Northrop Grumman awarded $188.8M for SEWIP Block 3, a critical electronic warfare system
Contract Overview
Contract Amount: $188,759,793 ($188.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2015-02-12
End Date: 2023-09-30
Contract Duration: 3,152 days
Daily Burn Rate: $59.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: PRE DESIGN AN/SLQ-32(V)Y SEWIP BLOCK 3
Place of Performance
Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $188.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PRE DESIGN AN/SLQ-32(V)Y SEWIP BLOCK 3 Key points: 1. Contract value represents significant investment in advanced electronic warfare capabilities. 2. Full and open competition suggests a potentially competitive bidding process. 3. Cost-plus incentive fee structure aims to balance contractor performance with cost control. 4. Long contract duration indicates a complex, multi-year development and production effort. 5. Focus on SEWIP Block 3 highlights the Navy's commitment to modernizing its fleet's defenses. 6. The contract supports a key component of naval electronic warfare, crucial for threat detection and response.
Value Assessment
Rating: good
The contract value of $188.8 million for the SEWIP Block 3 program appears reasonable given the complexity and criticality of electronic warfare systems. Benchmarking against similar advanced defense systems suggests that costs are within expected ranges for cutting-edge technology development and production. The cost-plus incentive fee (CPIF) structure, while carrying inherent risk, is often employed for complex R&D efforts where final costs are not precisely predictable, aiming to incentivize efficiency.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of two bids suggests a degree of competition, though the exact number of bidders can influence price discovery. A competitive process is generally favorable for achieving better pricing and value for the government.
Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to offer their best pricing and technical solutions, potentially leading to cost savings and a more robust system.
Public Impact
The U.S. Navy benefits from enhanced electronic warfare capabilities for its fleet, improving situational awareness and defense against electronic threats. This contract delivers advanced electronic warfare systems crucial for maintaining naval superiority. The primary geographic impact is on naval operations globally, supporting deployed forces. The contract likely supports a specialized workforce in aerospace and defense manufacturing, particularly in areas related to electronic systems engineering and production.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus incentive fee contracts can lead to cost overruns if not managed tightly.
- The long duration of the contract increases the risk of scope creep or evolving requirements.
- Reliance on a single prime contractor for such a critical system warrants close oversight.
Positive Signals
- Awarded under full and open competition, suggesting a competitive environment.
- The SEWIP program is a well-established and critical capability for the Navy.
- The incentive fee structure aims to align contractor performance with government objectives.
Sector Analysis
The SEWIP Block 3 program falls within the defense electronics sector, specifically focusing on electronic warfare systems. This sector is characterized by high R&D investment, long development cycles, and significant government procurement. The market is dominated by a few large defense contractors capable of handling such complex systems. Comparable spending benchmarks in advanced radar, electronic countermeasures, and signal intelligence systems would likely be in the hundreds of millions to billions of dollars over the program's lifecycle.
Small Business Impact
There is no indication of a small business set-aside for this contract, and the prime contractor is a large corporation. However, large defense contracts often involve significant subcontracting opportunities. It is possible that small businesses could be involved as subcontractors, contributing specialized components or services. Further analysis would be needed to determine the extent of small business participation.
Oversight & Accountability
Oversight for this contract is likely managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the Cost Plus Incentive Fee (CPIF) contract terms, linking contractor performance and cost control to financial incentives. Transparency is typically managed through contract reporting requirements and program reviews. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations.
Related Government Programs
- AN/SLQ-32 Electronic Warfare System
- Surface Electronic Warfare Improvement Program (SEWIP)
- Naval Electronic Warfare Systems
- Defense Electronic Systems Manufacturing
- Department of Defense Procurement
Risk Flags
- Long contract duration increases risk of obsolescence and scope creep.
- Cost-plus contracts require diligent oversight to manage potential cost overruns.
- Complexity of electronic warfare systems can lead to integration challenges.
Tags
defense, department-of-defense, department-of-the-navy, northrop-grumman-systems-corporation, electronic-warfare, definitive-contract, full-and-open-competition, cost-plus-incentive-fee, system-manufacturing, maryland, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $188.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PRE DESIGN AN/SLQ-32(V)Y SEWIP BLOCK 3
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 $188.8 million.
What is the period of performance?
Start: 2015-02-12. End: 2023-09-30.
What is the historical spending trend for the SEWIP program, and how does this award compare?
The SEWIP program has seen consistent investment over several years, reflecting its importance to naval operations. While specific historical spending figures for SEWIP Block 3 prior to this award are not detailed here, the $188.8 million represents a significant single award for the development and initial production phase. Broader SEWIP program spending has likely been in the hundreds of millions annually, encompassing various blocks and upgrades. This award appears to be a substantial investment for a specific block's advancement, aligning with the program's established funding trajectory for critical electronic warfare modernization.
What are the key performance metrics and incentives within the Cost Plus Incentive Fee (CPIF) structure for this contract?
A Cost Plus Incentive Fee (CPIF) contract structure typically involves a target cost, a target profit, and a sharing arrangement for costs that deviate from the target. For this contract, key performance metrics would likely relate to technical performance (e.g., system effectiveness, reliability), schedule adherence, and cost control. The incentive fee would be adjusted based on how well Northrop Grumman meets or exceeds these targets. For example, if the contractor achieves lower costs than targeted while meeting performance specifications, they would earn a higher fee. Conversely, exceeding target costs without commensurate performance gains would reduce the fee, incentivizing efficient execution and cost management.
What is Northrop Grumman's track record with similar large-scale defense electronic systems contracts?
Northrop Grumman has a substantial and well-established track record in developing and producing complex defense electronic systems, including electronic warfare (EW) capabilities. They are a prime contractor on numerous advanced programs for various military branches. Their experience with previous iterations of the AN/SLQ-32 system and other EW suites demonstrates a deep understanding of the technology and program management required for systems like SEWIP Block 3. While specific performance details on all past contracts are proprietary, their consistent selection as a prime contractor for critical defense systems indicates a generally positive performance history and capability.
How does the SEWIP Block 3 capability compare to international electronic warfare systems?
SEWIP Block 3 is designed to provide advanced, integrated electronic warfare capabilities, including threat detection, identification, and countermeasures. It represents a significant upgrade over previous generations of shipboard EW systems. While direct, detailed comparisons with international systems are often classified or difficult due to differing operational requirements and technological approaches, SEWIP Block 3 is considered a state-of-the-art system intended to maintain U.S. naval technological superiority. Its integration into the network-centric warfare architecture aims for enhanced situational awareness and coordinated responses, a key focus in modern naval EW development globally.
What are the potential risks associated with the long duration (over 8 years) of this contract?
The contract's duration, spanning from February 2015 to September 2023 (approximately 8.5 years), presents several potential risks. Firstly, technological obsolescence is a concern; advancements in threat capabilities or countermeasure technologies could emerge, potentially requiring costly modifications or rendering parts of the system less effective before its intended lifecycle end. Secondly, requirements creep is a risk, where evolving operational needs or strategic shifts might lead to contract modifications, scope changes, and associated cost increases. Thirdly, long-term program management challenges, including maintaining contractor focus, managing personnel changes, and ensuring consistent quality over an extended period, can be complex. Finally, economic fluctuations or shifts in defense priorities could impact future funding stability.
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: SEALED BID
Solicitation ID: N0002412R5319
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 1580B W NURSERY RD MS B585, LINTHICUM HEIGHTS, MD, 21090
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $517,558,339
Exercised Options: $349,914,263
Current Obligation: $188,759,793
Actual Outlays: $13,910,949
Subaward Activity
Number of Subawards: 3
Total Subaward Amount: $556,906
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2015-02-12
Current End Date: 2023-09-30
Potential End Date: 2023-09-30 00:00:00
Last Modified: 2025-06-12
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