DoD awards $404M for MQ-4C Triton long lead items to Northrop Grumman, a sole-source contract

Contract Overview

Contract Amount: $404,031,432 ($404.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2017-05-22

End Date: 2024-06-30

Contract Duration: 2,596 days

Daily Burn Rate: $155.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: IGF::OT::IGF MQ-4C TRITON LRIP 3 LONG LEAD ITEMS

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $404.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF MQ-4C TRITON LRIP 3 LONG LEAD ITEMS Key points: 1. Contract awarded on a cost-no-fee basis, indicating potential for cost overruns. 2. Long duration of over 7 years suggests a complex and lengthy acquisition process. 3. Sole-source award raises concerns about price competition and potential for inflated costs. 4. The contract supports the MQ-4C Triton program, a high-altitude, long-endurance unmanned aircraft system. 5. Significant funding allocated for long lead items highlights the early-stage nature of production. 6. The contract's value is substantial, reflecting the strategic importance of the Triton program.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific focus on long lead items for a complex defense system. The cost-no-fee structure means the government bears the risk of cost overruns, which is a significant concern. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if there's an opportunity for cost savings through competition. The substantial award amount suggests a high degree of complexity and specialized manufacturing involved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It also raises questions about whether alternative solutions or suppliers were adequately explored.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing bids, there is a reduced incentive for the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive the MQ-4C Triton aircraft for intelligence, surveillance, and reconnaissance (ISR) missions. The contract delivers essential components and manufacturing capabilities for a critical unmanned aerial system. The geographic impact is primarily centered around Northrop Grumman's facilities in California, where the aircraft is manufactured. The contract supports a specialized aerospace manufacturing workforce, including engineers, technicians, and production staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-no-fee structure shifts cost overrun risk to the government.
Long contract duration increases exposure to potential schedule delays and cost increases.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Supports a critical national defense program (MQ-4C Triton).
Secures long-lead production items for a complex aircraft.
Maintains specialized manufacturing capabilities within the U.S. aerospace sector.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on unmanned aerial systems. The market for high-altitude, long-endurance (HALE) drones is a specialized segment of the broader defense industry. Spending in this area is driven by evolving military requirements for persistent ISR capabilities. Comparable spending benchmarks would typically involve other major defense platform acquisitions, which often run into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to include specific small business set-asides, as indicated by 'sb: false'. Given the sole-source nature and the specialized manufacturing requirements for a complex defense system like the MQ-4C Triton, it is less likely that significant subcontracting opportunities for small businesses will be mandated or easily integrated. The focus is on a large prime contractor with established capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Inspector General's office may conduct audits or investigations into cost, performance, and compliance. Transparency is limited due to the sole-source award, but contract modifications and performance reports would be subject to internal review and potentially public reporting through systems like FPDS.

Related Government Programs

MQ-4C Triton Program
Unmanned Aerial Systems (UAS)
Naval Aviation Programs
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Long-Range Surveillance Aircraft

Risk Flags

Sole-source award
Cost-plus contract type (implied by CNF)
Long contract duration
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $404.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF MQ-4C TRITON LRIP 3 LONG LEAD ITEMS

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 $404.0 million.

What is the period of performance?

Start: 2017-05-22. End: 2024-06-30.

What is the historical spending trend for the MQ-4C Triton program?

Historical spending data for the MQ-4C Triton program indicates a significant and sustained investment by the Department of Defense. Prior to this $404 million award for long lead items, substantial funds have been allocated for research, development, testing, and initial production phases. The program has seen multi-year appropriations reflecting its strategic importance and the complexity of developing and fielding a HALE UAS. Analyzing past obligations and expenditures reveals a consistent commitment to the program's lifecycle, from initial concept through to operational deployment. This long-term financial commitment underscores the perceived value of the Triton's ISR capabilities for naval operations.

How does the cost-no-fee (CNF) contract structure impact value for money?

The Cost-No-Fee (CNF) contract structure, as seen in this award, shifts the financial risk of cost overruns entirely to the government. While it can incentivize contractors to perform work efficiently to avoid losses, it also removes the contractor's direct financial incentive to control costs, as they are guaranteed their fee regardless of the final project cost. This structure is often used in situations where costs are highly uncertain or when the government needs to ensure performance without the contractor bearing undue financial risk. For taxpayers, this means the final cost could be higher than anticipated if the contractor does not proactively manage expenses, as there is no direct profit motive tied to cost reduction.

What are the risks associated with a sole-source award for long lead items?

Sole-source awards for long lead items, like this one for the MQ-4C Triton, carry inherent risks. The primary risk is the lack of price competition, which can lead to higher costs for the government compared to a competitively bid contract. Without multiple bidders vying for the contract, the contractor has less incentive to offer the lowest possible price. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single supplier, potentially limiting innovation and future sourcing options. This can also create a dependency on the incumbent contractor, making future procurements more challenging and potentially more expensive.

What is Northrop Grumman's track record with similar large defense contracts?

Northrop Grumman has a long and extensive track record of managing and delivering large, complex defense systems for the U.S. military. The company is a major defense contractor with significant experience in aerospace, including the development and production of unmanned aerial vehicles, aircraft, and other advanced defense technologies. They have been involved in numerous high-value contracts across various military branches. While specific performance metrics for every contract vary, Northrop Grumman is generally recognized for its technical capabilities and its ability to handle programs of this scale. However, like many large defense contractors, they have also faced scrutiny regarding cost performance and schedule adherence on certain major programs.

How does this contract fit into the broader context of U.S. military ISR strategy?

This contract is a critical component of the U.S. military's broader Intelligence, Surveillance, and Reconnaissance (ISR) strategy, particularly for naval operations. The MQ-4C Triton is designed to provide persistent, wide-area surveillance capabilities over vast ocean areas, complementing other ISR assets like the P-8 Poseidon. Its ability to operate at high altitudes for extended periods allows for continuous monitoring of maritime domains, supporting functions such as anti-submarine warfare, battle damage assessment, and search and rescue. The investment in long lead items ensures the continued production pipeline for this strategic platform, reinforcing the Navy's commitment to maintaining situational awareness in contested environments and projecting power globally.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 92127

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: $404,031,432

Exercised Options: $404,031,432

Current Obligation: $404,031,432

Actual Outlays: $27,787,884

Subaward Activity

Number of Subawards: 1801

Total Subaward Amount: $836,764,328

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline