

Exercised Options: $9,035,972

Current Obligation: $9,035,972

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $2,846,818

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA853321D0001

IDV Type: IDC

Timeline