DoD's $60M ALMDS Production Support Contract Awarded to Northrop Grumman Raises Competition Concerns
Contract Overview
Contract Amount: $60,361,160 ($60.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2022-03-31
End Date: 2029-03-31
Contract Duration: 2,557 days
Daily Burn Rate: $23.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ALMDS PRODUCTION SUPPORT
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32904
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $60.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ALMDS PRODUCTION SUPPORT Key points: 1. Significant contract value of $60.36 million for ALMDS production support. 2. Sole-source award to Northrop Grumman limits competitive pricing and innovation. 3. Potential for inflated costs due to lack of competition. 4. Contract falls within the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing sector.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure, combined with a sole-source award, makes a direct pricing assessment difficult. Without competitive bids, it's hard to determine if the fixed fee adequately reflects market rates or if it allows for excessive profit margins.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Northrop Grumman. This lack of competition limits price discovery and may lead to higher costs for the government.
Taxpayer Impact: The absence of competition likely results in higher taxpayer costs compared to a competitively awarded contract.
Public Impact
Taxpayers may be overpaying for ALMDS production support due to the sole-source nature of the contract. Limited visibility into the cost-effectiveness of the awarded contract. Potential impact on the development and availability of advanced detection systems if competition is stifled.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of transparency in pricing
Positive Signals
- Supports critical defense systems (ALMDS)
- Long-term contract duration provides stability
Sector Analysis
This contract is within the aerospace and defense manufacturing sector, specifically focusing on search and navigation systems. Spending in this sector is often characterized by high R&D costs and specialized manufacturing capabilities, but competitive bidding is crucial for cost control.
Small Business Impact
The contract was awarded to Northrop Grumman, a large defense contractor. There is no indication of small business participation in this specific award, which is common for sole-source, high-value defense contracts.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and effective performance. The Department of the Navy should actively monitor costs and deliverables throughout the contract's duration.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competition
- Cost-plus contract type may incentivize higher costs
- Potential for inflated pricing
- Limited transparency on cost drivers
- No clear small business participation
Tags
search-detection-navigation-guidance-aer, department-of-defense, fl, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $60.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ALMDS PRODUCTION SUPPORT
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 $60.4 million.
What is the period of performance?
Start: 2022-03-31. End: 2029-03-31.
What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or proprietary technology held by a single vendor. To ensure fair pricing, the Department of the Navy should conduct a thorough cost analysis, review Northrop Grumman's proposed costs, and potentially negotiate profit margins. Independent government cost estimators can provide benchmarks. Regular performance reviews are also essential.
What are the potential risks associated with a cost-plus fixed-fee contract awarded without competition for advanced defense systems?
A cost-plus fixed-fee (CPFF) contract can incentivize the contractor to increase costs, as the government bears the majority of the expense while the contractor receives a predetermined fee. Without competition, there's less pressure on the contractor to innovate cost-saving measures. This combination increases the risk of cost overruns and potentially inflated prices for the government, especially for complex systems like ALMDS.
How does this sole-source award impact the broader market for ALMDS technology and related systems, particularly concerning innovation and future competition?
A sole-source award can stifle innovation by removing the competitive pressure that drives companies to develop more advanced or cost-effective solutions. It may also discourage other potential suppliers from entering the market or investing in related technologies, as they see limited opportunities for government contracts. This could lead to a less dynamic market and potentially higher prices in the long run.
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: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002421R6318
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904
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: $107,123,439
Exercised Options: $63,461,827
Current Obligation: $60,361,160
Subaward Activity
Number of Subawards: 38
Total Subaward Amount: $6,771,667
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2022-03-31
Current End Date: 2029-03-31
Potential End Date: 2029-03-31 00:00:00
Last Modified: 2025-09-30
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