DoD's $70M Global Hawk contract with Northrop Grumman faces scrutiny over limited competition and cost-plus structure
Contract Overview
Contract Amount: $70,021,997 ($70.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2017-06-08
End Date: 2023-09-30
Contract Duration: 2,305 days
Daily Burn Rate: $30.4K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF ACAT 1C, GLOBAL HAWK, ENTERPRISE MANAGEMENT
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $70.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF ACAT 1C, GLOBAL HAWK, ENTERPRISE MANAGEMENT Key points: 1. Significant contract value ($70M) awarded to a single large defense contractor. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. Cost-plus contract type can incentivize higher spending without guaranteed value. 4. Aircraft manufacturing sector is highly specialized, potentially limiting competitive options.
Value Assessment
Rating: questionable
The contract's cost-plus fixed fee structure, combined with a lack of competition, makes a definitive value assessment difficult. Benchmarking against similar aircraft manufacturing contracts is challenging due to the specialized nature of the Global Hawk and the specific enterprise management services provided.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was not competed, indicating a limited source selection. This approach may have been chosen for specialized expertise, but it bypasses competitive price discovery, potentially leading to higher costs for taxpayers.
Taxpayer Impact: The absence of competition and the cost-plus structure suggest a higher potential for taxpayer funds to be spent inefficiently compared to a fully competed contract.
Public Impact
Taxpayers may be overpaying for enterprise management services due to lack of competition. Limited competition could stifle innovation in aircraft manufacturing support. The long duration (2017-2023) of the contract raises questions about ongoing necessity and value.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- No small business participation
Positive Signals
- Critical defense asset (Global Hawk)
- Experienced contractor
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, characterized by high R&D costs, long production cycles, and significant government reliance. Spending benchmarks are difficult to establish due to the unique nature of defense platforms like the Global Hawk.
Small Business Impact
The data indicates no small business participation in this contract. This is a missed opportunity to foster small business growth within the defense industrial base and could indicate a lack of outreach or specific program requirements.
Oversight & Accountability
The 'st' field indicates 'CA' (Contract Award), suggesting the award itself has been processed. However, the lack of competition and cost-plus nature warrant further oversight to ensure fair pricing and efficient use of funds.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- No small business participation
- Potential for cost overruns
- Limited transparency on justification for sole-sourcing
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $70.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF ACAT 1C, GLOBAL HAWK, ENTERPRISE MANAGEMENT
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 $70.0 million.
What is the period of performance?
Start: 2017-06-08. End: 2023-09-30.
What specific enterprise management services are being provided under this contract, and how do they directly support the Global Hawk program's operational effectiveness?
The contract details are limited, but 'Enterprise Management' typically encompasses a range of services including program management, logistics support, systems integration, and potentially sustainment planning for the Global Hawk fleet. The effectiveness hinges on how these services contribute to the aircraft's readiness, operational availability, and overall mission success.
Given the 'NOT COMPETED' status, what justification was provided for bypassing the full and open competition process for these critical aircraft manufacturing support services?
Justification for not competing typically involves factors like unique capabilities, urgent need, or existing infrastructure/knowledge that would make a new competition impractical or excessively costly. Without the specific justification document, it's impossible to assess its validity, but it's a key area for oversight to ensure taxpayer funds are protected.
How does the cost-plus fixed fee structure incentivize Northrop Grumman to control costs and deliver maximum value, especially in the absence of competitive pressure?
Cost-plus contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. While the fixed fee aims to provide some incentive for efficiency, the primary risk of cost overruns lies with the government. In a non-competed scenario, the government has less leverage to ensure cost control and value maximization compared to a fixed-price contract.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
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: $71,441,433
Exercised Options: $71,441,433
Current Obligation: $70,021,997
Subaward Activity
Number of Subawards: 116
Total Subaward Amount: $58,333,681
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA862015D3009
IDV Type: IDC
Timeline
Start Date: 2017-06-08
Current End Date: 2023-09-30
Potential End Date: 2023-09-30 00:00:00
Last Modified: 2023-09-28
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