DoD's $38.8M Northrop Grumman contract for mission computers lacked competition, raising value concerns

Contract Overview

Contract Amount: $38,807,832 ($38.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-03-29

End Date: 2021-11-30

Contract Duration: 977 days

Daily Burn Rate: $39.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TECH REFRESH MISSION COMPUTER (TRMC)

Place of Performance

Location: WOODLAND HILLS, LOS ANGELES County, CALIFORNIA, 91367

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $38.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: TECH REFRESH MISSION COMPUTER (TRMC) Key points: 1. The contract's value proposition is questionable due to a lack of competitive bidding. 2. Sole-source awards can lead to inflated pricing and reduced innovation. 3. The fixed-price contract type offers some cost certainty but doesn't mitigate the risk of overpayment without competition. 4. Performance duration of nearly 1000 days suggests a long-term need for these critical components. 5. The contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, indicating a specialized industrial base. 6. The absence of small business set-asides means opportunities for smaller firms were not prioritized.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable competitive awards. The $38.8 million awarded to Northrop Grumman for mission computers, under a sole-source justification, suggests a potential lack of price discovery. While the firm-fixed-price structure provides some cost control, the absence of competition raises concerns about whether the government secured the best possible price and value for these critical components. Without competitive bids, it's difficult to ascertain if the pricing aligns with market rates or if taxpayers are bearing a premium.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was solicited. The justification for this approach is not detailed in the provided data, but sole-source awards typically occur when only one responsible source can provide the required supplies or services. This lack of competition significantly limits the government's ability to leverage market forces to drive down costs and ensure the most innovative solutions are considered. Price discovery is inherently compromised when only one vendor is involved.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for the same goods or services.

Public Impact

The Department of the Navy benefits from the acquisition of essential mission computers for its aircraft. This contract supports the operational readiness and technological advancement of naval aviation platforms. The primary beneficiaries are the military personnel who rely on these updated mission computers for effective operations. The contract's geographic impact is likely concentrated around Northrop Grumman's facilities and naval bases where the equipment is deployed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can stifle innovation by not exploring alternative solutions.
Dependence on a single supplier could create future supply chain risks.
Limited transparency in pricing due to the absence of competitive bids.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Northrop Grumman is an established defense contractor with a track record.
The contract addresses a critical need for technology refresh in mission computers.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a specialized segment of the aerospace and defense industry. The market for mission-critical components like advanced computers is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this sector is heavily influenced by defense budgets and modernization programs. Comparable spending benchmarks are difficult to establish precisely without more detail on the specific technology, but large sole-source awards to prime contractors are common in defense procurement for specialized systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for them based on the information provided. The award to a large prime contractor like Northrop Grumman suggests that the focus was on direct procurement of a specialized system. This approach may limit the direct participation of small businesses in this specific contract, although they might be involved further down the supply chain in ways not captured here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature of the award provides a degree of financial oversight by establishing a ceiling cost. However, the sole-source justification warrants scrutiny to ensure it was appropriate and that the pricing is reasonable. Transparency could be enhanced by making the justification for sole-source award publicly available and detailing the price analysis conducted. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Defense Procurement
Aerospace Manufacturing
Mission Systems
Avionics
Sole-Source Contracts
Department of the Navy Contracts

Risk Flags

Sole-source award without clear justification
Potential for overpricing due to lack of competition
Limited visibility into specific technology and performance metrics
Absence of small business participation opportunities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. TECH REFRESH MISSION COMPUTER (TRMC)

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 $38.8 million.

What is the period of performance?

Start: 2019-03-29. End: 2021-11-30.

What is Northrop Grumman's track record with the Department of Defense, particularly on sole-source contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of supplying complex systems and technologies to the Department of Defense (DoD). They have a significant portfolio of contracts across various military branches, including the Navy. While specific data on their sole-source contract performance isn't provided here, large defense primes often engage in sole-source arrangements for highly specialized or proprietary systems where competition is limited. Their track record generally involves delivering advanced capabilities, but like many large contractors, they are subject to scrutiny regarding pricing and contract execution, especially in non-competitive scenarios. Analyzing past sole-source awards to Northrop Grumman could reveal patterns in pricing and performance compared to competitive bids.

How does the $38.8 million value compare to similar mission computer procurements by the Navy or other branches?

Direct comparison of the $38.8 million value is difficult without knowing the exact specifications, quantity, and technological sophistication of the 'TECH REFRESH MISSION COMPUTER (TRMC)'. Mission computer costs can vary dramatically based on factors like processing power, ruggedization, software integration, and specific platform requirements. However, for a sole-source award of this magnitude, it is crucial for the Navy to have conducted a thorough price analysis against independent cost estimates or benchmarks for similar, albeit potentially less complex or older, systems. The absence of competitive data means this $38.8 million figure cannot be definitively benchmarked against market rates or other competitive procurements, raising questions about potential overpayment.

What are the primary risks associated with awarding a $38.8 million contract on a sole-source basis for mission computers?

The primary risks associated with this sole-source award are financial and strategic. Financially, the government risks paying a premium for the technology and services because there was no competitive pressure to drive down costs. Without competing bids, it's harder to ensure the price reflects fair market value. Strategically, relying on a single source can create dependency and limit access to potentially superior or more cost-effective solutions from other vendors. It may also reduce incentives for the incumbent contractor to innovate aggressively or offer the most competitive pricing in the future. Furthermore, if Northrop Grumman faces production issues or supply chain disruptions, the Navy has limited alternative options for these critical mission computers.

What does the 'TECH REFRESH MISSION COMPUTER' designation imply about the program's effectiveness and the need for this spending?

The 'TECH REFRESH' designation strongly implies that the current mission computer systems are outdated and no longer meet the evolving operational or technological requirements of the Navy's platforms. This spending is therefore driven by a need to maintain or enhance mission effectiveness, cybersecurity, and potentially reduce lifecycle costs associated with aging hardware. It suggests a proactive effort to prevent obsolescence and ensure that naval aviation assets remain capable and competitive. The effectiveness of this specific spending will ultimately be measured by how well the new mission computers perform, their reliability, and their contribution to overall mission success, rather than just the acquisition cost itself.

How has historical spending on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) by the Department of the Navy trended?

Historical spending data for NAICS code 336413 ('Other Aircraft Parts and Auxiliary Equipment Manufacturing') by the Department of the Navy can provide context for the $38.8 million award. While specific trends require access to broader procurement databases, this sector generally sees significant investment driven by defense modernization programs and sustainment requirements for aircraft fleets. Spending can fluctuate based on new platform development, upgrades to existing systems, and the overall defense budget. A review of past Navy spending within this NAICS code would help determine if this contract amount is typical, unusually high, or low for the types of components procured, and whether sole-source awards are a common practice within this specific sub-sector for the Navy.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 21240 BURBANK BLVD, WOODLAND HILLS, CA, 91367

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: $38,807,832

Exercised Options: $38,807,832

Current Obligation: $38,807,832

Actual Outlays: $11,517,070

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001919D0025

IDV Type: IDC

Timeline