DoD's $120M Polar System Recapitalization Contract Awarded to Northrop Grumman Faces Oversight Concerns
Contract Overview
Contract Amount: $119,780,174 ($119.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2019-05-02
End Date: 2025-09-30
Contract Duration: 2,343 days
Daily Burn Rate: $51.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: IT
Official Description: ENHANCED POLAR SYSTEM RECAPITALIZATION CONTROL AND PLANNING SEGMENT
Place of Performance
Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $119.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ENHANCED POLAR SYSTEM RECAPITALIZATION CONTROL AND PLANNING SEGMENT Key points: 1. Significant investment in critical satellite telecommunications infrastructure. 2. Sole-source award to Northrop Grumman raises questions about competition and price discovery. 3. Contract duration of over 6 years presents long-term financial exposure. 4. Potential for cost overruns given the Cost Plus Incentive Fee structure.
Value Assessment
Rating: questionable
The contract's Cost Plus Incentive Fee structure, while incentivizing performance, can lead to higher costs than fixed-price contracts. Benchmarking is difficult without detailed cost breakdowns, but the total value suggests a need for rigorous oversight.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition for this substantial contract may result in taxpayers paying a premium for the Enhanced Polar System Recapitalization.
Public Impact
Ensures continued operation and modernization of vital polar region communication and surveillance capabilities. Supports national security interests by maintaining a robust satellite telecommunications network. Potential for technological advancements in satellite systems through the incentive fee structure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- Cost-plus contract type can inflate costs.
- Long contract duration increases risk.
- Lack of small business participation noted.
Positive Signals
- Critical national security system.
- Potential for technological advancement.
Sector Analysis
This contract falls within the IT and Defense sectors, specifically focusing on satellite telecommunications. Spending in this area is critical for national security and often involves high-value, long-term procurements.
Small Business Impact
The data indicates no specific small business participation in this contract. Efforts should be made to ensure opportunities for small businesses in subcontracting roles where feasible.
Oversight & Accountability
The sole-source nature and cost-plus incentive fee structure necessitate robust oversight from the Department of the Air Force to ensure cost control and effective performance.
Related Government Programs
- Satellite Telecommunications
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of small business participation
- Long contract duration
- Potential for cost overruns
Tags
satellite-telecommunications, department-of-defense, va, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $119.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ENHANCED POLAR SYSTEM RECAPITALIZATION CONTROL AND PLANNING SEGMENT
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 $119.8 million.
What is the period of performance?
Start: 2019-05-02. End: 2025-09-30.
What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or urgent needs. Without further details, it's difficult to assess the fairness of pricing. However, the lack of competition inherently reduces pressure on the contractor to offer the lowest possible price, making rigorous cost analysis and negotiation by the agency crucial.
How will the Cost Plus Incentive Fee structure be managed to prevent cost overruns and ensure value for taxpayers?
Managing a CPIF contract requires clear definition of performance objectives and cost targets. The agency must actively monitor costs, negotiate incentive targets effectively, and ensure that the contractor's performance truly aligns with the government's best interests. Regular audits and performance reviews are essential to mitigate the risk of uncontrolled cost escalation.
What are the key performance indicators (KPIs) for this contract, and how will their achievement be measured and verified?
Key performance indicators for a satellite telecommunications recapitalization contract would likely include system availability, data throughput, signal reliability, and adherence to schedule milestones. Verification would involve rigorous testing, independent assessments, and ongoing operational monitoring. Clear, measurable, and verifiable KPIs are essential for the incentive fee structure to function as intended.
Industry Classification
NAICS: Information › Satellite Telecommunications › Satellite Telecommunications
Product/Service Code: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: FA880813R0001
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 14119 SULLYFIELD CIR STE A, CHANTILLY, VA, 20151
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: $120,791,087
Exercised Options: $120,791,087
Current Obligation: $119,780,174
Actual Outlays: $4,567,941
Subaward Activity
Number of Subawards: 421
Total Subaward Amount: $66,925,947
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2019-05-02
Current End Date: 2025-09-30
Potential End Date: 2025-09-30 00:00:00
Last Modified: 2025-08-04
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