DoD's $22.9M Interrogator Set Purchase for Air Traffic Control Lacked Competition

Contract Overview

Contract Amount: $22,949,084 ($22.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2007-10-01

End Date: 2010-12-15

Contract Duration: 1,171 days

Daily Burn Rate: $19.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY07 BUY OF UPX-24 INTERROGATOR SETS, CIS AND RETROFIT KITS

Place of Performance

Location: WOODLAND HILLS, LOS ANGELES County, CALIFORNIA, 91367

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $22.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FY07 BUY OF UPX-24 INTERROGATOR SETS, CIS AND RETROFIT KITS Key points: 1. The contract awarded to Northrop Grumman Systems Corporation for UPX-24 Interrogator Sets represents a significant investment in air traffic control modernization. 2. The sole-source nature of this award raises questions about potential price inflation and the absence of market-driven cost efficiencies. 3. A single awardee limits opportunities for innovation and potentially restricts the government's access to a broader range of technological solutions. 4. The firm-fixed-price contract type suggests that cost risks were largely transferred to the contractor, but the lack of competition hinders verification of fair pricing. 5. The duration of the contract (over 3 years) indicates a substantial commitment to this specific system, underscoring the importance of competitive sourcing for future procurements. 6. The absence of small business set-aside provisions means that opportunities for smaller, specialized firms in the defense supply chain were not explicitly pursued. 7. The procurement falls under the Air Traffic Control NAICS code, highlighting its role in critical infrastructure management within the Department of the Navy.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, potentially niche, nature of the UPX-24 Interrogator Sets. Without competitive bids, it's difficult to ascertain if the $22.9 million price reflects a fair market value or if it includes a premium due to the lack of alternatives. Comparing it to similar procurements for advanced air traffic control systems would be necessary, but such data may be limited for specialized military equipment. The firm-fixed-price structure shifts risk to the contractor, but the absence of competition prevents a robust assessment of whether the price is truly competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not conduct a competitive bidding process. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of multiple bidders means there was no direct price comparison or market pressure to drive down costs. This approach can lead to higher prices than might be achieved in a competitive environment, as the contractor faces no direct threat from rivals.

Taxpayer Impact: Taxpayers may have paid a premium for these interrogator sets due to the absence of competition. Without competing offers, the government lacked the leverage to negotiate the lowest possible price, potentially resulting in a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense requiring advanced air traffic control capabilities. The contract delivers UPX-24 Interrogator Sets, CIS (Combat Identification System), and retrofit kits, enhancing the identification and tracking of aircraft. The geographic impact is likely concentrated within naval air stations and operational areas where these systems are deployed for air traffic management. Workforce implications include the need for trained personnel to operate, maintain, and integrate these new systems into existing air traffic control infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs for taxpayers.
Lack of competition may stifle innovation by not encouraging alternative solutions.
Absence of small business considerations means potential missed opportunities for specialized firms.
Limited transparency in the justification for sole-source procurement could obscure potential issues.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Award to a large, established defense contractor like Northrop Grumman suggests a focus on proven capabilities.
Procurement addresses a specific need within air traffic control, potentially enhancing operational safety and efficiency.

Sector Analysis

The defense sector, particularly within aerospace and electronic systems, is characterized by high R&D costs, long product lifecycles, and significant government investment. Air traffic control systems, whether for civilian or military use, represent a critical component of national infrastructure. Spending in this area often involves specialized technologies and stringent performance requirements. Comparable spending benchmarks would likely involve other procurements of radar, identification, or communication systems for aviation, often awarded through competitive processes to ensure value for money.

Small Business Impact

This contract did not include any small business set-aside provisions, nor is there an indication of subcontracting goals for small businesses. The award to a large prime contractor like Northrop Grumman suggests that the primary focus was on fulfilling the technical requirements through an established entity. This approach may limit opportunities for smaller, innovative firms that could potentially offer specialized components or services related to air traffic control technology, thereby not fully leveraging the small business ecosystem.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the delivery of the specified interrogator sets and kits according to the firm-fixed-price agreement. Transparency is limited by the sole-source nature of the award; justifications for such awards are typically reviewed internally and may not be publicly detailed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the procurement or execution phases.

Related Government Programs

DoD Air Traffic Control Systems
Military Identification Friend or Foe (IFF) Systems
Naval Aviation Support Equipment
Defense Electronics Procurement
Airspace Management Technology

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited innovation opportunities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FY07 BUY OF UPX-24 INTERROGATOR SETS, CIS AND RETROFIT KITS

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 $22.9 million.

What is the period of performance?

Start: 2007-10-01. End: 2010-12-15.

What is the track record of Northrop Grumman Systems Corporation in delivering similar air traffic control or identification systems to the DoD?

Northrop Grumman Systems Corporation has a long history of providing complex systems to the Department of Defense, including radar, electronic warfare, and communication systems. Their experience in aerospace and defense manufacturing positions them as a capable provider for critical components like interrogator sets. While specific details on past UPX-24 deliveries might be proprietary, the company's general track record suggests a capacity to meet stringent military specifications. However, the absence of competition for this specific contract means that performance on this award cannot be directly benchmarked against rival offerings, making it harder to assess value beyond meeting basic contractual requirements.

How does the $22.9 million cost compare to similar procurements of air traffic control interrogator sets, considering the sole-source nature?

Direct cost comparisons for this specific UPX-24 Interrogator Set procurement are difficult due to its sole-source award and the specialized nature of military equipment. In a competitive environment, multiple bids would provide a clear benchmark for fair pricing. The $22.9 million figure, awarded without competition, carries a higher risk of being above market rate. To assess value, one would need to compare it against historical sole-source awards for similar systems or against the estimated cost if it had been competed. Without such comparative data, it's challenging to definitively state whether the price represents good value for taxpayers, though the lack of competition inherently raises concerns about potential overpayment.

What are the primary risks associated with awarding a sole-source contract for critical air traffic control technology?

The primary risks of a sole-source award for critical technology like air traffic control interrogator sets include inflated pricing due to the absence of competitive pressure, limited innovation as there's no incentive for contractors to offer superior or more cost-effective alternatives, and potential vendor lock-in. Taxpayers may bear a higher cost, and the government might not benefit from the latest technological advancements that could emerge from a competitive market. Furthermore, sole-source awards can sometimes mask underlying issues with market research or acquisition planning, potentially leading to suboptimal long-term solutions.

What is the expected effectiveness and impact of the UPX-24 Interrogator Sets on air traffic control operations within the Navy?

The UPX-24 Interrogator Sets are designed to enhance air traffic control capabilities by improving the identification and tracking of aircraft. They work in conjunction with radar systems to interrogate transponders on aircraft, providing crucial data for distinguishing friendly, hostile, or unknown targets. For the Navy, this translates to improved situational awareness in potentially complex and high-traffic operational environments, such as carrier strike groups or busy naval air stations. Enhanced identification accuracy contributes directly to flight safety, operational security, and efficient airspace management, which are paramount for military aviation operations.

What has been the historical spending pattern for air traffic control systems by the Department of the Navy?

Historical spending by the Department of the Navy on air traffic control (ATC) systems likely shows a consistent need for modernization and upgrades to maintain operational readiness and safety. This spending would encompass a range of technologies, including radar, communication systems, navigation aids, and identification systems like interrogators. Procurement patterns often involve a mix of competitive bids for standard equipment and sole-source or limited competition awards for highly specialized or integrated systems, particularly those tied to specific platforms or legacy technologies. Analyzing past spending would reveal trends in technology adoption, contractor relationships, and the proportion of competitive versus non-competitive awards within the ATC domain.

Are there any known issues or performance concerns related to Northrop Grumman's previous contracts for similar military identification systems?

Information regarding specific performance issues on past Northrop Grumman contracts for similar military identification systems is not publicly detailed in this data. Generally, large defense contractors like Northrop Grumman have extensive contract histories, and while most are successful, occasional performance issues or contract disputes can arise. Without access to contract performance reports, past performance reviews, or specific program histories, it is difficult to ascertain any particular concerns related to this specific type of system. The sole-source nature of this award means that past performance was likely a key factor in the decision, but the details of that assessment are not provided.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Air Traffic Control

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001907R0034

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 21240 BURBANK BLVD, WOODLAND HILLS, CA, 32

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: $22,949,084

Exercised Options: $22,949,084

Current Obligation: $22,949,084

Contract Characteristics

Cost or Pricing Data: YES

Timeline