DoD awards $69.4M for Naval Surveillance Radars, with Northrop Grumman as prime contractor

Contract Overview

Contract Amount: $69,396,532 ($69.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2008-03-11

End Date: 2025-09-10

Contract Duration: 6,392 days

Daily Burn Rate: $10.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: NAVAL SURVEILLANCE RADARS DETECTION & TRACKING SYSTEM

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $69.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NAVAL SURVEILLANCE RADARS DETECTION & TRACKING SYSTEM Key points: 1. Contract value of $69.4M over 17 years suggests a long-term investment in critical defense capabilities. 2. The contract was awarded using full and open competition, indicating a broad market search. 3. The cost-plus award fee (CPAF) structure incentivizes contractor performance while allowing for flexibility. 4. Northrop Grumman's extensive experience in defense systems likely contributed to their selection. 5. The contract's duration and value place it within a significant spending category for defense electronics. 6. The award order type suggests this is part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle.

Value Assessment

Rating: good

The total award amount of $69.4M over nearly 17 years averages to approximately $4.1M annually. Benchmarking this against similar large-scale defense system development and sustainment contracts is challenging without more specific details on the system's capabilities and scope. However, the CPAF contract type suggests that the government aims to control costs while rewarding performance, which can be a good value proposition if managed effectively. The relatively low number of bids (2) might indicate a specialized market, but the full and open competition should have ensured a competitive baseline.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The data indicates two bids were received. While two bids represent some level of competition, it is on the lower end for a contract of this magnitude and duration. This suggests that the market for such specialized naval surveillance radar systems may be limited to a few key players, or that the specific requirements of the solicitation may have narrowed the field.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to solicit the best possible pricing through a wide range of potential bidders. However, with only two bids, the potential for significant price discovery might be constrained compared to scenarios with numerous competing offers.

Public Impact

The U.S. Navy benefits from advanced naval surveillance radar systems, enhancing its operational capabilities and situational awareness. This contract supports the development, integration, and sustainment of critical defense technology. The primary geographic impact is likely within naval bases and operational theaters where these systems will be deployed. The contract supports highly skilled jobs in engineering, manufacturing, and program management within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) could potentially lead to higher prices than a more robustly competed contract.
The Cost Plus Award Fee (CPAF) structure requires careful government oversight to ensure costs remain reasonable and award fees are justified.
Long contract duration (nearly 17 years) introduces risks related to technological obsolescence and changing defense requirements.

Positive Signals

Full and open competition, despite fewer bidders, aims to ensure a broad search for qualified contractors.
Northrop Grumman is a major defense contractor with a proven track record in complex systems integration.
The award fee mechanism incentivizes contractor performance, potentially leading to better outcomes and value.

Sector Analysis

This contract falls within the Defense Electronics and Systems sector, a critical component of national security spending. The market for advanced radar systems is highly specialized, dominated by a few large defense contractors capable of meeting stringent performance and security requirements. Spending in this area is driven by evolving threats and the need for technological superiority. Comparable spending benchmarks would typically involve other major defense platform upgrades or new system developments, often running into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

The data indicates that small business participation (sb: false) was not a primary set-aside consideration for this specific contract award. While Northrop Grumman is a large prime contractor, the nature of advanced defense systems often involves complex supply chains. It is possible that small businesses could be involved as subcontractors to Northrop Grumman, contributing specialized components or services. However, without specific subcontracting plans or goals detailed in the award, the direct impact on the small business ecosystem for this particular contract is unclear.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Award Fee (CPAF) structure necessitates robust government oversight to monitor costs, evaluate performance against established criteria, and determine appropriate award fees. Transparency is generally maintained through contract reporting mechanisms, though specific details of performance and cost breakdowns may be sensitive.

Related Government Programs

Naval Combat Systems
Radar Systems Development
Defense Electronics Procurement
Surveillance and Reconnaissance Systems
Department of Defense Major Defense Acquisition Programs

Risk Flags

Limited Competition
Long Contract Duration
Cost-Plus Award Fee Structure Requires Oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. NAVAL SURVEILLANCE RADARS DETECTION & TRACKING SYSTEM

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 $69.4 million.

What is the period of performance?

Start: 2008-03-11. End: 2025-09-10.

What is the specific capability and intended use of the "NAVAL SURVEILLANCE RADARS DETECTION & TRACKING SYSTEM"?

The specific capabilities and intended use of the "NAVAL SURVEILLANCE RADARS DETECTION & TRACKING SYSTEM" are not detailed in the provided data. However, based on the name, it is highly probable that this system is designed to detect, identify, and track various targets (such as aircraft, missiles, ships, or other vessels) at sea and in the air. Such systems are critical for naval operations, providing situational awareness, threat detection, and targeting information to support defensive and offensive missions. The "detection and tracking" functions imply advanced signal processing and data fusion capabilities to provide a comprehensive operational picture to naval commanders.

How does the Cost Plus Award Fee (CPAF) structure typically function in defense contracts?

A Cost Plus Award Fee (CPAF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs incurred, plus a fee. This fee consists of two parts: a base fee (typically a small percentage of the estimated cost) and an award fee. The award fee is earned based on the contractor's performance against specific criteria established by the government. These criteria often relate to technical achievement, schedule adherence, and cost control. The government unilaterally determines the amount of the award fee, incentivizing the contractor to exceed minimum performance requirements. This structure aims to balance cost control with the need for high performance in complex, often R&D-intensive, projects where outcomes can be uncertain.

What are the implications of having only two bidders for a contract of this size and duration?

Having only two bidders for a contract valued at $69.4 million over nearly 17 years suggests a highly specialized market. This limited competition could potentially reduce the government's leverage in price negotiations, as there are fewer alternatives to drive down costs. While full and open competition was utilized, the small number of bids might indicate high barriers to entry, such as significant technical expertise, existing infrastructure, or intellectual property requirements. This scenario necessitates careful evaluation of the proposals received to ensure the chosen contractor offers the best value, and robust contract management to mitigate risks associated with limited vendor choice over the long contract term.

What is Northrop Grumman Systems Corporation's general track record in providing defense systems?

Northrop Grumman Systems Corporation is a major American defense contractor with a long and extensive track record in developing and producing a wide array of advanced defense systems. They are known for their work in areas such as aerospace, including fighter jets, bombers, and unmanned aerial vehicles; C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems; cybersecurity; and space technology. Their portfolio includes significant programs for the U.S. military and its allies. Given their scale and expertise, they are frequently a prime contractor on large, complex defense contracts, including those involving radar, electronic warfare, and integrated battle management systems.

How does this contract's value and duration compare to typical spending on naval surveillance systems?

The $69.4 million award over approximately 17 years represents an average annual expenditure of roughly $4.1 million. This figure appears moderate for a system development and sustainment contract within the naval domain, especially considering the complexity of modern radar technology. Major naval platform programs or the development of entirely new, cutting-edge surveillance systems can often cost hundreds of millions or even billions of dollars over their lifecycle. This contract might represent a specific upgrade, sustainment phase, or a component system rather than a brand-new, large-scale platform acquisition. Without more context on the system's scope, it's difficult to definitively benchmark, but it falls within a plausible range for specialized defense electronics support.

What are the potential risks associated with a 17-year contract duration for advanced technology?

A contract duration of nearly 17 years for advanced technology, such as naval surveillance radars, presents several potential risks. Firstly, technological obsolescence is a significant concern; radar technology evolves rapidly, and a system designed today might be outdated long before the contract ends. Secondly, requirements can change due to evolving geopolitical landscapes or new threats, potentially making the original system specifications less relevant. Thirdly, long-term contracts can face budget uncertainties within the government's appropriations process. Finally, maintaining contractor focus and performance over such an extended period requires continuous oversight and adaptation to ensure the system remains effective and aligned with current needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002407R3352

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $185,308,217

Exercised Options: $95,054,475

Current Obligation: $69,396,532

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4091

IDV Type: IDC

Timeline