DoD's $111.8M Global Hawk contract awarded to Northrop Grumman for aircraft manufacturing

Contract Overview

Contract Amount: $111,871,080 ($111.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-03-20

End Date: 2025-01-30

Contract Duration: 1,777 days

Daily Burn Rate: $63.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ACAT III, GLOBAL HAWK, INTEGRATED FUNCTIONAL CAPABILITY (IFC) 9

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $111.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ACAT III, GLOBAL HAWK, INTEGRATED FUNCTIONAL CAPABILITY (IFC) 9 Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant investment in a key defense platform, the Global Hawk. 3. Long contract duration suggests a sustained need for these capabilities. 4. Focus on aircraft manufacturing indicates a production or sustainment phase. 5. No small business set-aside, potentially limiting broader economic participation. 6. Contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed closely.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The Cost Plus Fixed Fee structure, while allowing for flexibility, carries inherent risks of cost escalation. Without comparable sole-source awards for similar systems, it's difficult to definitively assess if the pricing represents good value for money. The long duration and substantial value suggest a critical need, but the absence of competition prevents a robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was considered. This approach bypasses the typical competitive bidding process, which can lead to less favorable pricing for the government. The lack of competition means there was no opportunity for other manufacturers to propose alternative solutions or offer more competitive pricing, potentially impacting the government's ability to secure the best possible deal.

Taxpayer Impact: Sole-source awards limit the government's leverage in price negotiations, potentially leading to higher costs for taxpayers compared to a competitively bid contract. This reduces the incentive for the contractor to minimize costs.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, which will receive advanced unmanned aerial vehicles. The contract supports the continued operation and potential enhancement of the Global Hawk surveillance and reconnaissance platform. The geographic impact is likely global, given the nature of the Global Hawk's mission, with operations potentially spanning various theaters of operation. Workforce implications include sustaining jobs within Northrop Grumman and its supply chain, particularly in areas related to aerospace engineering and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can incentivize higher spending.
Lack of small business participation may limit economic benefits.
Long contract duration increases exposure to potential cost overruns.

Positive Signals

Addresses a critical defense capability (Global Hawk).
Long-term commitment suggests strategic importance.
Award to an established defense contractor implies technical expertise.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on unmanned aerial vehicles (UAVs). The Global Hawk is a high-altitude, long-endurance surveillance platform. Spending in this sector is heavily influenced by government defense budgets and geopolitical priorities. Comparable spending benchmarks would involve other large-scale defense platform procurements or sustainment contracts, often running into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there is a reduced likelihood of significant subcontracting opportunities flowing down to small businesses unless explicitly mandated or pursued by the prime. This could limit the direct economic impact on the small business ecosystem within the aerospace manufacturing supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would be embedded in the contract terms, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature, but contract awards are generally reported. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Unmanned Aerial Vehicle (UAV) programs
ISR (Intelligence, Surveillance, Reconnaissance) platforms
Defense Aircraft Manufacturing
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type carries inherent cost overrun risk.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $111.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ACAT III, GLOBAL HAWK, INTEGRATED FUNCTIONAL CAPABILITY (IFC) 9

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 $111.9 million.

What is the period of performance?

Start: 2020-03-20. End: 2025-01-30.

What is the historical spending trend for the Global Hawk program with Northrop Grumman?

Analyzing historical spending for the Global Hawk program with Northrop Grumman requires access to detailed contract data over multiple years. Typically, such programs involve significant initial development costs followed by production, sustainment, and upgrade phases. Spending often fluctuates based on production rates, modification needs, and operational tempo. Without specific historical data for this contract vehicle or related contracts, it's difficult to provide precise figures. However, large-scale defense platforms like the Global Hawk generally represent multi-year, multi-billion dollar investments throughout their lifecycle, with significant portions allocated to sustainment and upgrades after initial fielding.

How does the Cost Plus Fixed Fee (CPFF) contract type typically impact program costs compared to other contract types?

The Cost Plus Fixed Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, providing flexibility. However, it shifts much of the cost risk to the government. Unlike fixed-price contracts, where the contractor bears the risk of cost overruns to maintain their profit, CPFF incentivizes the contractor to incur costs to achieve the fixed fee. This can lead to higher overall program costs if not rigorously managed through strong government oversight, detailed cost tracking, and negotiation of fee structures that align with performance.

What are the key performance indicators (KPIs) typically associated with Global Hawk operations and how are they measured under this contract?

Key performance indicators (KPIs) for the Global Hawk program typically revolve around mission effectiveness, operational availability, and system reliability. These can include metrics such as flight hours achieved, sortie completion rates, time on station, sensor data quality, and mean time between failures (MTBF). Under this contract, Northrop Grumman would likely be required to report on these KPIs through regular performance reports. The 'Integrated Functional Capability (IFC) 9' designation suggests a specific phase of capability development or integration, implying KPIs related to the successful implementation and testing of these new functionalities. The government's contracting officers and technical representatives would monitor these reports to ensure the contractor meets contractual obligations.

What are the potential risks associated with a sole-source award for a critical defense asset like the Global Hawk?

The primary risk associated with a sole-source award for a critical defense asset like the Global Hawk is the lack of competitive pressure on pricing and innovation. Without competing bids, the government may pay a higher price than if multiple contractors vied for the contract. This can also reduce the incentive for the sole-source provider to innovate or improve efficiency, as they face no direct threat from competitors. Furthermore, reliance on a single supplier can create supply chain vulnerabilities and reduce flexibility if the contractor faces financial difficulties or strategic shifts. Ensuring robust oversight and negotiation is crucial to mitigate these risks.

What is Northrop Grumman's track record with the Global Hawk program and similar large defense contracts?

Northrop Grumman has a long-standing and extensive track record with the Global Hawk program, having been the prime contractor responsible for its development, production, and sustainment for many years. They are a major defense contractor with significant experience in large, complex aerospace and defense systems. Their history with the Global Hawk includes numerous upgrades, capability enhancements, and operational support. While specific performance metrics for all past contracts are not publicly detailed, Northrop Grumman is generally recognized for its technical capabilities in this domain. However, like many large defense contractors managing complex programs, they may have faced scrutiny regarding cost, schedule, or performance on various contracts over time.

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 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: $112,218,871

Exercised Options: $112,218,871

Current Obligation: $111,871,080

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $123,547,913

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