DoD's $3.2B Global Hawk contract awarded to Northrop Grumman, a sole-source definitive contract

Contract Overview

Contract Amount: $32,012,559 ($32.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2017-05-03

End Date: 2019-01-04

Contract Duration: 611 days

Daily Burn Rate: $52.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EQ-4B 4TH GLOBAL HAWK UON

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $32.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: EQ-4B 4TH GLOBAL HAWK UON Key points: 1. The contract's value of over $3.2 billion represents a significant investment in advanced aerial surveillance capabilities. 2. Awarded on a sole-source basis, this contract bypasses competitive bidding, potentially impacting price discovery and value for money. 3. The firm-fixed-price structure aims to control costs, but the lack of competition warrants scrutiny of pricing. 4. The duration of the contract (611 days) suggests a substantial, ongoing need for these services. 5. The contract falls under 'Other Electronic Component Manufacturing,' indicating a focus on specialized hardware or systems. 6. The absence of small business set-asides or subcontracting requirements means limited direct benefit to smaller enterprises.

Value Assessment

Rating: questionable

Benchmarking the value of this $3.2 billion contract is challenging due to its sole-source nature and specific defense application. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or if a more advantageous price could have been secured through competition. The firm-fixed-price type offers some cost certainty, but the overall value proposition is obscured by the lack of comparative data from other bidders.

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 standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition means there was no direct price comparison or market pressure to drive down costs, potentially leading to higher prices than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. The sole-source award limits the government's ability to leverage market forces for cost savings.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, which will utilize the Global Hawk unmanned aerial system for intelligence, surveillance, and reconnaissance (ISR) missions. The services delivered include the provision and sustainment of advanced aerial surveillance platforms, crucial for national security. The geographic impact is global, as the Global Hawk is designed for long-endurance, high-altitude reconnaissance over diverse operational theaters. Workforce implications include specialized roles for engineers, technicians, and operators involved in the manufacturing, maintenance, and deployment of these sophisticated systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value assessment.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if not closely managed due to lack of competition.
No explicit small business participation, potentially excluding smaller innovative firms.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established defense contractor with a track record in similar systems.
Addresses a critical defense need for advanced ISR capabilities.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on unmanned aerial systems (UAS) and related electronic components. The market for advanced ISR platforms is characterized by high R&D costs, long development cycles, and significant government investment. Comparable spending benchmarks would involve other large-scale defense procurements for similar high-tech surveillance or weapon systems, often involving billions of dollars.

Small Business Impact

This contract does not appear to include any specific small business set-asides or subcontracting requirements. The sole-source nature of the award to a large prime contractor limits opportunities for small businesses to participate directly. This could mean that the broader small business ecosystem, which often relies on subcontracting opportunities, does not benefit from this particular procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures would include contract performance reviews, milestone tracking, and financial audits. Transparency is often limited for sole-source defense contracts, but reporting requirements to Congress and internal DoD oversight bodies would be in place. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Global Hawk Unmanned Aerial System Program
Air Force ISR Platforms
Defense Unmanned Aircraft Systems Procurement
Northrop Grumman Defense Contracts
Electronic Component Manufacturing for Defense

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Lack of small business participation limits broader economic impact.
High dollar value necessitates rigorous oversight to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. EQ-4B 4TH GLOBAL HAWK UON

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 $32.0 million.

What is the period of performance?

Start: 2017-05-03. End: 2019-01-04.

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

Historical spending data for the Global Hawk program under Northrop Grumman would reveal the total investment over the system's lifecycle. Analyzing this trend would show the scale of commitment and potentially identify periods of increased or decreased expenditure, which could correlate with production phases, upgrades, or sustainment activities. Without specific historical data for this definitive contract, we can infer that this $3.2 billion award represents a significant portion of the program's overall funding, likely encompassing production, integration, and initial operational support. Further analysis would require access to historical contract awards and modifications for the Global Hawk platform to understand the cumulative financial commitment and its evolution over time.

How does the pricing of this contract compare to similar sole-source defense procurements?

Directly comparing the pricing of this $3.2 billion sole-source Global Hawk contract to similar procurements is challenging without access to detailed cost breakdowns and specific contract terms. Sole-source awards inherently lack the price discovery mechanism of competition. However, defense procurement analysts often benchmark against industry averages for similar platforms or against previous contracts for the same system. Given the advanced technology and specialized nature of the Global Hawk, its cost is expected to be substantial. The lack of competition means the government relies heavily on Northrop Grumman's cost proposals and negotiation leverage. A thorough comparison would involve analyzing the cost per flight hour, per system, or per capability delivered against other high-value, non-competed defense assets.

What are the key performance indicators (KPIs) for this contract and how is performance being measured?

Key performance indicators (KPIs) for a contract like this, involving advanced aerial systems, would typically focus on mission effectiveness, system availability, reliability, and operational readiness. For the Global Hawk, KPIs might include metrics such as mission success rates, uptime percentages, mean time between failures (MTBF), and adherence to flight schedules. Performance measurement would likely involve regular reporting from Northrop Grumman, joint reviews with the Air Force, and potentially independent assessments. The firm-fixed-price nature suggests that meeting defined performance standards is critical for the contractor to achieve full payment and avoid penalties, although specific performance incentives or penalties would be detailed in the contract's terms and conditions.

What is the justification provided for awarding this contract on a sole-source basis?

The justification for awarding a contract on a sole-source basis typically stems from specific circumstances where only one responsible source can fulfill the requirement. For defense systems like the Global Hawk, this often relates to unique capabilities, proprietary technology, existing infrastructure, or the need for commonality with existing systems to ensure interoperability and reduce training/logistical burdens. The government would need to formally document and justify why competition is not feasible or not in the government's best interest. Common justifications include the existence of only one capable contractor, urgent and compelling needs where competition would cause unacceptable delays, or follow-on work to a previously competed contract where only the original contractor possesses the necessary expertise or data.

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

Northrop Grumman has a long-standing and extensive track record with the Global Hawk Unmanned Aerial System (UAS) program, having been the prime contractor responsible for its development, production, and sustainment for many years. Their experience encompasses delivering complex, high-altitude surveillance platforms to various military branches and international partners. This deep involvement suggests a high level of technical expertise and program management capability specific to the Global Hawk. Beyond the Global Hawk, Northrop Grumman is a major defense contractor with a broad portfolio of aerospace and defense systems, including other unmanned systems, aircraft, and electronic warfare capabilities, indicating a strong overall track record in executing large, complex government contracts.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $32,012,559

Exercised Options: $32,012,559

Current Obligation: $32,012,559

Subaward Activity

Number of Subawards: 553

Total Subaward Amount: $85,926,148

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline