DoD awards $47.3M to Northrop Grumman for E-2D Integrated Test Team support, a sole-source contract

Contract Overview

Contract Amount: $47,288,522 ($47.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-07-01

End Date: 2026-03-31

Contract Duration: 2,099 days

Daily Burn Rate: $22.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: INTEGRATED TEST TEAM (ITT) SUPPORT FOR THE E-2D

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $47.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: INTEGRATED TEST TEAM (ITT) SUPPORT FOR THE E-2D Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market engagement. 2. The contract's duration of nearly 2100 days suggests a long-term need for specialized support services. 3. Focus on E-2D Integrated Test Team (ITT) support indicates a critical role in the aircraft's development and sustainment. 4. The award is a delivery order under an existing contract, suggesting a continuation of established services. 5. The use of a Cost Plus Fixed Fee (CPFF) contract type can incentivize cost escalation if not closely monitored. 6. The contract is managed by the Department of the Navy, highlighting its importance within naval aviation programs.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D, carries inherent risks of cost overruns if not rigorously managed. The obligated amount of $47.3 million over approximately 5.8 years suggests a significant investment in specialized support. Without comparable contract data or a competitive process, it's difficult to definitively assess if this represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically justified when only one responsible source can provide the required services or supplies. The lack of competition means that potential cost savings from a bidding process were not realized, and the government did not benefit from the price discovery mechanisms inherent in a competitive environment.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competition. The government's negotiating position is weakened without alternative offers, potentially leading to higher prices than if multiple vendors had vied for the contract.

Public Impact

The primary beneficiaries are the Department of the Navy and the E-2D Hawkeye program, ensuring continued testing and development. Services delivered include critical support for the Integrated Test Team (ITT), vital for the operational readiness of the E-2D aircraft. The contract's geographic impact is centered in Florida (ST/SN), likely supporting key testing and development facilities. Workforce implications include the retention of specialized technical expertise required for advanced aircraft testing and integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost increases if oversight is insufficient.
Long contract duration (nearly 2100 days) requires sustained vigilance to ensure continued value.
Lack of transparency in the justification for sole-source award requires further scrutiny.
Potential for vendor lock-in due to specialized nature of E-2D ITT support.

Positive Signals

Northrop Grumman is a key contractor for the E-2D program, suggesting established expertise and a strong track record.
The contract supports a critical national defense asset (E-2D Hawkeye), ensuring its continued development and readiness.
Delivery order under an existing contract implies a streamlined process for an ongoing need.
The specific focus on Integrated Test Team (ITT) support indicates a high degree of technical specialization.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. Contracts like this, supporting specialized aircraft systems, are common. The E-2D Hawkeye is a vital airborne early warning and control aircraft, and its continued development and testing are crucial for naval aviation superiority. Spending benchmarks for similar specialized aircraft support services can vary widely based on system complexity and required expertise.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a sole-source award to a large prime contractor, the primary impact on small businesses would likely be through subcontracting opportunities. The extent of small business participation will depend on Northrop Grumman's subcontracting plan and the availability of qualified small businesses capable of providing specialized support services for the E-2D ITT.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are essential to control costs and ensure that expenditures are reasonable and allocable. Transparency regarding the justification for the sole-source award and ongoing performance metrics would be key accountability measures. The Inspector General for the Department of Defense may also have jurisdiction for audits and investigations.

Related Government Programs

E-2D Hawkeye Program
Naval Air Systems Command (NAVAIR) Contracts
Aerospace Systems Development
Integrated Test and Evaluation Services
Defense Contractor Support Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. INTEGRATED TEST TEAM (ITT) SUPPORT FOR THE E-2D

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 $47.3 million.

What is the period of performance?

Start: 2020-07-01. End: 2026-03-31.

What is Northrop Grumman's track record with the E-2D program and similar sole-source contracts?

Northrop Grumman is the prime contractor for the E-2D Hawkeye program, responsible for its development and production. This deep involvement suggests a strong understanding of the aircraft's systems and testing requirements. Their history with the E-2D likely includes numerous contracts, both competed and sole-source, for various aspects of its lifecycle. Analyzing their performance on previous sole-source awards, particularly those involving specialized testing or integration support, would provide insight into their ability to manage costs and deliver effectively under such arrangements. However, specific data on past sole-source awards for E-2D ITT support is not readily available in this dataset, making a precise comparison difficult.

How does the $47.3 million value compare to similar E-2D support contracts or industry benchmarks?

Direct comparison of this $47.3 million sole-source contract is difficult due to the lack of competitive bidding and specific service details. The contract spans nearly six years, suggesting an average annual value of approximately $8.1 million. Benchmarking requires access to data on other E-2D Integrated Test Team support contracts, ideally competed ones, or industry standards for similar specialized aerospace testing services. Given the sole-source nature and CPFF structure, the value is inherently less certain than in a competitive scenario. Further analysis would require detailed cost breakdowns and comparisons with industry cost models for specialized aerospace engineering and testing support.

What are the primary risks associated with this sole-source, CPFF contract for E-2D ITT support?

The primary risks stem from the contract's structure. Sole-source awards inherently reduce competitive pressure, potentially leading to higher prices than a competed contract. The Cost Plus Fixed Fee (CPFF) structure, while allowing flexibility for evolving requirements, can incentivize cost escalation if the contractor is not diligently managed. The government bears a significant portion of the cost risk, needing robust oversight to ensure costs remain reasonable and allocable to the contract objectives. Additionally, the long duration increases the risk of scope creep or inefficiencies developing over time without proactive management. Dependence on a single contractor for critical support also poses a risk if performance falters.

How effective is the Department of the Navy in managing sole-source contracts of this nature?

The Department of the Navy, through Naval Air Systems Command (NAVAIR), has extensive experience managing complex aerospace contracts, including sole-source awards. Their effectiveness hinges on robust program management, stringent financial oversight, and diligent contract administration. For CPFF contracts, this includes detailed cost monitoring, audits, and ensuring the contractor's management systems are adequate. The success of this specific contract will depend on the Navy's ability to apply these oversight mechanisms consistently over its nearly six-year duration, ensuring that Northrop Grumman's performance aligns with objectives and costs remain controlled despite the lack of direct price competition.

What are the historical spending patterns for E-2D Integrated Test Team support?

Historical spending data specifically for the E-2D Integrated Test Team (ITT) support is not detailed in the provided information. However, the current award of $47.3 million for a delivery order under an existing contract suggests a continuation or expansion of previously funded activities. To understand historical patterns, one would need to examine prior contracts awarded for E-2D testing and development, looking at total obligated amounts, contract types, and durations over the E-2D's program history. This would reveal trends in funding levels, the prevalence of sole-source versus competed awards, and the evolution of support requirements.

What are the implications of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' suggests that the contract's primary focus is on the manufacturing or modification of parts and auxiliary equipment related to aircraft, rather than the assembly of complete aircraft or broader systems integration. For E-2D ITT support, this could imply work related to specialized test equipment, modifications to aircraft components for testing purposes, or the manufacturing of specific parts required during the testing phase. It indicates a focus on the tangible components and equipment necessary for the testing infrastructure and processes, rather than purely services or software development.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $60,366,643

Exercised Options: $60,366,643

Current Obligation: $47,288,522

Actual Outlays: $1,043,795

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $372,604

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001920G0005

IDV Type: BOA

Timeline