DoD awards $8.46B for E-2D Advanced Hawkeye Aircraft, a sole-source contract with Northrop Grumman

Contract Overview

Contract Amount: $8,457,894,781 ($8.5B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2018-02-15

End Date: 2030-02-01

Contract Duration: 4,369 days

Daily Burn Rate: $1.9M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: E-2D ADVANCED HAWKEYE AIRCRAFT (FRP-7)

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $8.46 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: E-2D ADVANCED HAWKEYE AIRCRAFT (FRP-7) Key points: 1. This contract represents a significant investment in a critical airborne early warning and control platform. 2. The long duration of the contract suggests a sustained need for these specialized aircraft. 3. Sole-source nature raises questions about potential price efficiencies and market alternatives. 4. Performance context is tied to the ongoing operational requirements of the U.S. Navy. 5. The aircraft manufacturing sector is characterized by high barriers to entry and specialized capabilities. 6. Risk indicators may include reliance on a single supplier and potential for cost overruns over the contract's life.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of direct competition. The total award value of $8.46 billion over approximately 12 years indicates a substantial commitment. Without comparable contracts or open market pricing, assessing whether this represents excellent value for money is difficult. The firm-fixed-price nature provides some cost certainty, but the absence of competition limits the government's ability to negotiate the most favorable terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Northrop Grumman was the only bidder. This approach is typically used when a unique capability or proprietary technology is involved, or when only one responsible source can fulfill the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: Taxpayers are potentially paying a premium due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative suppliers.

Public Impact

The U.S. Navy benefits directly through the acquisition of advanced airborne early warning and control aircraft. These aircraft provide critical intelligence, surveillance, and reconnaissance capabilities for national defense. The contract supports high-skilled jobs in the aerospace manufacturing sector, primarily in Florida. Enhanced operational readiness and strategic advantage for naval forces are key outcomes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration increases exposure to potential cost escalations over time.
High reliance on a single contractor for a critical defense system poses supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government within the defined scope.
Northrop Grumman is an established defense contractor with experience in complex aircraft manufacturing.
The E-2D Advanced Hawkeye is a technologically advanced platform essential for naval operations.

Sector Analysis

The E-2D Advanced Hawkeye falls within the aerospace and defense manufacturing sector, specifically focusing on specialized military aircraft. This sector is characterized by high research and development costs, stringent regulatory requirements, and long production cycles. Major defense contractors like Northrop Grumman dominate this market due to the significant capital investment and technical expertise required. Comparable spending benchmarks would involve other large-scale military aircraft procurement programs, which often involve multi-billion dollar awards over extended periods.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, nor is Northrop Grumman explicitly identified as a small business. Subcontracting opportunities for small businesses may exist within Northrop Grumman's supply chain, but the primary award is to a large prime contractor. The impact on the small business ecosystem is indirect, relying on the prime contractor's subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Naval Inspector General. Transparency is facilitated through contract award databases, but detailed cost breakdowns and performance metrics may be subject to classification or proprietary restrictions. Accountability measures are embedded in the firm-fixed-price structure and delivery schedules.

Related Government Programs

E-2 Hawkeye Program
Naval Aviation Programs
Airborne Early Warning and Control Systems
Defense Aircraft Manufacturing Contracts

Risk Flags

Sole-source award
Long contract duration
High total contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.46 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. E-2D ADVANCED HAWKEYE AIRCRAFT (FRP-7)

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 $8.46 billion.

What is the period of performance?

Start: 2018-02-15. End: 2030-02-01.

What is the historical spending trend for the E-2D Advanced Hawkeye program prior to this award?

Prior to this definitive contract, the E-2D Advanced Hawkeye program likely involved various contract actions for research, development, testing, and initial production. Analyzing historical spending would require examining previous contract awards for the E-2D, potentially including cost-plus and fixed-price development contracts. These earlier phases often involve significant R&D investment. Understanding the cumulative investment leading up to this full-rate production award provides context for the total program cost and the government's long-term commitment to the platform. Without specific historical data readily available for this query, it's assumed that prior spending was substantial, reflecting the complexity and advanced technology of the E-2D system.

How does the per-unit cost of the E-2D Advanced Hawkeye compare to similar airborne early warning aircraft?

Direct per-unit cost comparisons for the E-2D Advanced Hawkeye are difficult without access to specific contract line item details and production volumes associated with this $8.46 billion award. However, the E-2D is a highly specialized and technologically advanced platform, incorporating sophisticated radar, command and control systems, and mission equipment. Compared to less complex surveillance aircraft, its per-unit cost is expected to be significantly higher. Similar platforms, such as the Boeing E-7 Wedgetail (based on a commercial airliner), may offer different cost structures and capabilities. The E-2D's unique carrier-based operational requirements and specific mission set contribute to its specialized cost profile, making direct benchmarking challenging against non-carrier-capable or less integrated systems.

What are the key performance metrics and delivery schedules associated with this contract?

This contract specifies a firm-fixed-price structure with a delivery end date of February 1, 2030, indicating a long-term production schedule. Key performance metrics would typically revolve around meeting specified technical requirements, quality standards, and delivery timelines for each aircraft. While the exact metrics are not detailed in the provided data, they would likely include adherence to performance specifications for radar range, processing capabilities, communication systems, and overall system reliability. Failure to meet these metrics could result in penalties or contract modifications, depending on the specific terms negotiated. The duration suggests a phased delivery approach over more than a decade.

What is Northrop Grumman's track record with sole-source defense contracts of this magnitude?

Northrop Grumman has a long history of executing large, sole-source defense contracts, particularly in specialized areas like aerospace and defense systems. The company is a major prime contractor for numerous U.S. military programs, often involving complex, high-value systems where they possess unique capabilities or are the incumbent provider. Their track record includes managing multi-billion dollar contracts for aircraft, electronic warfare systems, and other advanced defense technologies. While sole-source awards can present challenges in terms of price negotiation, Northrop Grumman's extensive experience in the defense sector suggests they have established processes for managing such contracts, though oversight and negotiation remain critical.

What are the potential risks associated with relying solely on Northrop Grumman for the E-2D aircraft?

The primary risk associated with relying solely on Northrop Grumman for the E-2D Advanced Hawkeye is the lack of competitive pressure, which can lead to less favorable pricing for the government over the life of the contract. Additionally, dependence on a single supplier can create vulnerabilities in the supply chain; any production issues, labor disputes, or financial instability at Northrop Grumman could directly impact the delivery schedule and availability of these critical aircraft. Furthermore, without alternative providers, the government has limited leverage if costs increase significantly beyond initial projections or if technological advancements by potential competitors are not incorporated.

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

Solicitation ID: N0001917R0056

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904

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: $8,464,190,973

Exercised Options: $8,460,120,754

Current Obligation: $8,457,894,781

Actual Outlays: $234,383,836

Subaward Activity

Number of Subawards: 6871

Total Subaward Amount: $8,286,354,989

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline