DoD awards $85.5M for Triton MQ-4C aircraft retrofits to Northrop Grumman, citing sole-source procurement

Contract Overview

Contract Amount: $85,525,496 ($85.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-18

End Date: 2023-06-01

Contract Duration: 1,414 days

Daily Burn Rate: $60.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THE MODIFICATION IS TO PROCURE MATERIAL KITS AND RETROFIT LABOR TO INCORPORATE THE IFC 4.0 CONFIGURATION INTO RETROFIT AIRCRAFT AND GROUND SEGMENTS FOR THE TRITON MQ-4C PROGRAM

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $85.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THE PURPOSE OF THE MODIFICATION IS TO PROCURE MATERIAL KITS AND RETROFIT LABOR TO INCORPORATE THE IFC 4.0 CONFIGURATION INTO RETROFIT AIRCRAFT AND GROUND SEGMENTS FOR THE TRITON MQ-4C PROGRAM Key points: 1. Contract focuses on incorporating IFC 4.0 configuration into Triton MQ-4C aircraft and ground segments. 2. Procurement includes material kits and labor for retrofitting. 3. The contract is a delivery order under a previously awarded contract. 4. Northrop Grumman Systems Corporation is the sole awardee. 5. The contract duration is approximately 1414 days. 6. The North American Industry Classification System (NAICS) code is 336413 (Other Aircraft Parts and Auxiliary Equipment Manufacturing).

Value Assessment

Rating: fair

The contract value of $85.5 million for retrofitting material kits and labor appears substantial. Without specific benchmarks for the IFC 4.0 configuration or comparable retrofit projects, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) contract type suggests that costs are reimbursed, plus a fixed fee for profit, which can sometimes lead to less cost control compared to fixed-price contracts. However, for complex development and integration efforts, CPFF can be appropriate.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bidders had participated.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, as the government did not solicit bids from multiple vendors. This can result in a higher overall expenditure for the required retrofitting services and materials.

Public Impact

The primary beneficiaries are the U.S. Navy, which operates the Triton MQ-4C program, receiving upgraded aircraft and ground systems. The services delivered include the incorporation of the IFC 4.0 configuration, enhancing the operational capabilities of the Triton drone. The geographic impact is primarily within the operational theaters where the MQ-4C Triton is deployed, and potentially at Northrop Grumman's facilities in California. Workforce implications include employment for engineers, technicians, and support staff involved in manufacturing kits and performing the retrofits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type may offer less incentive for cost control by the contractor.
Lack of competition makes it difficult to benchmark pricing against market alternatives.
The long duration of the contract (1414 days) increases the exposure to potential cost overruns or scope creep.

Positive Signals

The contract addresses a specific, critical upgrade (IFC 4.0) for a key intelligence, surveillance, and reconnaissance (ISR) platform.
Northrop Grumman is the prime contractor for the Triton MQ-4C, suggesting specialized knowledge and capability for this retrofit.
The award is a delivery order against an existing contract, implying some level of prior vetting and oversight.
The contract aims to enhance the operational effectiveness of a high-value military asset.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for aircraft modification and upgrades are common, often involving complex systems integration. The MQ-4C Triton is a high-altitude, long-endurance unmanned aircraft system used for ISR missions. Spending in this sub-sector is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other major aircraft upgrade programs within the DoD, which often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by 'sb': false. Given the sole-source nature and the prime contractor being Northrop Grumman, a large defense contractor, the likelihood of significant subcontracting opportunities for small businesses on this specific delivery order is uncertain without further details. However, large prime contractors are often required to meet overall small business subcontracting goals on their larger contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency may be limited due to the sole-source nature and the classification of defense programs. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse.

Related Government Programs

MQ-4C Triton Program
Unmanned Aircraft Systems (UAS) Procurement
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Aerospace Manufacturing
Defense Contractor Support Services

Risk Flags

Sole-source procurement
Cost-plus contract type
Potential for cost overruns
Lack of competitive pricing benchmark

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THE PURPOSE OF THE MODIFICATION IS TO PROCURE MATERIAL KITS AND RETROFIT LABOR TO INCORPORATE THE IFC 4.0 CONFIGURATION INTO RETROFIT AIRCRAFT AND GROUND SEGMENTS FOR THE TRITON MQ-4C PROGRAM

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 $85.5 million.

What is the period of performance?

Start: 2019-07-18. End: 2023-06-01.

What is the specific nature of the IFC 4.0 configuration and its impact on the MQ-4C Triton's capabilities?

The IFC 4.0 (Integrated Fire Control 4.0) configuration likely refers to an advanced suite of systems designed to enhance the MQ-4C Triton's ability to detect, track, and potentially engage targets, or to better integrate its intelligence, surveillance, and reconnaissance (ISR) data with other military assets. For a platform like the Triton, which operates in a strategic ISR role, upgrades to its command and control, sensor fusion, data dissemination, and network connectivity are critical. Enhancements could include improved situational awareness, faster data processing and relay, more robust communication links, and potentially new mission capabilities. The specific impact would be a significant boost in the platform's operational effectiveness, allowing it to provide more timely and actionable intelligence to commanders in complex operational environments.

How does the cost-plus-fixed-fee (CPFF) contract structure influence cost control for this $85.5 million award?

A Cost-Plus-Fixed-Fee (CPFF) contract reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for research and development or complex system integration efforts where the scope or final costs are difficult to estimate precisely upfront. While the fixed fee provides some profit certainty for the contractor, it can reduce the incentive for aggressive cost management compared to fixed-price contracts. The government bears the risk of cost overruns, making robust oversight, auditing of incurred costs, and clear definition of allowable expenses critical to controlling the overall expenditure. For this $85.5 million award, the DoD will need strong program management to monitor costs closely and ensure they remain reasonable and allocable to the contract's objectives.

What are the risks associated with a sole-source procurement for critical aircraft retrofits?

Sole-source procurements carry inherent risks, primarily the potential for inflated pricing due to the absence of competitive pressure. Without multiple bidders vying for the contract, the government may pay more than it would in a competitive environment. There's also a risk of reduced innovation, as the contractor may have less incentive to propose cost-saving or efficiency-enhancing solutions. Furthermore, reliance on a single source can create vulnerabilities if that contractor experiences financial difficulties, production issues, or supply chain disruptions. For critical retrofits like the IFC 4.0 upgrade to the MQ-4C Triton, a sole-source award necessitates a high degree of trust in the contractor's capabilities and pricing, alongside stringent government oversight to mitigate these risks.

What is Northrop Grumman's track record with the MQ-4C Triton program?

Northrop Grumman Systems Corporation is the prime contractor responsible for the development and production of the MQ-4C Triton Unmanned Aircraft System (UAS). They have been involved with the program since its inception, including design, manufacturing, testing, and initial fielding. Their long-standing relationship with the program indicates a deep understanding of the platform's systems, capabilities, and operational requirements. Past performance reviews and contract history with the DoD would provide a more detailed assessment of their execution, adherence to schedule, and cost performance on previous Triton-related contracts. This specific modification award leverages their established position as the program's integrator.

How does this $85.5 million award compare to historical spending on the MQ-4C Triton program?

The MQ-4C Triton program represents a significant investment by the U.S. Navy, encompassing development, procurement of aircraft, ground control stations, and associated support. Total program costs have been estimated in the billions of dollars over its lifecycle. This $85.5 million award for retrofitting material kits and labor for the IFC 4.0 configuration is a substantial but likely incremental expenditure within the broader program's budget. It reflects the ongoing need to upgrade and modernize fielded systems to maintain technological superiority and operational relevance. Without access to detailed historical spending breakdowns for specific upgrade phases, a precise comparison is difficult, but it aligns with the typical cost profile of major avionics and system integration modifications for large defense platforms.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R0023

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $85,614,151

Exercised Options: $85,614,151

Current Obligation: $85,525,496

Actual Outlays: $7,280,651

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $11,783,029

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001915G0026

IDV Type: BOA

Timeline