DoD awards Northrop Grumman $23.2M for JCREW EW Systems, raising concerns about cost and competition
Contract Overview
Contract Amount: $23,213,076 ($23.2M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2007-12-07
End Date: 2010-11-19
Contract Duration: 1,078 days
Daily Burn Rate: $21.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 30
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: ALL MATERIAL AND SERVICES REQUIRED TO MANUFACTURE, ENGINEER, BUILD, AND DEVELOP JOINT COUNTER RADIO-CONTROLLED IMPROVISED EXPLOSIVE DEVICE ELECTRONIC WAREFARE (JCREW) SYSTEMS.
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128
Plain-Language Summary
Department of Defense obligated $23.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ALL MATERIAL AND SERVICES REQUIRED TO MANUFACTURE, ENGINEER, BUILD, AND DEVELOP JOINT COUNTER RADIO-CONTROLLED IMPROVISED EXPLOSIVE DEVICE ELECTRONIC WAREFARE (JCREW) SYSTEMS. Key points: 1. Significant investment in electronic warfare capabilities for counter-IED efforts. 2. Sole contractor Northrop Grumman raises questions about competitive pricing. 3. Contract duration and cost-plus award fee structure warrant scrutiny. 4. Focus on advanced technology development in a critical defense sector.
Value Assessment
Rating: questionable
The contract's cost-plus award fee structure, combined with a single awardee, makes it difficult to benchmark pricing effectively against similar contracts. The total award value of $23.2M over approximately three years suggests a high per-unit cost for complex EW systems.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under full and open competition, but Northrop Grumman appears to be the sole awardee. This limited competition may have impacted price discovery, potentially leading to higher costs than if multiple vendors had competed.
Taxpayer Impact: Taxpayer funds are directed towards a critical defense need, but the lack of robust competition could mean less value for money.
Public Impact
Enhances military capabilities against radio-controlled IED threats. Supports technological advancement in electronic warfare. Potential for cost overruns due to contract type and limited competition. Impacts the defense industrial base and supply chain for EW systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition
- Cost-plus award fee structure
- Lack of small business participation
- Long contract duration
Positive Signals
- Addresses critical national security need
- Investment in advanced technology
- Experienced prime contractor
Sector Analysis
This contract falls within the Defense sector, specifically focusing on electronic warfare systems crucial for counter-IED operations. Spending benchmarks for similar complex EW system development and manufacturing can vary widely, but the $23.2M award over three years indicates a substantial investment.
Small Business Impact
The data indicates no small business participation in this contract. This suggests that the prime contractor, Northrop Grumman, is handling the entire scope of work, potentially missing opportunities to leverage specialized small business capabilities in the EW domain.
Oversight & Accountability
The Department of Defense, through the Defense Contract Management Agency, is responsible for overseeing this contract. The cost-plus award fee structure necessitates close monitoring of performance and costs to ensure accountability and value for taxpayer money.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Potential for cost overruns due to Cost Plus Award Fee structure.
- Limited competition may result in suboptimal pricing.
- Lack of small business participation.
- Long contract duration increases risk exposure.
- Dependency on a single contractor for critical EW systems.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $23.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ALL MATERIAL AND SERVICES REQUIRED TO MANUFACTURE, ENGINEER, BUILD, AND DEVELOP JOINT COUNTER RADIO-CONTROLLED IMPROVISED EXPLOSIVE DEVICE ELECTRONIC WAREFARE (JCREW) SYSTEMS.
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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $23.2 million.
What is the period of performance?
Start: 2007-12-07. End: 2010-11-19.
What specific performance metrics are tied to the 'award fee' component, and how are they objectively measured to ensure fair compensation and taxpayer value?
The award fee component is typically tied to exceeding baseline performance requirements, achieving specific milestones ahead of schedule, or demonstrating exceptional quality and innovation. Objective measurement involves rigorous testing, independent verification, and adherence to pre-defined key performance indicators (KPIs). The contracting officer's determination of the award fee amount is crucial for ensuring that the contractor is rewarded for superior performance while safeguarding taxpayer interests against inflated costs.
Given the sole award to Northrop Grumman, what steps were taken during the 'full and open competition' phase to ensure a robust and competitive bidding environment?
During the 'full and open competition' phase, agencies typically issue broad solicitations, conduct market research to identify potential sources, and may hold pre-solicitation conferences. To ensure robustness, they might encourage joint ventures or subcontracting to foster broader participation. However, if only one capable source emerges or submits a viable proposal, the competition may be deemed limited despite initial open solicitation, necessitating careful justification.
How does the JCREW system's technological advancement compare to current and emerging threats, and is the $23.2M investment sufficient for sustained effectiveness?
The JCREW system is designed to counter evolving radio-controlled IED threats. Its technological advancement is assessed through rigorous testing and validation against known and projected threat capabilities. The $23.2M investment over approximately three years is intended to cover manufacturing, engineering, and development. Sustained effectiveness relies on continuous upgrades and adaptation, which may require future investments beyond this initial contract.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002407R6304
Offers Received: 30
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: ONE RANCHO CARMEL DRIVE, SAN DIEGO, CA, 92128
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $23,660,337
Exercised Options: $23,286,248
Current Obligation: $23,213,076
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2007-12-07
Current End Date: 2010-11-19
Potential End Date: 2010-11-19 00:00:00
Last Modified: 2016-02-03
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