DoD Awards Northrop Grumman $341.7M for E-2D FMS Integration, Sole-Source Contract
Contract Overview
Contract Amount: $34,175,117 ($34.2M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2017-06-27
End Date: 2022-08-31
Contract Duration: 1,891 days
Daily Burn Rate: $18.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: INCORPORATION OF FLIGHT MANAGEMENT SYSTEM (FMS) INTO E-2D AIRCRAFT
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32904
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $34.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: INCORPORATION OF FLIGHT MANAGEMENT SYSTEM (FMS) INTO E-2D AIRCRAFT Key points: 1. Significant investment in advanced aircraft capabilities. 2. Sole-source award raises questions about competition and price. 3. Long contract duration (1891 days) suggests complex integration. 4. Focus on specialized aircraft parts manufacturing sector.
Value Assessment
Rating: questionable
The contract type is Cost Plus Incentive Fee, which can lead to cost overruns if not managed tightly. Benchmarking is difficult without more detailed cost breakdowns and comparison to similar FMS integration projects.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Northrop Grumman. This limits price discovery and potentially increases costs for taxpayers as competitive pressure is absent.
Taxpayer Impact: The lack of competition for this significant contract may result in higher costs for taxpayers compared to a competitively awarded contract.
Public Impact
Enhances critical intelligence, surveillance, and reconnaissance capabilities for the E-2D Hawkeye aircraft. Supports the modernization of the U.S. Navy's airborne early warning fleet. Potential for follow-on contracts and sustainment services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
Positive Signals
- Critical defense capability enhancement
- Experienced contractor
Sector Analysis
This contract falls within the Other Aircraft Parts and Auxiliary Equipment Manufacturing sector. Spending in this sector is driven by defense modernization and platform upgrades, with significant investments often going to prime contractors for complex systems integration.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large prime contractor. There is no indication of small business participation in this specific award, which is common for sole-source, large-scale system integration contracts.
Oversight & Accountability
The Department of Defense, through the Defense Contract Management Agency, is responsible for oversight. The cost-plus incentive fee structure requires diligent monitoring to ensure cost control and contractor performance.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Potential for cost overruns
- Contract duration and complexity
- Reliance on a single contractor
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, fl, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $34.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. INCORPORATION OF FLIGHT MANAGEMENT SYSTEM (FMS) INTO E-2D 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 $34.2 million.
What is the period of performance?
Start: 2017-06-27. End: 2022-08-31.
What is the estimated total cost savings that could have been achieved through a competitive bidding process for this FMS integration?
Quantifying exact savings from a sole-source award is challenging without a competitive baseline. However, industry studies suggest competitive procurements can yield savings ranging from 10% to 30% or more compared to sole-source contracts, depending on the complexity and market dynamics. This could translate to tens of millions of dollars for a contract of this magnitude.
What are the specific risks associated with the Cost Plus Incentive Fee (CPIF) contract type in this context?
The CPIF structure incentivizes the contractor to meet cost targets but also carries risks. If the target cost is set too high, the government may overpay. Conversely, if the target is too low and the contractor exceeds it significantly, the incentive fee might not adequately motivate cost reduction. Close monitoring of performance and cost is crucial to mitigate these risks.
How will the incorporation of the FMS impact the operational effectiveness and lifecycle costs of the E-2D aircraft?
The FMS incorporation is intended to significantly enhance the E-2D's operational effectiveness by improving its command and control, surveillance, and communication capabilities. While initial integration costs are substantial, the long-term goal is to improve mission performance and potentially reduce lifecycle costs through more integrated and efficient systems, though this depends heavily on the success of the integration and subsequent sustainment.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001914R0023
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $34,175,117
Exercised Options: $34,175,117
Current Obligation: $34,175,117
Actual Outlays: $2,864,444
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $121,760
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0001915G0026
IDV Type: BOA
Timeline
Start Date: 2017-06-27
Current End Date: 2022-08-31
Potential End Date: 2022-08-31 00:00:00
Last Modified: 2022-09-01
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