DoD Awards Northrop Grumman $130M for E-6B Aircraft Upgrade, Facing Potential Cost Overruns
Contract Overview
Contract Amount: $129,538,611 ($129.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2012-03-15
End Date: 2023-04-30
Contract Duration: 4,063 days
Daily Burn Rate: $31.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: BLOCK II MODIFICATION UPGRADE TO THE E-6B AIRCRAFT
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128
Plain-Language Summary
Department of Defense obligated $129.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: BLOCK II MODIFICATION UPGRADE TO THE E-6B AIRCRAFT Key points: 1. Significant contract value for aircraft modification. 2. Northrop Grumman is a major defense contractor, indicating potential for limited competition in specialized areas. 3. Risk of cost overruns due to long duration and firm-fixed-price contract type. 4. Spending falls within the broad 'Aircraft Manufacturing' sector.
Value Assessment
Rating: questionable
The contract value of $129.5M over 4063 days suggests a high per-unit cost for modification. Benchmarking against similar complex aircraft upgrades is necessary to assess value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically promotes price discovery. However, the long duration and specialized nature of the upgrade could limit future competitive opportunities.
Taxpayer Impact: Taxpayer funds are being used for a critical military asset upgrade. Ensuring cost-effectiveness through robust oversight is paramount.
Public Impact
Enhances the operational capabilities of the E-6B Mercury aircraft, a vital command and control platform. Supports national security by modernizing aging military aviation assets. Potential for job creation within the aerospace and defense industry.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration increases risk of scope creep and cost escalation.
- Firm-fixed-price contract may not fully account for unforeseen technical challenges in complex upgrades.
- Lack of small business participation noted.
Positive Signals
- Awarded under full and open competition.
- Critical upgrade to a strategic military asset.
Sector Analysis
This contract falls under the Aircraft Manufacturing sector, which is characterized by high R&D costs and long production cycles. Defense spending in this sector is crucial for maintaining technological superiority.
Small Business Impact
The data indicates no small business participation in this contract. Opportunities for small businesses in specialized aerospace manufacturing and support roles may be limited.
Oversight & Accountability
The Defense Contract Management Agency (DCMA) is responsible for oversight. Given the contract's duration and value, continuous monitoring for performance and cost control is essential.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Potential for cost overruns due to long duration.
- Firm-fixed-price risk for complex, long-term modifications.
- Lack of small business participation.
- Dependency on a single large contractor for critical upgrades.
Tags
aircraft-manufacturing, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $129.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. BLOCK II MODIFICATION UPGRADE TO THE E-6B AIRCRAFT
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 $129.5 million.
What is the period of performance?
Start: 2012-03-15. End: 2023-04-30.
What is the projected return on investment for this E-6B upgrade in terms of extended operational life and enhanced mission capabilities?
The projected ROI is tied to extending the operational life of the E-6B, a critical airborne command post, by an estimated 10-15 years. Enhanced mission capabilities include improved communication systems and survivability, directly supporting national security objectives. Quantifying the exact financial ROI is challenging due to the strategic nature of the asset, but the operational benefits are considered substantial.
What specific risks are associated with the firm-fixed-price contract type for a long-duration aircraft modification project?
A firm-fixed-price contract for a long-duration modification carries risks of cost overruns if unforeseen technical challenges arise or material costs escalate significantly. The contractor may face pressure to cut corners on quality to maintain profitability, potentially impacting long-term reliability. Conversely, the government is protected from cost increases unless contract scope changes.
How effectively does this upgrade address the obsolescence of key E-6B systems and ensure future interoperability?
The upgrade aims to replace aging avionics, communication, and computing systems with modern, more capable alternatives. This directly addresses obsolescence, ensuring the E-6B can continue to perform its critical command and control functions. Interoperability with current and future military networks is a key design consideration, though ongoing vigilance will be needed to maintain compatibility as other systems evolve.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0001909R0276
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 15120 INNOVATION DR, SAN DIEGO, CA, 92128
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $129,888,399
Exercised Options: $129,888,399
Current Obligation: $129,538,611
Actual Outlays: $1,364,647
Subaward Activity
Number of Subawards: 1291
Total Subaward Amount: $1,057,523,566
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-03-15
Current End Date: 2023-04-30
Potential End Date: 2023-04-30 00:00:00
Last Modified: 2025-10-30
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