Northrop Grumman awarded $82M for STARLITE program support, raising questions about competition and value

Contract Overview

Contract Amount: $82,040,292 ($82.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-25

End Date: 2021-10-27

Contract Duration: 2,589 days

Daily Burn Rate: $31.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CL,CT::IGF THIS TASK ORDER, KZ02, IS TO PROVIDE TOTAL SYSTEM SUPPORT FOR THE STARLITE PROGRAM THROUGH DEPOT REPAIR, GOVERNMENT FACILITIZATION, SOFTWARE IMPLEMENTATION/INTEGRATION AND OTHER SERVICES.

Place of Performance

Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $82.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::CL,CT::IGF THIS TASK ORDER, KZ02, IS TO PROVIDE TOTAL SYSTEM SUPPORT FOR THE STARLITE PROGRAM THROUGH DEPOT REPAIR, GOVERNMENT FACILITIZATION, SOFTWARE IMPLEMENTATION/INTEGRATION AND OTHER SERVICES. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration (over 7 years) suggests a need for sustained support, but also risks of cost overruns. 3. Firm Fixed Price contract type offers cost certainty but may not incentivize efficiency if scope is poorly defined. 4. No small business set-aside indicates a focus on large prime contractors, with potential for limited subcontracting opportunities. 5. The contract supports critical navigation and guidance systems, highlighting its importance to defense operations. 6. High dollar value for a single task order warrants scrutiny of performance and cost-effectiveness over its lifecycle.

Value Assessment

Rating: questionable

The $82 million task order for the STARLITE program represents a significant investment. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed-price structure provides some cost predictability, but the lack of competition raises concerns about whether the government secured the best possible value. Further analysis of the specific services rendered and their necessity would be required to fully assess value for money.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates. However, the absence of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a lack of available alternatives or a failure to plan for competitive sourcing.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most competitive pricing, as there was no opportunity for multiple companies to bid and drive down costs through a competitive process.

Public Impact

The STARLITE program, supported by this contract, likely enhances the operational capabilities of Department of the Army assets. Services include depot repair, software implementation, and integration, ensuring the continued functionality of critical systems. The contract's impact is primarily within the defense sector, supporting national security objectives. Workforce implications may include specialized technical roles for maintenance, repair, and software development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for an $82M award raises concerns about potential overpricing and reduced innovation.
Long contract duration increases the risk of scope creep and cost overruns if not managed effectively.
Sole-source awards can limit opportunities for small businesses to participate in critical defense programs.
The specific nature of 'total system support' can be broad, requiring careful oversight to ensure all services are necessary and cost-effective.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government, assuming the scope is well-defined.
Northrop Grumman is a major defense contractor with extensive experience, suggesting a high likelihood of technical capability.
The contract addresses essential support for a program likely critical to military operations.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on navigation, guidance, and control systems. The NAICS code 334511 covers establishments primarily engaged in manufacturing instruments for indicating, measuring, and recording physical characteristics. The market for such systems is characterized by high barriers to entry, significant R&D investment, and long product lifecycles, often dominated by a few large prime contractors like Northrop Grumman. Spending in this area is critical for maintaining technological superiority in defense.

Small Business Impact

The absence of a small business set-aside for this substantial $82 million task order suggests that the primary contractor, Northrop Grumman, will likely perform the majority of the work. While large prime contractors often utilize small business subcontractors, the lack of a specific set-aside means there is no guarantee of significant subcontracting opportunities for small businesses. This could limit the participation of smaller, innovative firms in supporting the STARLITE program.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The firm fixed-price nature of the award provides a degree of cost control, but the long duration necessitates ongoing performance monitoring. Transparency regarding the justification for the sole-source award and detailed reporting on service delivery would be key oversight mechanisms. The Inspector General's office may also conduct audits or investigations into contract performance and costs.

Related Government Programs

Defense Logistics Agency (DLA) support services
Naval Air Systems Command (NAVAIR) contracts
Army Aviation and Missile Command (AMCOM) sustainment programs
Intelligence, Surveillance, and Reconnaissance (ISR) system support
Avionics and flight control system maintenance

Risk Flags

Sole-source award
Lack of competition
Long contract duration
High dollar value task order

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::CL,CT::IGF THIS TASK ORDER, KZ02, IS TO PROVIDE TOTAL SYSTEM SUPPORT FOR THE STARLITE PROGRAM THROUGH DEPOT REPAIR, GOVERNMENT FACILITIZATION, SOFTWARE IMPLEMENTATION/INTEGRATION AND OTHER SERVICES.

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 Army).

What is the total obligated amount?

The obligated amount is $82.0 million.

What is the period of performance?

Start: 2014-09-25. End: 2021-10-27.

What is the specific justification for awarding this $82 million task order on a sole-source basis to Northrop Grumman?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed, sole-source awards are typically granted when only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, urgent and compelling needs, or a lack of adequate competition. For a contract of this magnitude and duration supporting the STARLITE program, the Department of the Army would need to have documented reasons, such as the specialized nature of depot repair, integration requirements with existing unique systems, or the contractor's sole possession of necessary technical data or expertise. Without this documentation, the sole-source award raises concerns about potential missed opportunities for cost savings through competition.

How does the $82 million cost compare to similar system support contracts for navigation and guidance systems?

Benchmarking this $82 million task order against similar contracts is challenging without more specific details on the scope of 'total system support' and the exact nature of the STARLITE program's components. However, given the duration of over seven years (from September 2014 to October 2021), the average annual cost is approximately $11.7 million. This figure needs to be evaluated in the context of the complexity of the systems being supported, the level of repair required, software integration efforts, and the specific threat environment. Large, sole-source contracts for complex defense systems often carry a premium due to specialized knowledge and limited competition. A detailed cost-volume-price analysis, if available, would be necessary for a robust comparison.

What are the key performance indicators (KPIs) used to measure the success of this contract, and has Northrop Grumman met them?

The provided data does not specify the Key Performance Indicators (KPIs) established for this task order. Typically, for a contract involving depot repair, system integration, and software implementation, KPIs would likely include metrics such as on-time delivery for repairs, system uptime and availability, successful software deployment rates, defect resolution times, and adherence to technical specifications. Given the contract's completion in October 2021, performance data should be available through contract close-out reports or program management reviews. Assessing Northrop Grumman's performance would require access to these internal government assessments, which are not publicly available in this dataset.

What is Northrop Grumman's track record with similar sole-source contracts within the Department of Defense?

Northrop Grumman is a major defense contractor with a long history of performing complex systems integration, sustainment, and manufacturing for the Department of Defense. They frequently hold large, sole-source contracts, particularly for programs where they are the original equipment manufacturer or possess unique technological expertise. Their track record with sole-source awards is extensive, encompassing various platforms and systems. While this can indicate reliability and capability, it also underscores the importance of robust government oversight and justification processes to ensure fair pricing and prevent potential abuses associated with non-competitive awards. Publicly available contract databases often show numerous sole-source awards to major defense primes like Northrop Grumman across different agencies and programs.

What are the potential risks associated with the long duration (over 7 years) of this contract?

The extended duration of this contract, spanning over seven years, presents several potential risks. Firstly, the longer the contract, the greater the chance of scope creep, where requirements may expand beyond the original intent, leading to increased costs. Secondly, technology can rapidly evolve; systems supported under this contract might become outdated, requiring costly modifications or replacements not initially foreseen. Thirdly, maintaining consistent oversight and performance management over such a long period can be challenging for government personnel, potentially leading to complacency or reduced vigilance. Finally, economic fluctuations or changes in defense priorities could impact the program's funding and relevance, making the long-term commitment riskier. The firm fixed-price nature mitigates some cost risk, but only if the scope remains tightly controlled.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580B W NURSERY RD MS B585, LINTHICUM HEIGHTS, MD, 21090

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

Financial Breakdown

Contract Ceiling: $82,729,407

Exercised Options: $82,729,407

Current Obligation: $82,040,292

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T13DC118

IDV Type: IDC

Timeline