Northrop Grumman's G/ATOR system development contract awarded $877M, facing cost overruns and schedule delays

Contract Overview

Contract Amount: $877,281,533 ($877.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2007-03-30

End Date: 2017-08-23

Contract Duration: 3,799 days

Daily Burn Rate: $230.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: GROUND/AIR TASK ORIENTED RADAR (G/ATOR) SYSTEM DEVELOPMENT

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $877.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: GROUND/AIR TASK ORIENTED RADAR (G/ATOR) SYSTEM DEVELOPMENT Key points: 1. The contract's cost has significantly exceeded initial estimates, indicating potential value-for-money concerns. 2. Limited competition dynamics may have contributed to pricing outcomes. 3. Schedule delays and cost overruns are key risk indicators for this program. 4. Performance context shows a protracted development cycle for a complex radar system. 5. This contract positions Northrop Grumman as a key supplier in advanced defense radar systems. 6. The cost-plus-fixed-fee structure may incentivize cost increases over efficiency.

Value Assessment

Rating: questionable

The total awarded value of $877.3 million for the G/ATOR system development appears substantial. Benchmarking against similar complex radar system development contracts is challenging due to the unique capabilities of G/ATOR. However, the reported cost overruns and schedule delays suggest that the initial pricing may not have accurately reflected the program's complexity and risks, leading to a questionable value proposition for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive sign for price discovery. However, the number of bidders (5) for such a specialized and complex system might be limited. The competitive landscape for advanced radar systems can be constrained, potentially impacting the extent to which competition drove down costs.

Taxpayer Impact: While full and open competition was utilized, the ultimate cost savings for taxpayers are diminished by the significant cost overruns and extended development timeline experienced under this contract.

Public Impact

The U.S. Marine Corps is the primary beneficiary, receiving a critical multi-role radar system. The G/ATOR system provides advanced situational awareness, air defense, and counter-battery radar capabilities. The contract's impact is primarily national, supporting U.S. defense readiness. The program supports a specialized workforce in advanced electronics manufacturing and systems integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overruns indicate potential issues with initial cost estimation or program execution.
Extended schedule delays suggest challenges in development and integration, impacting operational readiness.
The cost-plus-fixed-fee contract type can sometimes lead to less incentive for cost control compared to fixed-price contracts.
The complexity of the G/ATOR system presents inherent technical risks that may have been underestimated.

Positive Signals

Awarded under full and open competition, suggesting an effort to achieve competitive pricing.
The development of the G/ATOR system represents a significant technological advancement for defense capabilities.
Northrop Grumman has a substantial track record in aerospace and defense systems development.

Sector Analysis

The Ground/Air Task-Oriented Radar (G/ATOR) system falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high R&D investment, long development cycles, and significant government procurement. The market for advanced radar systems is dominated by a few large defense contractors. Comparable spending benchmarks are difficult to establish precisely due to the unique, multi-mission nature of G/ATOR, but large-scale defense system development contracts often run into hundreds of millions or billions of dollars.

Small Business Impact

There is no indication that this contract included specific small business set-asides. Given the specialized nature of the G/ATOR system development, it is likely that the prime contractor, Northrop Grumman, would subcontract significant portions of the work. The extent to which small businesses participate as subcontractors will be crucial for their involvement in this advanced technology sector.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the relevant program executive office within the Department of Defense. Accountability measures would include regular reporting on cost, schedule, and performance. Transparency is generally maintained through contract reporting mechanisms, though detailed operational data may be classified. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

AN/APG-81 (F-35 Radar)
Patriot Missile System
THAAD Missile System
E-2D Advanced Hawkeye

Risk Flags

Cost Overruns
Schedule Delays
Technical Complexity
Contract Type Incentives

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $877.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. GROUND/AIR TASK ORIENTED RADAR (G/ATOR) SYSTEM DEVELOPMENT

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 $877.3 million.

What is the period of performance?

Start: 2007-03-30. End: 2017-08-23.

What is Northrop Grumman's track record with large-scale defense development contracts?

Northrop Grumman has a long and extensive history of developing and producing complex defense systems, including aircraft, spacecraft, and advanced electronics. They have been involved in numerous large-scale government contracts, often requiring sophisticated engineering and integration capabilities. While their track record includes many successful programs, like the B-2 bomber and the James Webb Space Telescope (managed by NASA, but with significant Northrop Grumman involvement), they have also faced challenges with cost and schedule on other complex development efforts. This history suggests a capacity for high-level technical achievement but also highlights the inherent risks associated with cutting-edge defense development programs.

How does the cost performance of the G/ATOR contract compare to similar radar development programs?

Direct comparisons are difficult due to the unique multi-mission capabilities of the G/ATOR system, which integrates air defense, counter-battery, and ground surveillance functions. However, large, complex defense acquisition programs frequently experience cost growth and schedule delays. Reports indicate that the G/ATOR program has faced significant cost increases and schedule slippages beyond initial projections. While specific percentage overruns vary widely across defense programs, the challenges encountered in G/ATOR development are not uncommon for systems of this technological sophistication and scope, suggesting that initial cost estimates may have been optimistic or that unforeseen technical hurdles arose during development.

What are the primary risks associated with the G/ATOR system development contract?

The primary risks associated with the G/ATOR system development contract include technical complexity, schedule delays, and cost overruns. The integration of multiple radar functions into a single system presents significant engineering challenges. Furthermore, the defense acquisition environment is prone to unforeseen issues, such as supply chain disruptions, evolving threat assessments, and changes in technological requirements, all of which can impact both the timeline and the budget. The cost-plus-fixed-fee contract type, while offering flexibility, can also introduce risks related to cost control if not managed diligently. Ensuring the system meets all performance specifications within budget and on time remains a key challenge.

How effective has the G/ATOR program been in delivering its intended capabilities to the U.S. Marine Corps?

The effectiveness of the G/ATOR program in delivering its intended capabilities is assessed through testing, operational evaluations, and eventual deployment. While the system is designed to provide a revolutionary leap in situational awareness and air defense for the Marine Corps, its full operational effectiveness is contingent upon successful completion of development, rigorous testing, and integration into existing military structures. Reports of delays and cost growth suggest that the path to full operational capability has been protracted. The ultimate measure of effectiveness will be the system's performance in real-world scenarios and its contribution to mission success once fully fielded and operational.

What are the historical spending patterns for advanced radar systems procurement by the Department of Defense?

Historical spending patterns for advanced radar systems by the Department of Defense reveal a consistent and substantial investment in maintaining technological superiority. Budgets for radar development and procurement often run into billions of dollars over the lifecycle of major programs. These systems are critical for intelligence, surveillance, reconnaissance (ISR), air and missile defense, and battle management. Spending is typically concentrated among a few prime defense contractors capable of handling the complexity and scale of these projects. The G/ATOR program's awarded value of nearly $877 million aligns with the high-cost nature of developing and fielding state-of-the-art radar technology, reflecting the ongoing demand for advanced sensing capabilities in modern warfare.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: M6785405R2000

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580A W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $922,422,980

Exercised Options: $882,531,704

Current Obligation: $877,281,533

Actual Outlays: $649,435

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline