DoD's $32.8M contract for search and navigation systems awarded to Northrop Grumman shows fair value
Contract Overview
Contract Amount: $32,780,318 ($32.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2012-08-20
End Date: 2013-09-30
Contract Duration: 406 days
Daily Burn Rate: $80.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: 3 DELRR PRE-EMD TD PHASE
Place of Performance
Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $32.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 3 DELRR PRE-EMD TD PHASE Key points: 1. The contract was awarded under full and open competition, suggesting a competitive pricing environment. 2. Northrop Grumman, a major defense contractor, has a significant track record in this sector. 3. The firm fixed-price contract type shifts performance risk to the contractor. 4. The contract duration of 406 days is relatively short for an EMD phase. 5. The award value is within a reasonable range for similar system development contracts. 6. The contract is not set aside for small businesses, indicating a focus on large prime contractors.
Value Assessment
Rating: good
The contract value of $32.8 million for the DELRR PRE-EMD TD PHASE appears reasonable when benchmarked against similar development contracts for advanced sensor and navigation systems. While specific per-unit cost data is not available, the overall award amount suggests a fair price given the complexity and technological sophistication typically involved in such defense procurements. The firm fixed-price structure further indicates that the government secured a defined cost for the scope of work, mitigating potential cost overruns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of 3 bidders indicates a degree of competition, which is generally beneficial for price discovery and ensuring the government receives competitive pricing. The fact that multiple companies vied for this contract suggests that the requirements were well-defined and attractive to the market.
Taxpayer Impact: Full and open competition typically leads to better value for taxpayers by driving down prices through market forces and encouraging innovation among bidders.
Public Impact
The primary beneficiaries are the Department of Defense, specifically the Air Force, which will receive advanced search, detection, navigation, guidance, aeronautical, and nautical systems. This contract supports the development phase (EMD) of critical defense technology, enhancing operational capabilities. The geographic impact is primarily within the United States, where Northrop Grumman operates and where the systems will likely be deployed. The contract supports highly skilled jobs in the aerospace and defense manufacturing sector, particularly in engineering and systems development.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if the firm fixed-price contract does not adequately account for unforeseen technical challenges in the EMD phase.
- Dependence on a single large contractor (Northrop Grumman) could limit future competition or innovation if not managed carefully.
- The specific performance metrics and acceptance criteria are not detailed, posing a risk if the delivered system does not meet all operational needs.
Positive Signals
- Awarded under full and open competition, indicating a robust bidding process.
- Firm fixed-price contract type transfers significant performance risk to the contractor.
- Northrop Grumman is a well-established defense contractor with extensive experience in relevant technologies.
- The contract supports a critical defense capability, aligning with national security objectives.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on advanced navigation and sensor systems. The market for such specialized defense electronics is characterized by high barriers to entry due to technological complexity and stringent qualification requirements. Spending in this area is driven by evolving military requirements and technological advancements. Comparable spending benchmarks would involve other EMD contracts for similar complex defense systems, often running into tens or hundreds of millions of dollars.
Small Business Impact
This contract was not set aside for small businesses, and the prime contractor is Northrop Grumman Systems Corporation, a large aerospace and defense company. There is no explicit information regarding small business subcontracting goals or performance within this data. However, large prime contractors in the defense sector are often required to meet specific subcontracting targets with small businesses as part of their overall contract obligations, which could indirectly benefit the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified systems. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.
Related Government Programs
- Advanced Navigation Systems Development
- Defense Electronics Manufacturing
- Air Force Research and Development
- Sensor Technology Procurement
- Guidance System Development
Risk Flags
- Potential for schedule slippage if technology demonstration proves more complex than anticipated.
- Risk of performance not meeting full operational requirements if key technologies are not sufficiently mature.
- Dependence on a single large contractor for critical defense technology development.
Tags
defense, department-of-defense, air-force, northrop-grumman-systems-corporation, firm-fixed-price, full-and-open-competition, search-detection-navigation-guidance-aeronautical-and-nautical-system-and-instrument-manufacturing, emd-phase, technology-demonstration, maryland, large-contractor
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 3 DELRR PRE-EMD TD PHASE
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 $32.8 million.
What is the period of performance?
Start: 2012-08-20. End: 2013-09-30.
What is Northrop Grumman's track record with similar Department of Defense contracts, particularly for EMD phases of navigation and sensor systems?
Northrop Grumman Systems Corporation is a major defense contractor with a long history of delivering complex systems to the Department of Defense. They have extensive experience in areas such as radar, electronic warfare, and navigation systems. For EMD phases, their track record generally includes successful development and integration of advanced technologies, though like any large contractor, they may have faced challenges related to schedule or cost on specific programs. Reviewing their past performance on similar contracts, particularly those involving sensor fusion, advanced guidance, and real-time data processing, would provide a more detailed picture of their capabilities and reliability in executing EMD contracts.
How does the $32.8 million award value compare to the estimated cost for similar EMD contracts in the defense sector?
The $32.8 million award value for this EMD phase contract appears to be within a reasonable range for specialized defense systems development. EMD contracts, by their nature, involve significant research, design, prototyping, and testing of complex technologies. Depending on the specific technological advancements and the scale of the system being developed, EMD contracts can range from tens of millions to hundreds of millions of dollars. Benchmarking against publicly available data for similar navigation, search, and detection systems development contracts awarded by the DoD suggests that this value is competitive, especially considering it was awarded under full and open competition with multiple bidders.
What are the primary risks associated with this firm fixed-price contract for the EMD phase?
The primary risk with a firm fixed-price (FFP) contract, even in the EMD phase, is that the contractor may face unforeseen technical challenges or cost increases that are not adequately accounted for in their bid. If the actual costs to develop the system significantly exceed the fixed price, Northrop Grumman could experience reduced profit margins or financial losses. Conversely, the government's risk is that the contractor might cut corners on quality or performance to protect their profit if costs escalate unexpectedly. However, FFP contracts are generally favored for shifting cost risk to the contractor and providing budget certainty for the government.
What does the '3 DELRR PRE-EMD TD PHASE' designation imply about the program's maturity and expected outcomes?
The designation '3 DELRR PRE-EMD TD PHASE' indicates that this contract is part of the '3 DELRR' program (likely a specific system or initiative), and it specifically covers the 'PRE-EMD' (Pre-Engineering and Manufacturing Development) phase, focusing on 'TD' (Technology Demonstration). This suggests the program is in an advanced stage of research and development, moving beyond basic concept exploration towards demonstrating the feasibility and core technologies required for the system. The objective of this phase is typically to mature critical technologies, reduce system risks, and validate performance parameters before committing to full-scale EMD, which would involve building and testing a more complete system prototype.
How does the contract's duration of 406 days align with typical EMD phases for complex defense systems?
A duration of 406 days (approximately 13.5 months) for a Pre-EMD Technology Demonstration phase is relatively concise for complex defense systems. While EMD phases themselves can often span several years, the preceding technology demonstration and risk reduction activities might be shorter. This duration suggests a focused effort on demonstrating specific technological capabilities within a defined timeframe. It implies that much of the foundational research may have already been completed, and the primary goal here is to prove the viability of key components or integrated functions before proceeding to the more extensive EMD phase.
What is the significance of the contract being awarded to Northrop Grumman Systems Corporation in the context of the defense industrial base?
Awarding this contract to Northrop Grumman Systems Corporation signifies the reliance of the Department of Defense on large, established defense prime contractors for developing advanced and critical systems. Northrop Grumman is a key player in the defense industrial base, possessing the extensive resources, specialized expertise, and security clearances necessary for such high-technology programs. Their involvement suggests a program of significant strategic importance, requiring a contractor with proven capabilities in systems integration, advanced manufacturing, and program management. This also highlights the consolidation trend within the defense industry, where a few major corporations handle a substantial portion of advanced development contracts.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › OTHER RESEARCH/DEVELOPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 1580B W NURSERY RD MS B585, LINTHICUM HEIGHTS, MD, 03
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $33,610,318
Exercised Options: $33,610,318
Current Obligation: $32,780,318
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2012-08-20
Current End Date: 2013-09-30
Potential End Date: 2013-09-30 00:00:00
Last Modified: 2013-10-29
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