DoD Spends $96.5M on Northrop Grumman's 5th to 4th Gen Gateway Effort, Lacking Competition
Contract Overview
Contract Amount: $96,497,844 ($96.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2017-12-19
End Date: 2021-09-30
Contract Duration: 1,381 days
Daily Burn Rate: $69.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: 5TH TO 4TH GENERATION GATEWAY URGENT OPERATIONAL NEED RISK REDUCTION EFFORT
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128
Plain-Language Summary
Department of Defense obligated $96.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 5TH TO 4TH GENERATION GATEWAY URGENT OPERATIONAL NEED RISK REDUCTION EFFORT Key points: 1. Significant investment of $96.5 million in a critical defense communication upgrade. 2. Sole-source award to Northrop Grumman raises concerns about competitive pricing. 3. Urgent operational need suggests potential for cost overruns and rushed development. 4. Contract type (Cost Plus Fixed Fee) may incentivize higher costs. 5. Focus on risk reduction for gateway systems is a key strategic objective.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Benchmarking against similar complex communication system upgrades is challenging without competitive data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was awarded on a sole-source basis, citing an urgent operational need. This significantly limits price discovery and competitive pressure, potentially leading to higher costs for the government.
Taxpayer Impact: The absence of competition for a nearly $100 million contract means taxpayers may not have received the best possible price for this critical defense capability.
Public Impact
Enhances critical communication infrastructure for the Department of Defense. Supports modernization efforts by bridging older and newer generation systems. Ensures operational readiness and risk reduction in vital defense networks. Potential for long-term reliance on a single vendor for essential technology.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Urgent operational need justification
- Cost Plus Fixed Fee contract type
- Lack of small business participation
Positive Signals
- Addresses critical risk reduction for gateway systems
- Supports modernization of defense communication infrastructure
Sector Analysis
This contract falls within the broader defense electronics and communications sector. Spending benchmarks for similar complex system integration and risk reduction efforts can vary widely, but sole-source awards often exceed competitive outcomes.
Small Business Impact
The data indicates no small business participation in this contract. Given the large dollar value and specialized nature of the work, opportunities for small businesses may have been limited or overlooked.
Oversight & Accountability
The contract was managed by the Defense Contract Management Agency, responsible for overseeing contract performance and ensuring compliance. However, the sole-source nature limits the scope of oversight regarding price reasonableness.
Related Government Programs
- Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition may lead to inflated costs.
- Cost Plus Fixed Fee structure can incentivize higher spending.
- Urgent need justification may mask underlying planning deficiencies.
- Sole-source award limits innovation from other potential vendors.
- Potential for vendor lock-in on critical defense technology.
Tags
radio-and-television-broadcasting-and-wi, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $96.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 5TH TO 4TH GENERATION GATEWAY URGENT OPERATIONAL NEED RISK REDUCTION EFFORT
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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $96.5 million.
What is the period of performance?
Start: 2017-12-19. End: 2021-09-30.
What specific factors constituted the 'urgent operational need' that precluded a competitive bidding process?
The 'urgent operational need' likely relates to immediate threats or critical capability gaps identified by the Department of Defense. This could involve a rapidly evolving threat landscape, the obsolescence of existing systems, or a requirement to integrate new technologies quickly to maintain operational superiority. Specific details are often classified for national security reasons.
How will the government ensure cost control and value for money under a Cost Plus Fixed Fee contract awarded without competition?
Despite the lack of competition, the government can employ robust oversight mechanisms. This includes detailed cost audits, performance monitoring, and strict adherence to the fixed fee negotiation. The Defense Contract Management Agency will likely scrutinize all incurred costs to ensure they are reasonable and allowable under the contract terms.
What is the long-term strategy for ensuring competitive access to upgrades or maintenance for this gateway system?
The long-term strategy should involve planning for future competition. This could include breaking down future requirements into smaller, more competitive contract vehicles, encouraging technology refresh initiatives, or fostering an environment where alternative solutions can be developed and integrated. Proactive market research and engagement with potential future vendors are crucial.
Industry Classification
NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment 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
Address: 15120 INNOVATION DR, SAN DIEGO, CA, 92128
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $161,553,735
Exercised Options: $161,553,732
Current Obligation: $96,497,844
Actual Outlays: $3,895,347
Subaward Activity
Number of Subawards: 608
Total Subaward Amount: $50,126,091
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-12-19
Current End Date: 2021-09-30
Potential End Date: 2021-09-30 00:00:00
Last Modified: 2025-12-12
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