DoD awards Northrop Grumman $28.4M follow-on contract for MQ-8 software sustainment through 2025
Contract Overview
Contract Amount: $28,380,929 ($28.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2022-12-22
End Date: 2025-12-22
Contract Duration: 1,096 days
Daily Burn Rate: $25.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FOLLOW-ON MQ-8 SOFTWARE SUSTAINMENT CONTRACT FOR CY23-CY25
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127
Plain-Language Summary
Department of Defense obligated $28.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FOLLOW-ON MQ-8 SOFTWARE SUSTAINMENT CONTRACT FOR CY23-CY25 Key points: 1. Contract focuses on sustainment for MQ-8 unmanned aircraft system software. 2. Northrop Grumman is the incumbent provider. 3. Follow-on nature suggests potential for sole-source justification. 4. Engineering services sector, NAICS 541330.
Value Assessment
Rating: fair
The contract value of $28.4M over three years appears reasonable for specialized software sustainment. Benchmarking against similar complex system sustainment contracts is needed for a definitive assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source or limited competition award. This limits price discovery and may result in higher costs compared to a competitive environment.
Taxpayer Impact: Potential for increased taxpayer cost due to lack of competition.
Public Impact
Ensures continued operational readiness of MQ-8 unmanned aircraft. Supports critical intelligence, surveillance, and reconnaissance missions. Impacts defense modernization efforts and technological advancement.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Potential for cost overruns
- Reliance on a single vendor
Positive Signals
- Ensures continuity of essential services
- Supports critical defense capabilities
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting defense systems. Spending in this area is critical for maintaining advanced military platforms and requires careful oversight to ensure value.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large business. There is no indication of small business participation in this specific award.
Oversight & Accountability
The 'not competed' status warrants further review to ensure proper justification for sole-source procurement and to explore future opportunities for competition.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Potential for sole-source pricing
- Limited transparency in cost build-up
- No small business participation noted
Tags
engineering-services, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $28.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FOLLOW-ON MQ-8 SOFTWARE SUSTAINMENT CONTRACT FOR CY23-CY25
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 $28.4 million.
What is the period of performance?
Start: 2022-12-22. End: 2025-12-22.
What is the justification for not competing this follow-on contract, and what is the projected cost savings compared to a competitive bid?
The justification for not competing this follow-on contract likely stems from Northrop Grumman's unique knowledge and proprietary data related to the MQ-8 software sustainment. A competitive bid might introduce risks of integration issues or delays. However, without a competitive process, it's difficult to quantify projected cost savings. A thorough cost analysis by the agency is crucial to ensure the fixed-fee component is reasonable and reflects fair market value.
What are the specific risks associated with relying solely on Northrop Grumman for MQ-8 software sustainment over the next three years?
The primary risk is vendor lock-in, potentially leading to inflated prices and reduced innovation. There's also a risk of knowledge transfer limitations if Northrop Grumman's personnel turnover is high. Furthermore, the government's ability to influence software development priorities or adopt alternative solutions is constrained. This reliance could also impact the long-term strategic flexibility of the MQ-8 program.
How does the cost-plus-fixed-fee (CPFF) structure ensure effective cost management and value for taxpayers in this sustainment contract?
The CPFF structure aims to provide a degree of cost control by setting a fixed fee for the contractor's profit, regardless of the final cost. However, the government bears the risk of cost overruns. Effective management relies on robust government oversight to scrutinize allowable costs and ensure the contractor operates efficiently. The 'fixed fee' provides incentive for the contractor to manage costs within the estimated range, but the 'cost plus' aspect means the government pays actual allowable costs.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
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
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: $70,097,163
Exercised Options: $33,784,603
Current Obligation: $28,380,929
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2022-12-22
Current End Date: 2025-12-22
Potential End Date: 2025-12-22 00:00:00
Last Modified: 2024-02-07
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