Northrop Grumman awarded $72.5M for AN/SPQ-9B RADAR systems, a sole-source contract

Contract Overview

Contract Amount: $72,519,213 ($72.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2015-12-21

End Date: 2019-09-30

Contract Duration: 1,379 days

Daily Burn Rate: $52.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SPQ-9B RADAR SYSTEM

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $72.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: AN/SPQ-9B RADAR SYSTEM Key points: 1. This contract represents a significant investment in advanced radar technology for naval operations. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited innovation. 3. Performance risk appears moderate given the established nature of the AN/SPQ-9B system. 4. The contract duration of over three years suggests a sustained need for these radar systems. 5. This procurement aligns with the Department of the Navy's broader strategy for enhancing maritime surveillance capabilities. 6. The absence of competition may limit opportunities for cost savings and broader market engagement.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. The awarded amount of $72.5 million for the AN/SPQ-9B RADAR system is substantial. While the system is critical, the lack of competition prevents a direct comparison to market rates or alternative solutions. Further analysis would require understanding the specific components and services included in this award and comparing them to historical sole-source procurements for similar advanced defense systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was considered. This approach is typically used when a unique capability is required, or when only one responsible source can provide the necessary supplies or services. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

Naval forces will benefit from enhanced search and detection capabilities provided by the AN/SPQ-9B RADAR system. The contract supports the delivery of critical radar systems essential for maritime security and operational effectiveness. The primary geographic impact is on naval bases and deployed fleets, particularly those operating under the Department of the Navy. This contract likely sustains jobs within Northrop Grumman's defense sector, contributing to the skilled workforce in aerospace and defense manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of competitive bidding may stifle innovation and limit the adoption of newer technologies.
Dependence on a single supplier for critical radar systems could pose long-term supply chain risks.

Positive Signals

The AN/SPQ-9B system is a proven technology, suggesting reliability and reduced performance risk.
The contract supports a critical defense capability, ensuring operational readiness for naval forces.
Northrop Grumman is an established defense contractor with a track record in complex systems integration.

Sector Analysis

The AN/SPQ-9B RADAR system falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high research and development costs, long product lifecycles, and significant government procurement. The market for advanced radar systems is often dominated by a few large, specialized contractors due to the technical expertise and capital investment required. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition awards for similar sophisticated radar or sensor systems within the defense industry.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the primary subcontracting opportunities would likely be managed by Northrop Grumman. Analysis of Northrop Grumman's subcontracting plans would be necessary to determine the extent to which small businesses are involved in fulfilling this contract, and whether there are specific provisions for small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance metrics and delivery schedules. Transparency may be limited due to the sole-source nature of the award. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this procurement.

Related Government Programs

AN/SPQ-9B RADAR SYSTEM
Naval Surveillance Systems
Defense Electronics Manufacturing
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Potential for price inflation
Limited innovation due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. AN/SPQ-9B RADAR SYSTEM

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 $72.5 million.

What is the period of performance?

Start: 2015-12-21. End: 2019-09-30.

What is the historical spending trend for the AN/SPQ-9B RADAR system with Northrop Grumman?

Historical spending data for the AN/SPQ-9B RADAR system with Northrop Grumman indicates a consistent, albeit potentially increasing, investment over time. While the provided data point is for a single definitive contract valued at $72.5 million, a comprehensive analysis would involve examining all prior contracts, modifications, and task orders related to this system. This would reveal the total lifecycle cost, identify any significant cost escalations, and highlight the duration of the sole-source relationship. Understanding past spending patterns is crucial for assessing the long-term financial commitment and identifying potential areas for cost optimization in future procurements, especially if the system remains critical to naval operations.

How does the awarded price compare to similar radar systems procured competitively?

Directly comparing the awarded price of $72.5 million for the AN/SPQ-9B RADAR system to competitively procured systems is difficult due to the sole-source nature of this contract. Competitive procurements typically drive prices down through market forces. To perform a meaningful comparison, one would need to identify comparable radar systems with similar capabilities (e.g., range, resolution, target detection) that have been awarded through full and open competition. Analyzing the per-unit cost, total contract value, and contract type (e.g., firm-fixed-price) of these competitive contracts would provide a benchmark. Without such a benchmark, it's challenging to definitively state whether the $72.5 million represents a fair market value or if it includes a premium due to the lack of competition.

What are the key performance indicators (KPIs) for the AN/SPQ-9B RADAR system under this contract?

The specific Key Performance Indicators (KPIs) for the AN/SPQ-9B RADAR system under this definitive contract are not explicitly detailed in the provided data. However, typical KPIs for such advanced radar systems would likely include metrics related to detection range, target tracking accuracy, false alarm rates, system availability (uptime), mean time between failures (MTBF), and potentially the ability to discriminate between different types of targets (e.g., surface vessels, low-flying aircraft, missiles). The contract's firm-fixed-price nature suggests that Northrop Grumman is obligated to meet certain performance standards to receive full payment. The Department of the Navy would monitor these KPIs to ensure the system meets operational requirements for search, detection, and navigation.

What is Northrop Grumman's track record with the AN/SPQ-9B RADAR system and similar defense contracts?

Northrop Grumman Systems Corporation has a significant track record as a prime contractor for advanced defense systems, including radar technology. The AN/SPQ-9B itself is a known system, and Northrop Grumman's involvement suggests they possess the necessary expertise for its production, integration, and sustainment. Their broader portfolio includes a wide range of aerospace and defense products, indicating experience with complex manufacturing, stringent quality control, and large-scale government contracts. Assessing their specific performance on past AN/SPQ-9B contracts, including delivery timeliness, adherence to specifications, and cost performance, would require a deeper dive into contract history and performance reports. Generally, large defense contractors like Northrop Grumman are accustomed to the rigorous oversight and performance expectations of the Department of Defense.

Are there any identified risks associated with the sole-source procurement of this radar system?

Yes, there are several identified risks associated with the sole-source procurement of the AN/SPQ-9B RADAR system. The primary risk is the potential for inflated pricing, as the absence of competition removes the downward pressure that multiple bidders would typically exert on cost. This can lead to taxpayers bearing a higher financial burden. Another significant risk is the lack of innovation; without competitive pressure, the contractor may have less incentive to invest in developing improved versions or more cost-effective solutions. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch to alternative systems or suppliers in the future, potentially impacting long-term sustainment and upgrade strategies. Finally, there's a risk of reduced transparency in the procurement process.

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: N0002414R5343

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 15 GRUMMAN RD W, BETHPAGE, NY, 11714

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $72,519,213

Exercised Options: $72,519,213

Current Obligation: $72,519,213

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline