DoD awards Northrop Grumman $1.51B for G/ATOR GAN FRP LOT 1, a sole-source definitive contract

Contract Overview

Contract Amount: $1,511,353,722 ($1.5B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-06-07

End Date: 2029-04-13

Contract Duration: 3,598 days

Daily Burn Rate: $420.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: G/ATOR GAN FRP LOT 1 QTY 4

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $1.51 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: G/ATOR GAN FRP LOT 1 QTY 4 Key points: 1. Contract awarded to a single, established prime contractor, limiting competitive pricing benefits. 2. Long-term contract duration (nearly 10 years) suggests a critical, ongoing need for the system. 3. Favorable firm-fixed-price structure shifts cost risk to the contractor. 4. High contract value indicates significant investment in advanced sensor technology. 5. Focus on search, detection, navigation, and guidance systems points to critical defense capabilities. 6. Contract awarded by the Department of the Navy, highlighting naval aviation or maritime applications.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized technology. The firm-fixed-price contract type is generally favorable for the government, locking in costs. However, without competitive bids, it's difficult to ascertain if the $1.51 billion represents optimal value for money compared to potential market alternatives. The long duration suggests a sustained need, but the absence of competition raises questions about potential overpricing over the contract's life.

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. This typically occurs when only one responsible source can provide the required supplies or services. While this can expedite acquisition for unique capabilities, it bypasses the price discovery benefits inherent in a competitive bidding process. The lack of multiple bidders means the government did not benefit from a range of proposals and pricing strategies.

Taxpayer Impact: Taxpayers may not be receiving the most cost-effective solution due to the absence of competitive pressure to drive down prices.

Public Impact

The primary beneficiaries are the U.S. Navy warfighters who will receive advanced search, detection, navigation, and guidance systems. The contract delivers critical technology for enhancing situational awareness and operational effectiveness in naval platforms. Geographic impact is national, supporting defense readiness across various naval deployments. Workforce implications include sustaining high-skilled jobs within Northrop Grumman and its supply chain, particularly in Maryland.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs over the contract's lifespan.
Long contract duration increases exposure to potential cost overruns or scope creep if not managed tightly.
Lack of transparency in the sole-source justification process can obscure potential alternatives or better value propositions.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor, providing budget certainty.
Award to a major defense contractor with a track record suggests a high likelihood of successful technical execution.
Long-term nature of the contract indicates a strategic investment in a critical, enduring capability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on advanced sensor and navigation systems. The market for such specialized equipment is dominated by a few large, established prime contractors. The $1.51 billion value is significant, reflecting the complexity and strategic importance of the G/ATOR (Ground/Air Task-Oriented Radar) system. Comparable spending benchmarks would likely involve other major radar, sensor, or electronic warfare system procurements for military platforms.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there are limited direct opportunities for small businesses to participate as prime contractors. Subcontracting opportunities may exist, but their extent and nature would depend on Northrop Grumman's procurement strategy and the specific components and services required for the G/ATOR system.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the contract's performance requirements and delivery schedules. Transparency is limited due to the sole-source nature, but contract awards and basic details are typically reported. The Inspector General for the Department of Defense may conduct audits or investigations as deemed necessary.

Related Government Programs

G/ATOR Radar Systems
Naval Aviation Systems
Search and Detection Systems
Defense Electronics Manufacturing
Northrop Grumman Defense Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.51 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. G/ATOR GAN FRP LOT 1 QTY 4

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 Navy).

What is the total obligated amount?

The obligated amount is $1.51 billion.

What is the period of performance?

Start: 2019-06-07. End: 2029-04-13.

What is the specific capability and intended use of the G/ATOR GAN FRP LOT 1 system?

The G/ATOR (Ground/Air Task-Oriented Radar) system is a multi-role, multi-mission radar designed to provide air defense, counter-fire target acquisition, and air traffic control capabilities. LOT 1 specifically refers to the initial production and delivery phase for the Ground/Air variant. This system is crucial for enhancing situational awareness and providing critical targeting data for naval aviation and ground forces, enabling them to detect and track a wide range of threats, including aircraft, missiles, and ground targets. Its versatility allows it to adapt to various operational environments and mission requirements.

Why was this contract awarded on a sole-source basis, and what are the implications for cost?

The contract was awarded on a sole-source basis likely because Northrop Grumman is the sole developer and manufacturer of the G/ATOR system, possessing unique intellectual property and production capabilities. This often occurs with highly specialized, technologically advanced defense systems where developing a competitive alternative would be prohibitively expensive and time-consuming. The implication for cost is that the government does not benefit from competitive bidding, which typically drives down prices. While the firm-fixed-price structure shifts cost risk to the contractor, the absence of competition means the government relies heavily on negotiation and oversight to ensure a fair price, potentially leading to higher overall expenditure compared to a competed contract.

How does the firm-fixed-price (FFP) contract type benefit the government in this scenario?

The firm-fixed-price (FFP) contract type is highly beneficial for the government in this sole-source scenario. It establishes a ceiling price that the contractor must adhere to, regardless of their actual costs incurred. This shifts the financial risk of cost overruns entirely to Northrop Grumman. For the Department of the Navy, this provides significant budget certainty and predictability, as the total cost of the contract is known upfront. It incentivizes the contractor to manage their resources efficiently and control costs to maximize their profit margin, as any savings achieved below the fixed price directly contribute to their bottom line.

What is the significance of the long contract duration (nearly 10 years)?

The nearly 10-year duration (June 2019 to April 2029) for this contract signifies the long-term strategic importance and anticipated lifespan of the G/ATOR system within the Navy's operational framework. Such extended periods are common for major defense platforms and systems that require substantial development, integration, testing, and ongoing sustainment. It suggests that the G/ATOR is intended to be a cornerstone capability for naval forces for the foreseeable future, necessitating continuous production, potential upgrades, and logistical support over an extended period. This long-term commitment also allows for economies of scale in production and sustainment planning.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk associated with a sole-source contract of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than it would in a competitive environment. Another risk is contractor complacency; the absence of competition might reduce the incentive for the contractor to innovate or improve efficiency aggressively. Furthermore, sole-source awards can sometimes mask underlying issues or inefficiencies that might be exposed during a competitive evaluation. Ensuring robust oversight, performance metrics, and fair negotiation becomes paramount to mitigate these risks.

How does this contract fit into Northrop Grumman's broader portfolio and the defense electronics market?

This contract is a significant component of Northrop Grumman's defense electronics and radar systems portfolio. The G/ATOR system represents a key technological capability that aligns with the company's strategic focus on advanced sensing, electronic warfare, and integrated air and missile defense. For the broader defense electronics market, it underscores the trend towards multi-functional, highly integrated systems that can perform multiple roles, reducing the need for separate, specialized equipment. The substantial value of this contract highlights the ongoing demand and investment in sophisticated radar technology by major military branches like the U.S. Navy.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: M6785418R0217

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

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: $1,511,606,603

Exercised Options: $1,511,353,722

Current Obligation: $1,511,353,722

Actual Outlays: $558,074,861

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $15,995,332

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline