DoD's $149M MQ-4C Sustainment Contract Awarded to Northrop Grumman Raises Questions on Competition and Value
Contract Overview
Contract Amount: $148,909,474 ($148.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2019-03-16
End Date: 2023-06-30
Contract Duration: 1,567 days
Daily Burn Rate: $95.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: MQ-4C SUSTAINMENT ENGINEERING SUPPORT
Place of Performance
Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $148.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: MQ-4C SUSTAINMENT ENGINEERING SUPPORT Key points: 1. The contract awarded to Northrop Grumman for MQ-4C sustainment engineering support is a significant expenditure. 2. Lack of competition is a major concern, potentially leading to inflated costs and reduced innovation. 3. The 'All Other Professional, Scientific, and Technical Services' NAICS code suggests a broad category, making direct benchmarking difficult. 4. The sector is Defense, specifically aviation sustainment, which often involves complex and specialized services.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee (CPFF) structure, combined with a lack of competition, makes a direct pricing assessment challenging. Without competitive bids, it's difficult to ascertain if the $149 million represents a fair market price for the services rendered.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and negotiation leverage for the government, potentially resulting in higher costs than if multiple vendors had competed.
Taxpayer Impact: The lack of competition for this substantial contract raises concerns about taxpayer value, as the government may be overpaying for sustainment engineering services.
Public Impact
Taxpayers may be footing a higher bill due to the absence of competitive bidding. The long duration of the contract (over 4 years) means sustained potential overpayment. Dependence on a single contractor for critical sustainment could pose risks to operational readiness if issues arise. Lack of transparency in the sole-source award process can erode public trust.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Cost-plus contract type
- Broad NAICS code
Positive Signals
- Essential support for a critical defense asset (MQ-4C)
Sector Analysis
This contract falls within the Defense sector, specifically supporting the sustainment engineering for the MQ-4C Triton unmanned aircraft system. Spending in defense sustainment can be substantial, and competitive procurement is crucial for cost efficiency.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation and does not indicate any subcontracting to small businesses. This represents a missed opportunity for small business participation in a significant defense contract.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the contractor is delivering services efficiently and that costs are reasonable, despite the lack of competition. Robust auditing and performance monitoring are essential.
Related Government Programs
- All Other Professional, Scientific, and Technical Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Sole-source award
- Cost-plus contract type
- Potential for cost overruns
- Limited small business participation
Tags
all-other-professional-scientific-and-te, department-of-defense, md, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $148.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. MQ-4C SUSTAINMENT ENGINEERING SUPPORT
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 $148.9 million.
What is the period of performance?
Start: 2019-03-16. End: 2023-06-30.
What specific justifications were provided for awarding this contract on a sole-source basis, and were alternatives thoroughly explored?
Sole-source awards require strong justification, typically citing unique capabilities or urgent needs. Without access to the specific justification documentation, it's impossible to definitively state if alternatives were explored. However, the absence of competition suggests that either no other vendors were deemed capable, or the justification leaned heavily on unique proprietary knowledge or a time-sensitive requirement that precluded a competitive process.
How does the cost-plus-fixed-fee structure impact the government's ability to control costs in a sole-source environment?
Cost-plus-fixed-fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. In a sole-source scenario, this structure can be disadvantageous for the government. The government bears the risk of cost overruns, while the contractor has less incentive to control costs since their profit (the fixed fee) remains constant regardless of the final cost incurred.
What are the long-term implications of relying on a single contractor for sustainment engineering of the MQ-4C?
Long-term reliance on a single contractor can lead to vendor lock-in, reduced bargaining power for the government, and potential stagnation in innovation. It also creates a single point of failure; if the contractor experiences financial difficulties, operational issues, or decides to exit the market, the government could face significant disruptions in maintaining the MQ-4C fleet.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services
Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001919R1020
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
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: $178,915,098
Exercised Options: $178,068,646
Current Obligation: $148,909,474
Actual Outlays: $21,241,649
Subaward Activity
Number of Subawards: 252
Total Subaward Amount: $145,124,853
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2019-03-16
Current End Date: 2023-06-30
Potential End Date: 2023-06-30 00:00:00
Last Modified: 2025-04-02
More Contracts from Northrop Grumman Systems Corporation
- 200506!000026!5700!fa8214!oo-Alc/Pkme/Lmke !F4261098C0001 !A!N! !Y! !p01502!20041213!20050701!001563738!004179453!016435559!n!northrop Grumman Space & Missi!888 S 2000 E !clearfield !ut!84015!13850!011!49!clearfield !davis !utah !-000001960000!n!n!000000000000!l014!tech REP Svcs/Guided Missiles !A2 !missile and Space Systems !302 !minuteman III GRP !541330!E! !3! ! !C! ! !20200930!B! ! !A! !a!n!l!2!002!b! !Z!Y!Z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! ! — $10.0B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-7) — $8.5B (Department of Defense)
- E-2D Advanced Hawkeye Aircraft (FRP-2) — $5.4B (Department of Defense)
- First DDT and E, Ares I-X, and Flight Tests. First Stage Will BE a Five Segment, Solid Rocket Booster Derived From the Space Shuttle Program (SSP) Solid Rocket Booster (srb)/Reusable Solid Rocket Motor (rsrm). the Contractor Shall Furnish the Necessary Management, Engineering, Labor, Facilities, Tools, Equipment, and Materials Required for First Stage Development, Qualification, Certification and Acceptance Program. Activities Include: Redesign and Testing of the Motor to Incorporate the Fifth Segment and Production of Five Full Scale Ground Static Test Motors: TWO Development Motors (dms)-And Three Qualification Motors (QMS); Structural Test Article (STA), Ground Vibration Test Motors (gvtms) and Other Development Testing; Redesign of the Avionics, Deceleration, Separation, and Flight Termination System (FTS) Subsystems; Ares I-X: Simulated Ares I Outer Mold Line/Mass Properties Using Modified Srb/Rsrm; and Three Flight Test Vehicles. TAS::80 0124::TAS — $4.4B (National Aeronautics and Space Administration)
- Federal Contract — $4.4B (Department of Defense)
View all Northrop Grumman Systems Corporation federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)