DoD awards Northrop Grumman $11.3M for navigation systems, bypassing competition

Contract Overview

Contract Amount: $11,312,163 ($11.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2026-02-13

End Date: 2027-08-01

Contract Duration: 534 days

Daily Burn Rate: $21.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LN-100M (PMW/A-170) NEW DELIVERY ORDER.

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $11.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LN-100M (PMW/A-170) NEW DELIVERY ORDER. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not carefully managed. 2. Sole-source award raises concerns about potential overpayment and lack of competitive pressure on pricing. 3. The contract duration of over 1.5 years suggests a significant need for these navigation systems. 4. Northrop Grumman's established presence in defense contracting indicates a potentially lower performance risk. 5. The specific NAICS code (334511) points to a specialized manufacturing sector for advanced instruments. 6. Lack of competition may limit opportunities for other capable small or large businesses in this niche.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure requires close monitoring to ensure value. Without competitive benchmarks, assessing the fairness of the fixed fee is challenging. The $11.3 million award for navigation systems needs to be compared against similar sole-source procurements or historical data for this specific system to determine if it represents a reasonable price. The absence of competition inherently limits the ability to benchmark against market rates, suggesting a potential for higher costs than if the contract were competed.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition means there were no other bidders, and therefore no direct price comparison or negotiation leverage was gained through a bidding process. This can result in higher prices for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, the government has less power to negotiate favorable terms and pricing, potentially leading to less efficient use of public funds.

Public Impact

The Department of the Navy is the primary beneficiary, receiving critical navigation systems. The contract supports the development and delivery of advanced search, detection, and navigation instruments. The geographic impact is primarily within California, where Northrop Grumman Systems Corporation is located. This contract likely supports a specialized workforce within Northrop Grumman, including engineers and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type requires diligent oversight to prevent cost overruns.
Lack of competition may stifle innovation and prevent smaller, specialized firms from participating.

Positive Signals

Northrop Grumman is a large, established defense contractor with a track record in complex systems.
The contract addresses a specific need for navigation systems, indicating critical operational requirements.
The award is for a delivery order, suggesting it's part of a larger, potentially established program.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of advanced navigation and guidance systems. The market for such specialized instruments is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this area is critical for national security and maintaining technological superiority. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar high-tech defense components.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for them based on the available data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on established capabilities rather than fostering small business participation. This could limit the impact on the small business ecosystem within this specific defense technology niche.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the cost-plus-fixed-fee agreement, requiring detailed reporting and justification of costs. Transparency may be limited due to the sole-source nature of the award, but contract performance metrics and financial reporting should be subject to internal review and potentially Inspector General oversight if issues arise.

Related Government Programs

Defense Procurement
Navigation Systems Manufacturing
Northrop Grumman Contracts
Department of the Navy Procurements
Sole-Source Awards

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LN-100M (PMW/A-170) NEW DELIVERY ORDER.

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 $11.3 million.

What is the period of performance?

Start: 2026-02-13. End: 2027-08-01.

What is Northrop Grumman's track record with sole-source cost-plus-fixed-fee contracts for navigation systems?

Northrop Grumman Systems Corporation, as a major defense contractor, has a long history of engaging in sole-source procurements, often utilizing cost-plus-fixed-fee (CPFF) contract types for complex, developmental, or specialized systems where competition is limited. Their track record with CPFF contracts for navigation systems would typically involve extensive documentation of cost performance, schedule adherence, and technical achievement. Analysis would require reviewing past performance evaluations (e.g., CPARS), audit reports, and any publicly available data on similar contracts to assess their efficiency in managing costs and delivering on time under such arrangements. Without specific data on this particular system, it's assumed their experience mitigates some risk, but CPFF inherently requires robust government oversight to ensure value.

How does the $11.3 million award compare to similar navigation system contracts awarded by the DoD?

Benchmarking this $11.3 million award requires identifying comparable contracts for similar navigation systems, considering factors like system complexity, technological maturity, quantity, and contract type. Sole-source awards, especially CPFF, are inherently difficult to compare directly due to the lack of competitive pricing. However, by examining historical data for navigation system procurements by the Department of Defense (DoD) or other agencies, one could identify average award values, cost structures, and profit margins for similar technologies. If this award significantly deviates from established benchmarks, it could indicate potential issues with pricing or scope. Given the sole-source nature, a detailed justification for the price reasonableness would be expected from the agency.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than if the contract were competed. The government lacks the leverage to negotiate the lowest possible price. Secondly, the CPFF structure shifts some cost risk to the government. While a fixed fee provides incentive for the contractor, costs can escalate, and the government is obligated to pay allowable costs plus the agreed-upon fee. This necessitates rigorous government oversight to monitor costs, ensure efficiency, and prevent scope creep. Without strong oversight, there's a risk of cost overruns and reduced value for taxpayer money.

What is the expected program effectiveness and impact of these navigation systems?

The expected program effectiveness hinges on the specific function of these navigation systems within the Department of the Navy's operations. Typically, advanced navigation systems are critical for mission success, enhancing situational awareness, enabling precise maneuvering, and ensuring the safe operation of naval assets (ships, aircraft, submarines). The effectiveness will be measured by the system's reliability, accuracy, integration capabilities with existing platforms, and its contribution to overall mission objectives. The $11.3 million investment suggests these systems are considered vital, likely supporting platforms or missions where precise and dependable navigation is paramount. The contract's duration (over 1.5 years) implies a need for sustained performance and potentially ongoing support.

How has federal spending on navigation system manufacturing (NAICS 334511) trended historically?

Historical federal spending on navigation system manufacturing, categorized under NAICS code 334511, has generally been substantial, driven by consistent defense modernization requirements. Spending in this sector fluctuates based on defense budgets, specific platform procurements (e.g., new aircraft, ships), and technological advancements. Over the past decade, there has been a continuous demand for sophisticated search, detection, and navigation instruments, particularly from the Department of Defense. While specific year-over-year trends require detailed analysis of federal procurement databases (like FPDS), the overall trajectory indicates sustained investment due to the critical nature of these systems for national security and military operations. Factors like geopolitical events and technological obsolescence also influence spending patterns.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

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: $22,812,735

Exercised Options: $22,812,735

Current Obligation: $11,312,163

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $1,808,488

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA857619D0001

IDV Type: IDC

Timeline