DoD's $635M Global Hawk contract with Northrop Grumman faces limited competition, raising cost concerns
Contract Overview
Contract Amount: $634,955,837 ($635.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2014-12-16
End Date: 2025-12-31
Contract Duration: 4,033 days
Daily Burn Rate: $157.4K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: GLOBAL HAWK, ACAT 1, FMS ROK
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $635.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: GLOBAL HAWK, ACAT 1, FMS ROK Key points: 1. The contract value is substantial at $634.96 million. 2. Limited competition is a key factor, potentially impacting price discovery. 3. The primary risk lies in the lack of competitive bidding. 4. The sector is Aircraft Manufacturing, a high-value defense segment.
Value Assessment
Rating: questionable
The contract's pricing is difficult to assess without competitive benchmarks. Given the lack of competition, there's a risk of inflated costs compared to what might be achieved in a more open market.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract is not available for competition, indicating a sole-source or limited-source award. This significantly restricts price discovery and negotiation leverage for the government.
Taxpayer Impact: The lack of competition may lead to higher prices, resulting in a less efficient use of taxpayer funds for this defense acquisition.
Public Impact
Taxpayers may be paying a premium due to the absence of competitive bidding. The long duration of the contract (over 10 years) amplifies the potential financial impact of non-competitive pricing. Dependence on a single contractor for critical defense assets like the Global Hawk raises strategic risks.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- Potential for Cost Overruns
- Long Contract Duration
Positive Signals
- Definitive Contract Awarded
- Firm Fixed Price Structure
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a critical component of the defense industry. Spending in this area is often characterized by high R&D costs and long procurement cycles, making competitive pricing even more crucial.
Small Business Impact
The data indicates this is a large prime contract awarded to Northrop Grumman, a major defense contractor. There is no explicit information provided regarding small business participation or subcontracting opportunities within this specific award.
Oversight & Accountability
The contract's long duration and sole-source nature warrant close oversight to ensure fair pricing and performance. Regular reviews by the Department of the Air Force are essential to mitigate risks associated with limited competition.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits price negotiation.
- Potential for inflated costs due to lack of competition.
- Long contract duration increases long-term financial exposure.
- No indication of small business participation.
- Strategic reliance on a single provider.
Tags
aircraft-manufacturing, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $635.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. GLOBAL HAWK, ACAT 1, FMS ROK
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 $635.0 million.
What is the period of performance?
Start: 2014-12-16. End: 2025-12-31.
What is the justification for the limited competition on this Global Hawk contract?
The justification for limited competition is not provided in the data. Typically, such awards occur when a specific system is deemed essential, proprietary, or when only one source can meet the unique requirements. However, without further details, it's impossible to ascertain the precise rationale, and it raises questions about whether alternative solutions or competitive approaches were adequately explored.
What are the potential long-term cost implications of this non-competitive award?
The long-term cost implications are significant. A lack of competition can lead to sustained higher prices than might be achieved through bidding. Over the contract's 10+ year duration, this could result in hundreds of millions of dollars in additional expenditure for the Department of Defense, impacting budget allocations for other critical programs.
How does the firm-fixed-price structure mitigate risks in a limited competition scenario?
The firm-fixed-price (FFP) structure shifts most of the cost risk to the contractor, providing budget certainty for the government. While it doesn't inherently lower the price in a non-competitive environment, it prevents cost overruns due to contractor inefficiencies or unforeseen expenses, which is a positive aspect given the limited competition.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 92127
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $636,634,686
Exercised Options: $636,634,686
Current Obligation: $634,955,837
Subaward Activity
Number of Subawards: 13
Total Subaward Amount: $1,422,128
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-12-16
Current End Date: 2025-12-31
Potential End Date: 2025-12-31 00:00:00
Last Modified: 2025-08-06
More Contracts from Northrop Grumman Systems Corporation
- 200506!000026!5700!fa8214!oo-Alc/Pkme/Lmke !F4261098C0001 !A!N! !Y! !p01502!20041213!20050701!001563738!004179453!016435559!n!northrop Grumman Space & Missi!888 S 2000 E !clearfield !ut!84015!13850!011!49!clearfield !davis !utah !-000001960000!n!n!000000000000!l014!tech REP Svcs/Guided Missiles !A2 !missile and Space Systems !302 !minuteman III GRP !541330!E! !3! ! !C! ! !20200930!B! ! !A! !a!n!l!2!002!b! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! — $10.0B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-7) — $8.5B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-2) — $5.4B (Department of Defense)
- First DDT and E, Ares I-X, and Flight Tests. First Stage Will BE a Five Segment, Solid Rocket Booster Derived From the Space Shuttle Program (SSP) Solid Rocket Booster (srb)/Reusable Solid Rocket Motor (rsrm). the Contractor Shall Furnish the Necessary Management, Engineering, Labor, Facilities, Tools, Equipment, and Materials Required for First Stage Development, Qualification, Certification and Acceptance Program. Activities Include: Redesign and Testing of the Motor to Incorporate the Fifth Segment and Production of Five Full Scale Ground Static Test Motors: TWO Development Motors (dms)-And Three Qualification Motors (QMS); Structural Test Article (STA), Ground Vibration Test Motors (gvtms) and Other Development Testing; Redesign of the Avionics, Deceleration, Separation, and Flight Termination System (FTS) Subsystems; Ares I-X: Simulated Ares I Outer Mold Line/Mass Properties Using Modified Srb/Rsrm; and Three Flight Test Vehicles. TAS::80 0124::TAS — $4.4B (National Aeronautics and Space Administration)
- Federal Contract — $4.4B (Department of Defense)
View all Northrop Grumman Systems Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)