DoD's $71M Global Hawk sensor integration contract awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $71,049,735 ($71.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2017-10-02

End Date: 2025-07-01

Contract Duration: 2,829 days

Daily Burn Rate: $25.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ACAT III, GLOBAL HAWK, MS-177 10-BAND INTEGRATION ITEMS

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $71.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ACAT III, GLOBAL HAWK, MS-177 10-BAND INTEGRATION ITEMS Key points: 1. Value for money is difficult to assess due to the sole-source nature of the award. 2. Competition dynamics are absent, raising concerns about potential overpricing and reduced innovation. 3. Risk indicators include the lack of competitive bidding and the cost-plus contract type. 4. Performance context is tied to the Global Hawk program, a high-altitude surveillance platform. 5. Sector positioning is within the defense aerospace manufacturing industry, dominated by large contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this $71 million contract is challenging given its sole-source award. Without competitive bids, it's difficult to determine if the pricing reflects fair market value or if alternative solutions could have been procured at a lower cost. The cost-plus incentive fee structure, while common in complex defense projects, can lead to cost overruns if not managed rigorously. Comparing this to similar integration efforts on other platforms is difficult without transparency into the specific technical requirements and associated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Northrop Grumman was the only bidder considered. This lack of competition typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. However, it limits the government's ability to explore alternative solutions and potentially secure more favorable pricing through a competitive process. The absence of multiple bids means price discovery is not driven by market forces.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without competing offers, the government cannot be assured it is receiving the best possible price for these integration services.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, which will receive enhanced sensor capabilities for its Global Hawk fleet. The services delivered involve the integration of MS-177 10-band sensors onto the Global Hawk platform, improving its intelligence, surveillance, and reconnaissance (ISR) capabilities. The geographic impact is primarily within the United States, where the integration work will likely occur, but the operational impact is global, supporting military operations worldwide. Workforce implications include specialized engineering and technical roles within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Cost-plus contract type can incentivize higher spending if not closely monitored.
Lack of transparency in sole-source justifications can obscure true value for money.
Dependence on a single contractor for critical integration may pose long-term supply chain risks.

Positive Signals

Contract supports a critical intelligence, surveillance, and reconnaissance (ISR) platform for the DoD.
Integration of advanced sensor technology aims to enhance military operational effectiveness.
Northrop Grumman is an established defense contractor with experience in the Global Hawk program.
The contract duration extends to mid-2025, indicating a planned, long-term integration effort.

Sector Analysis

This contract falls within the defense aerospace manufacturing sector, a segment characterized by high technological complexity, significant R&D investment, and long procurement cycles. The Global Hawk program itself represents a substantial investment in unmanned aerial vehicle (UAV) technology for ISR missions. Spending in this sector is heavily influenced by government defense budgets and geopolitical priorities. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of sensor integration, but overall UAV and sensor system procurements represent billions of dollars annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman, is a large aerospace and defense company. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this delivery order is not detailed here. The absence of a direct set-aside means small businesses are less likely to be the primary recipients of this specific award, though they may participate indirectly through subcontracts.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. As a sole-source award, scrutiny may be heightened to ensure fair and reasonable pricing and adherence to contract terms. Inspector General investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited by the non-competitive nature, but contract modifications, performance reports, and payment data are typically subject to internal review and potentially public reporting through systems like FPDS.

Related Government Programs

Global Hawk Unmanned Aircraft System
Advanced ISR Sensor Development
Defense Contract Management Agency (DCMA) Oversight
Air Force Research Laboratory (AFRL) Programs

Risk Flags

Sole Source Award
Cost-Plus Contract Type
Lack of Competition
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ACAT III, GLOBAL HAWK, MS-177 10-BAND INTEGRATION ITEMS

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 $71.0 million.

What is the period of performance?

Start: 2017-10-02. End: 2025-07-01.

What is Northrop Grumman's track record with the Global Hawk program and similar sensor integration projects?

Northrop Grumman is the prime contractor for the Global Hawk Unmanned Aerial System (UAS), possessing extensive experience with the platform's development, production, and sustainment. This includes integrating various payloads and sensors over the program's lifecycle. Their history with the Global Hawk suggests a deep understanding of its architecture and operational requirements. For similar sensor integration projects, Northrop Grumman has a broad portfolio across various defense platforms, leveraging their expertise in avionics, systems integration, and advanced sensor technologies. However, specific details on past integration projects comparable in scope and complexity to the MS-177 10-band integration, particularly regarding cost and performance metrics, are often proprietary or not publicly disclosed, making direct comparisons challenging.

How does the $71 million cost compare to similar sensor integration efforts on other DoD platforms?

Directly comparing the $71 million cost of this MS-177 10-band integration for the Global Hawk to similar efforts on other DoD platforms is difficult due to several factors. Firstly, this contract was sole-sourced, meaning competitive pricing benchmarks are absent. Secondly, the specific technical complexity, performance requirements, and the unique characteristics of the MS-177 sensor and the Global Hawk platform influence costs significantly. Thirdly, contract types (like Cost Plus Incentive Fee) and the duration of integration efforts vary widely. Generally, integrating advanced, multi-band sensors onto complex platforms like UAVs or aircraft is a costly endeavor, often running into tens of millions of dollars. Without detailed breakdowns of labor, materials, testing, and overhead specific to this contract and comparable ones, a precise value-for-money assessment relative to other programs remains elusive.

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

The primary risks associated with this sole-source, Cost Plus Incentive Fee (CPIF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for Northrop Grumman to optimize pricing or explore cost-saving alternatives. The government may not be achieving the best possible value. Secondly, the CPIF contract type, while designed to incentivize performance and cost control, can still lead to cost overruns if the target costs are not well-defined or if scope creep occurs. The contractor is reimbursed for allowable costs plus a share of any savings or overruns relative to target costs. This structure requires robust government oversight to manage expenditures effectively and ensure the contractor remains focused on achieving program objectives within reasonable cost parameters.

How effective is the Global Hawk platform with the MS-177 sensor integration likely to be for DoD's ISR mission?

The integration of the MS-177 10-band sensor onto the Global Hawk platform is expected to significantly enhance the Department of Defense's Intelligence, Surveillance, and Reconnaissance (ISR) capabilities. The MS-177 is a highly advanced electro-optical/infrared (EO/IR) sensor capable of capturing imagery across multiple spectral bands, providing detailed information in various atmospheric conditions and allowing for enhanced target detection, identification, and tracking. The Global Hawk's long endurance and high-altitude capabilities allow it to loiter over target areas for extended periods, providing persistent ISR coverage. Combining these attributes means the enhanced Global Hawk should offer superior situational awareness and actionable intelligence, supporting a wide range of military operations, from battlefield monitoring to strategic intelligence gathering, thereby increasing the overall effectiveness of the DoD's ISR mission.

What are the historical spending patterns for Global Hawk sensor integration or upgrades?

Historical spending patterns for the Global Hawk program, particularly concerning sensor integration and upgrades, have been substantial. The platform itself has undergone significant investment over its lifespan, including the development and integration of various sensor suites to meet evolving ISR requirements. Specific figures for individual sensor integration contracts can vary widely depending on the complexity and technology involved. For instance, earlier sensor integrations or modifications might have cost less than the current MS-177 10-band integration, which represents a significant technological advancement. Tracking precise historical spending requires analyzing numerous individual contracts and modifications over many years. However, it's evident that the DoD has consistently allocated significant funds to enhance the Global Hawk's sensor capabilities to maintain its relevance and effectiveness in modern warfare.

What is the potential impact of this contract on future competition for similar DoD sensor integration work?

This contract's sole-source award to Northrop Grumman could have a mixed impact on future competition for similar DoD sensor integration work. On one hand, it reinforces Northrop Grumman's position as a key provider for the Global Hawk platform, potentially making it difficult for competitors to break into this specific niche without significant investment or unique technological breakthroughs. On the other hand, the government's investment in integrating advanced capabilities like the MS-177 sensor could spur innovation across the industry. If the integration proves highly successful and demonstrates significant operational advantages, it might create demand for similar capabilities on other platforms, potentially opening doors for other companies to develop competing solutions. However, the precedent of sole-sourcing critical upgrades on established platforms can discourage new entrants if they perceive limited opportunities for competitive engagement.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $71,049,735

Exercised Options: $71,049,735

Current Obligation: $71,049,735

Actual Outlays: $1,815,168

Subaward Activity

Number of Subawards: 666

Total Subaward Amount: $332,712,866

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