DoD spent over $1.57 billion on Northrop Grumman's BATTLEFIELD AIRBORNE COMMUNICATIONS NODE system over 9 years

Contract Overview

Contract Amount: $1,578,172,932 ($1.6B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2009-06-24

End Date: 2018-02-02

Contract Duration: 3,145 days

Daily Burn Rate: $501.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BATTLEFIELD AIRBORNE COMMUNICATIONS NODE RAPID FIELDING

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $1.58 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: BATTLEFIELD AIRBORNE COMMUNICATIONS NODE RAPID FIELDING Key points: 1. Contract awarded without competition, raising questions about potential overspending and lack of market pressure. 2. Long contract duration (over 9 years) suggests a sustained need but also potential for cost creep. 3. Cost-plus-fixed-fee contract type can incentivize contractor to increase costs, though fixed fee provides some control. 4. The system falls under 'Other Electronic Component Manufacturing,' a broad category that may obscure specific technological advancements or dependencies. 5. Significant spending on a single contractor without competitive bidding warrants scrutiny of value for money. 6. The contract's end date in 2018 means current operational status and future needs require separate analysis.

Value Assessment

Rating: questionable

Benchmarking the value for money on this contract is challenging due to the lack of competitive data. The total award of over $1.57 billion over nearly a decade indicates substantial investment. Without comparable systems procured through open competition, it's difficult to definitively assess if the pricing was optimal. The cost-plus-fixed-fee structure, while common for complex systems, can lead to higher overall costs compared to fixed-price contracts if not managed rigorously.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means there was no direct price comparison against other potential vendors, potentially leading to higher costs for the government. It also limits the government's ability to leverage market dynamics to secure the best possible terms.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. Without multiple bids, the government had less leverage to negotiate favorable pricing, potentially resulting in a less efficient use of public funds.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives the BATTLEFIELD AIRBORNE COMMUNICATIONS NODE system. The system is designed to enhance airborne communication capabilities, crucial for military operations and battlefield awareness. The geographic impact is likely global, supporting deployed military forces wherever they operate. Workforce implications may include specialized roles in manufacturing, maintenance, and operation of advanced communication systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely monitored.
Long contract duration may indicate a lack of innovation or alternative solutions emerging.
Lack of transparency in the sole-source justification requires further investigation.
The 'Other Electronic Component Manufacturing' NAICS code is very broad, making it hard to assess specific market conditions.

Positive Signals

The sustained investment suggests the system is critical to military operations.
Northrop Grumman is a major defense contractor with a track record in complex systems.
The contract provided a consistent platform for airborne communications over an extended period.
The fixed fee component of the contract provides some level of cost predictability for the contractor's profit.

Sector Analysis

The defense electronics sector is characterized by high R&D costs, long product cycles, and significant government procurement. Companies like Northrop Grumman operate in a market where specialized knowledge and technological expertise are paramount. Spending in this area is driven by national security needs, often resulting in large, long-term contracts. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of military systems, but the overall defense electronics market is substantial, with billions allocated annually to communication and avionics systems.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by 'sb': false. The large scale and sole-source nature of the award suggest it was likely awarded directly to a prime contractor capable of handling such a significant undertaking. There is no explicit information on subcontracting plans for small businesses within this data, which could represent a missed opportunity for small business participation in the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and acquisition oversight mechanisms. Given it was a definitive contract awarded by the Air Force, the Defense Contract Management Agency (DCMA) likely played a role in monitoring performance and costs. Inspector General reports related to Air Force or DoD procurements could potentially offer insights into the oversight of such large, sole-source awards, though specific details are not provided here. Transparency is limited by the sole-source nature of the award.

Related Government Programs

Airborne Communication Systems
Defense Electronics Procurement
Northrop Grumman Contracts
Department of the Air Force Acquisitions
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type
Long contract duration
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.58 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. BATTLEFIELD AIRBORNE COMMUNICATIONS NODE RAPID FIELDING

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 $1.58 billion.

What is the period of performance?

Start: 2009-06-24. End: 2018-02-02.

What specific capabilities does the BATTLEFIELD AIRBORNE COMMUNICATIONS NODE (BACON) system provide, and how has it evolved over the contract period?

The BATTLEFIELD AIRBORNE COMMUNICATIONS NODE (BACON) system is designed to provide robust and secure airborne communication capabilities, acting as a critical node in military communication networks. It likely enhances data transfer, voice communication, and situational awareness for airborne platforms and ground forces. Over its nearly 9-year lifespan (2009-2018), the system would have undergone upgrades and modifications to adapt to evolving threats and technological advancements. Specific details on its evolution, such as new functionalities or performance improvements, are not publicly available from the provided data but would be crucial for assessing its continued relevance and value.

Why was this contract awarded on a sole-source basis, and what alternatives were considered?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Sole-source awards are typically justified when only one responsible contractor can provide the necessary goods or services, often due to proprietary technology, unique capabilities, or urgent needs where competition is not feasible. Without further documentation, the specific justification for awarding the BACON system to Northrop Grumman Systems Corporation without competition remains unclear. Standard procurement regulations require agencies to explore alternatives and document why competition was not practicable. The absence of this information raises concerns about the thoroughness of the procurement process and potential missed opportunities for cost savings through competition.

How does the total spending of over $1.57 billion compare to similar airborne communication systems procured by the DoD or other agencies?

Directly comparing the $1.57 billion spent on Northrop Grumman's BACON system is difficult without identifying truly comparable systems procured through open competition. Airborne communication systems vary widely in complexity, capabilities, and intended use. However, the sheer magnitude of this award over a 9-year period suggests a significant investment. For context, major defense programs often run into billions of dollars, but the sole-source nature here prevents a direct value-for-money comparison against market alternatives. Future procurements of similar systems would ideally be competed to establish a clearer benchmark for pricing and performance.

What is the cost-plus-fixed-fee (CPFF) structure's implication on the total cost and contractor incentive for this contract?

The Cost-Plus-Fixed-Fee (CPFF) contract type means Northrop Grumman was reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. While the fixed fee provides some incentive for the contractor to control costs (as their profit is capped), the reimbursement of all costs can reduce the incentive to be highly efficient. If costs escalate, the contractor is generally covered. This structure is often used for research and development or complex projects where the final costs are uncertain. For taxpayers, CPFF contracts carry a higher risk of cost overruns compared to fixed-price contracts, necessitating robust government oversight to manage expenses effectively.

What are the potential risks associated with relying on a single contractor for such a critical defense system over an extended period?

Relying on a single contractor, like Northrop Grumman for the BACON system, over nearly a decade presents several risks. Firstly, it can lead to vendor lock-in, making it difficult and expensive to switch providers or integrate alternative technologies later. Secondly, without competitive pressure, the contractor may have less incentive to innovate or offer cost reductions. Thirdly, the government becomes highly dependent on the contractor's financial stability, technical expertise, and continued willingness to support the system. Any disruption to the contractor's operations could significantly impact the military's communication capabilities. Finally, a sole-source award limits the government's ability to benefit from broader market competition and potentially discover more cost-effective solutions.

Given the contract ended in 2018, what is the current status of the BACON system and future plans for airborne communications?

The provided data indicates this specific contract for the BATTLEFIELD AIRBORNE COMMUNICATIONS NODE RAPID FIELDING concluded on February 2, 2018. This means the initial fielding and development phase under this award is complete. The current operational status of the BACON system and the Department of the Air Force's future plans for airborne communications would require separate, more recent data. It's possible the system has been further upgraded, replaced by newer technology, or continues to be supported under different contract vehicles. Understanding the follow-on strategy is crucial for assessing the long-term effectiveness and modernization of the DoD's communication infrastructure.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: ONE RANCHO CARMEL DRIVE, SAN DIEGO, CA, 92128

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,852,895,778

Exercised Options: $1,585,356,267

Current Obligation: $1,578,172,932

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline