Naval Air Systems Command awards $86.3M contract for drone systems, with Northrop Grumman as prime

Contract Overview

Contract Amount: $86,300,045 ($86.3M)

Contractor: Teledyne, Inc

Awarding Agency: Department of Defense

Start Date: 2001-04-05

End Date: 2011-08-10

Contract Duration: 3,779 days

Daily Burn Rate: $22.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200108!000727!1700!AT719 !NAVAL AIR SYSTEMS COMMAND !N0001901C0041 !A!N!*!N! !20010405!20040404!008391203!008255408!016435559!N!NORTHROP GRUMMAN CORPORATION !17066 GOLDENTOP ROAD !SAN DIEGO !CA!92127!02238!037!06!ANTELOPE CENTER !LOS ANGELES !CALIFORNIA!+000023594712!N!N!000000000000!1550!DRONES !A2 !MISSILE AND SPACE SYSTEMS !2CPK!BQM-74E SSAT !336414!*!*!3! ! ! !*!*!*!B!*!*!A! !D !N!J!1!001!N!1B!A!W!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $86.3 million to TELEDYNE, INC for work described as: 200108!000727!1700!AT719 !NAVAL AIR SYSTEMS COMMAND !N0001901C0041 !A!N!*!N! !20010405!20040404!008391203!008255408!016435559!N!NORTHROP GRUMMAN CORPORATION !17066 GOLDENTOP ROAD !SAN DIEGO !CA!92127!02238!037!06!ANTELOPE CENTER !LOS A… Key points: 1. Contract awarded for drone systems, indicating investment in unmanned aerial capabilities. 2. The contract's value suggests a significant program requiring specialized manufacturing. 3. Sole-source award raises questions about potential cost efficiencies and market competition. 4. Fixed-price contract type aims to control costs, but oversight is crucial for sole-source awards. 5. The duration of the contract implies a long-term need for these systems. 6. Northrop Grumman's role as prime contractor highlights its position in the defense sector.

Value Assessment

Rating: fair

The contract value of $86.3 million for drone systems appears substantial. Without specific benchmarks for comparable drone systems or detailed cost breakdowns, it is difficult to definitively assess value for money. However, as a sole-source award, there is an inherent risk of less competitive pricing. Further analysis would require comparing the unit costs and capabilities to similar systems procured through competitive means or to industry standards for advanced drone technology.

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 source is capable of meeting the government's requirements, or in cases of urgent need. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: For taxpayers, a sole-source award means less assurance of obtaining the best possible price. The absence of competition removes the downward pressure on costs that typically arises from a bidding process.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring advanced drone capabilities. The contract delivers specialized drone systems, likely for reconnaissance, surveillance, or other tactical missions. The geographic impact is primarily within the defense industrial base, with Northrop Grumman's facilities in California being a key location. Workforce implications include skilled labor in aerospace engineering, manufacturing, and program management at Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the procurement process due to sole-source nature.
Potential for cost overruns if not rigorously managed due to lack of competitive pressure.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to a major defense contractor like Northrop Grumman suggests a focus on proven capabilities.
Long contract duration indicates a sustained need for the technology.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on unmanned aerial systems (drones). The market for defense drones is characterized by high technological sophistication, significant R&D investment, and a concentration of major prime contractors. Spending in this area is driven by evolving military requirements for intelligence, surveillance, reconnaissance, and strike capabilities. Comparable spending benchmarks would involve analyzing other large-scale drone procurement contracts within the DoD.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct impact on small business participation may be limited unless Northrop Grumman actively includes them in its supply chain. Further investigation into subcontracting plans would be necessary to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the Naval Air Systems Command (NAVAIR). As a sole-source award, rigorous oversight of performance, quality, and cost is particularly important to ensure value for money. Transparency measures would include contract reporting and potentially program reviews, though the sole-source nature might limit public disclosure of detailed cost data.

Related Government Programs

Unmanned Aerial Vehicle (UAV) programs
Missile and Space Systems Procurement
Defense Advanced Research Projects Agency (DARPA) initiatives
Naval Aviation modernization efforts

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.3 million to TELEDYNE, INC. 200108!000727!1700!AT719 !NAVAL AIR SYSTEMS COMMAND !N0001901C0041 !A!N!*!N! !20010405!20040404!008391203!008255408!016435559!N!NORTHROP GRUMMAN CORPORATION !17066 GOLDENTOP ROAD !SAN DIEGO !CA!92127!02238!037!06!ANTELOPE CENTER !LOS ANGELES !CALIFORNIA!+000023594712!N!N!000000000000!1550!DRONES !A2 !MISSILE AND SPACE SYSTEMS !2CPK!BQM-74E SSAT !336414!*!*!3! ! ! !*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is TELEDYNE, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $86.3 million.

What is the period of performance?

Start: 2001-04-05. End: 2011-08-10.

What is the specific capability and intended use of the BQM-74E SSAT drone system being procured?

The BQM-74E SSAT (Surface-to-Surface Aerial Target) is a subscale drone system primarily used as a target for training and testing missile systems. It simulates enemy aircraft or missiles, providing a realistic threat environment for naval and air defense forces. The 'SSAT' designation suggests it can be launched from surface platforms, in addition to traditional aerial launch methods. Its role is crucial for ensuring the effectiveness of defensive weapon systems by providing a challenging and representative target during exercises and evaluations.

How does the $86.3 million contract value compare to historical spending on similar target drone systems?

Comparing the $86.3 million contract value requires understanding the quantity of BQM-74E SSAT systems procured and the contract's duration. Historical data for similar target drones, such as the MQM-170 Outlaw or various BQM series drones, would be needed for a direct comparison. However, given the duration of over 10 years (from initial award date to potential end date), the annual spending averages around $8 million. This figure needs to be contextualized against the complexity, capabilities, and lifespan of the specific drone model, as well as the inflationary impact over the contract period. Without specific unit costs or quantities, a precise benchmark is challenging, but the overall value suggests a significant, long-term sustainment or production program for a critical training asset.

What are the primary risks associated with a sole-source award for defense systems like the BQM-74E SSAT?

The primary risks associated with a sole-source award for defense systems like the BQM-74E SSAT include potential for inflated pricing due to the lack of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in cost justification. The government may not be receiving the best possible value for its investment. Furthermore, reliance on a single source can create supply chain vulnerabilities and limit flexibility if requirements change or if the sole provider encounters production issues. Robust contract oversight and negotiation are critical to mitigate these risks.

What is Northrop Grumman Corporation's track record with producing drone systems for the U.S. military?

Northrop Grumman Corporation has a substantial and well-established track record in producing a wide array of unmanned aerial systems (UAS) and related technologies for the U.S. military. They are known for developing and manufacturing high-profile platforms such as the RQ-4 Global Hawk, a high-altitude, long-endurance surveillance drone, and the MQ-8 Fire Scout, a vertical takeoff and landing (VTOL) tactical unmanned aerial system. Their expertise spans various aspects of drone technology, including airframes, avionics, sensors, and mission systems. This extensive experience positions them as a capable provider for complex drone systems like the BQM-74E SSAT.

How does the $86.3 million contract align with broader trends in U.S. military spending on unmanned systems?

The $86.3 million contract for the BQM-74E SSAT drone system aligns with the broader U.S. military trend of increasing investment in unmanned systems across all branches. There is a significant strategic push towards leveraging unmanned platforms for intelligence, surveillance, reconnaissance (ISR), electronic warfare, and strike missions, often at lower risk to personnel and potentially at a lower operational cost compared to manned platforms. While the BQM-74E is a target drone, its procurement reflects the overall emphasis on advanced aerial capabilities, including the need for realistic training and testing environments that support the development and deployment of more sophisticated operational unmanned systems.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: ATI Inc. (UEI: 949262737)

Address: 17066 GOLDENTOP ROAD, SAN DIEGO, CA, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline