DoD awards $132.8M for AN/SPQ-9B RADAR PRODUCTION, a sole-source contract to Northrop Grumman
Contract Overview
Contract Amount: $132,755,694 ($132.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2009-10-30
End Date: 2015-08-10
Contract Duration: 2,110 days
Daily Burn Rate: $62.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: AN/SPQ-9B RADAR PRODUCTION CONTRACT
Place of Performance
Location: MELVILLE, SUFFOLK County, NEW YORK, 11747, UNITED STATES OF AMERICA
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $132.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: AN/SPQ-9B RADAR PRODUCTION CONTRACT Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. The contract duration of 2110 days suggests a long-term need for the AN/SPQ-9B RADAR. 3. The award value of $132.8M indicates significant investment in this specific defense system. 4. Northrop Grumman, a major defense contractor, is the sole recipient, highlighting industry concentration. 5. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 6. No small business set-aside was utilized for this procurement.
Value Assessment
Rating: fair
Benchmarking the value of this specific AN/SPQ-9B RADAR production contract is challenging without detailed cost breakdowns or comparisons to similar sole-source procurements for advanced radar systems. The firm fixed price structure aims to control costs, but the lack of competition means potential savings from a competitive bidding process were not realized. The total award of $132.8 million over approximately 5.8 years suggests a substantial per-unit cost, which warrants scrutiny to ensure it aligns with market expectations for such specialized defense equipment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Northrop Grumman Systems Corporation. The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or the absence of adequate competition. Without a competitive process, it is difficult to assess the full range of potential suppliers or the price discovery that would have occurred in an open market. This approach may be necessary for specialized defense systems where only one contractor can meet the stringent requirements.
Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. The government relies on negotiation and justification to ensure a fair price, but the potential for overpayment is increased without multiple bids.
Public Impact
The primary beneficiaries are the U.S. Navy, which will receive the AN/SPQ-9B RADAR systems for its operations. The contract ensures the continued production and delivery of critical radar technology for naval platforms. The geographic impact is primarily centered around Northrop Grumman's facilities in New York, where the contract is managed. The contract supports jobs within Northrop Grumman's defense manufacturing sector, contributing to the specialized aerospace and defense workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potentially increases costs for taxpayers.
- Lack of transparency in the justification for sole-sourcing could mask inefficiencies.
- Long contract duration (2110 days) may lead to cost overruns if not managed tightly.
- Reliance on a single contractor for critical defense technology poses supply chain risks.
Positive Signals
- Firm Fixed Price contract shifts cost risk to the contractor, promoting cost control.
- Northrop Grumman is an established defense contractor with a track record in radar systems.
- The AN/SPQ-9B is a specific, likely critical, component for naval operations, indicating a clear need.
- Awarding to an experienced contractor can ensure timely delivery of essential defense capabilities.
Sector Analysis
The AN/SPQ-9B RADAR production falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Companies like Northrop Grumman are key players, often holding sole-source positions for highly specialized or proprietary systems. Comparable spending benchmarks would involve other advanced radar systems or complex defense electronics, where contract values can range from tens to hundreds of millions of dollars depending on system complexity and quantity.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the provided data. The award to a large prime contractor like Northrop Grumman suggests that the primary manufacturing and integration will occur within their own facilities or those of their major partners. This limits the direct economic benefit to the small business ecosystem for this specific procurement.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, there is an increased emphasis on negotiation and ensuring fair and reasonable pricing. Transparency is typically managed through contract reporting mechanisms, though detailed cost justifications for sole-source awards may be less publicly accessible. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.
Related Government Programs
- AN/SPQ-9A RADAR
- Naval Surface Warfare Systems
- Defense Radar Systems Procurement
- Northrop Grumman Defense Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
- Supply chain dependency
Tags
defense, department-of-defense, department-of-the-navy, northrop-grumman, radar-systems, sole-source, firm-fixed-price, new-york, large-business, search-detection-navigation-guidance-aeronautical-and-nautical-system-and-instrument-manufacturing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $132.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. AN/SPQ-9B RADAR PRODUCTION CONTRACT
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 $132.8 million.
What is the period of performance?
Start: 2009-10-30. End: 2015-08-10.
What is the specific operational role and technical capability of the AN/SPQ-9B RADAR system?
The AN/SPQ-9B is a surface-search radar system designed for naval applications. Its primary functions include detecting and tracking low-flying aircraft, anti-ship missiles, and surface targets. It is known for its ability to operate in challenging environments and provide critical situational awareness to naval vessels. The system integrates with other combat systems to provide a comprehensive threat picture, enhancing the defensive capabilities of ships. Its advanced tracking algorithms and high resolution are crucial for identifying and engaging fast-moving threats at sea.
What is the justification for awarding this contract on a sole-source basis to Northrop Grumman?
While the specific justification document is not provided, sole-source awards for defense systems like the AN/SPQ-9B are typically based on factors such as unique technological capabilities, proprietary data rights, or the unavailability of other sources that can meet the government's requirements. Northrop Grumman, as the original developer or a key integrator of this specific radar technology, likely possesses the necessary intellectual property, specialized manufacturing processes, or unique expertise that prevents other companies from competing effectively. The Department of Defense would have had to formally justify this sole-source procurement through established acquisition regulations.
How does the Firm Fixed Price (FFP) contract type benefit the government in this sole-source scenario?
The Firm Fixed Price (FFP) contract type is generally advantageous for the government as it shifts the majority of cost risk to the contractor, Northrop Grumman. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently and control production costs. In a sole-source situation, where competitive pricing is absent, the FFP structure provides a degree of cost certainty for the government, protecting against potential cost overruns that might occur with cost-reimbursement contracts.
What is the historical spending trend for the AN/SPQ-9B RADAR program or similar systems?
Historical spending data for the AN/SPQ-9B program prior to this award would provide context on the overall investment in this system. Without access to that specific data, we can infer that advanced naval radar systems represent a significant and ongoing investment for defense departments globally. Programs for similar complex electronic warfare and surveillance systems often span many years and involve multiple contract awards for development, production, and sustainment, with total program costs frequently reaching hundreds of millions or even billions of dollars over their lifecycle.
What are the potential risks associated with relying on a single contractor for critical defense hardware like the AN/SPQ-9B RADAR?
Relying on a single contractor, such as Northrop Grumman for the AN/SPQ-9B RADAR, introduces several risks. These include potential supply chain disruptions if the contractor faces financial or operational difficulties, reduced leverage for the government in future negotiations due to the lack of alternatives, and the possibility of technological stagnation if the contractor does not face competitive pressure to innovate. Furthermore, a sole-source dependency can create vulnerabilities if the technology becomes obsolete and requires significant investment to transition to a new system or supplier.
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
Solicitation ID: N0002408R5375
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 65 MARCUS DR, MELVILLE, NY, 11747
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $132,755,694
Exercised Options: $132,755,694
Current Obligation: $132,755,694
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2009-10-30
Current End Date: 2015-08-10
Potential End Date: 2015-08-14 00:00:00
Last Modified: 2015-08-20
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