Northrop Grumman awarded $128.7M follow-on contract for JCREW engineering services by the Navy

Contract Overview

Contract Amount: $128,732,944 ($128.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-02-01

End Date: 2028-02-18

Contract Duration: 1,478 days

Daily Burn Rate: $87.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JCREW FULL RATE PRODUCTION FOLLOW-ON CONTRACT ENGINEERING SERVICES

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $128.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: JCREW FULL RATE PRODUCTION FOLLOW-ON CONTRACT ENGINEERING SERVICES Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. Cost-plus-fixed-fee contract type indicates potential for cost overruns, requiring close oversight. 3. The contract duration of nearly 5 years suggests a long-term need for these specialized engineering services. 4. The award to Northrop Grumman, a major defense contractor, aligns with established industry players. 5. The North American Industry Classification System (NAICS) code 334511 points to a focus on advanced navigation and guidance systems. 6. The contract's value is significant, reflecting the complexity and importance of the JCREW program.

Value Assessment

Rating: good

Benchmarking this contract's value is challenging without specific details on the JCREW system's capabilities and the scope of engineering services. However, the $128.7 million over approximately 4.9 years suggests an average annual value of roughly $26 million. This figure appears reasonable for complex defense systems engineering, especially considering the cost-plus-fixed-fee structure which can accommodate evolving requirements. Further analysis would require comparing the labor rates and overhead applied to similar defense engineering contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but this approach generally fosters a competitive environment, which can lead to better pricing and innovation. The Navy's decision to use full and open competition suggests confidence in the market's ability to provide suitable solutions.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider array of innovative solutions being considered, ensuring the government receives the best value.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the U.S. military relying on the JCREW system. The contract delivers critical engineering services for the Joint Counter-Electronic Warfare (JCREW) program, likely enhancing electronic warfare capabilities. The geographic impact is primarily centered in California, where Northrop Grumman Systems Corporation is located, but the system's deployment could be global. The contract supports a workforce of engineers and technical specialists, contributing to the high-tech defense industry employment in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to increase costs to maximize profit, necessitating robust oversight.
The follow-on nature of the contract might indicate a lack of competitive pressure for subsequent phases if not managed carefully.
Reliance on a single large contractor for critical systems engineering can create vendor lock-in and reduce future flexibility.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
The contract duration implies a stable and predictable requirement, allowing for focused engineering efforts.
Northrop Grumman's established presence in defense contracting suggests a high level of technical expertise and experience.

Sector Analysis

The JCREW program falls within the defense electronics and systems manufacturing sector, specifically related to electronic warfare and navigation systems. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. The market is dominated by a few large defense contractors, making competition dynamics unique. Comparable spending benchmarks would involve looking at other major electronic warfare system development contracts within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. While Northrop Grumman is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Northrop Grumman's strategy and the specific needs of the JCREW program, which could impact the broader small business defense ecosystem.

Oversight & Accountability

Oversight for this cost-plus-fixed-fee contract will likely involve the Department of the Navy's contracting officers and program managers, who will monitor costs, performance, and adherence to the fixed fee. Transparency will be managed through regular reporting requirements from Northrop Grumman. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Electronic Warfare Systems
Navigation and Guidance Systems
Defense Research and Development
Naval Aviation Systems
Joint Counter-Electronic Warfare Program

Risk Flags

Cost-Plus-Fixed-Fee contract type requires diligent oversight to manage potential cost overruns.
Follow-on nature of the contract may reduce competitive pressure if not managed proactively.
Reliance on a single large contractor for critical systems engineering warrants monitoring for potential vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $128.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. JCREW FULL RATE PRODUCTION FOLLOW-ON CONTRACT ENGINEERING SERVICES

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 $128.7 million.

What is the period of performance?

Start: 2024-02-01. End: 2028-02-18.

What is the specific performance history of Northrop Grumman Systems Corporation on similar defense engineering contracts?

Northrop Grumman Systems Corporation has a long and extensive track record as a prime contractor for the Department of Defense and other government agencies, specializing in aerospace, defense, and information systems. They have consistently been awarded large-value contracts for complex systems development, including electronic warfare, radar, and communication systems. Their performance history generally reflects a capability to deliver sophisticated technological solutions. However, like many large defense contractors, they may have faced scrutiny or challenges on specific programs related to cost, schedule, or technical performance. A detailed review of past performance evaluations, such as Contractor Performance Assessment Reporting System (CPARS) data, would be necessary to provide a comprehensive assessment for this specific contract's context.

How does the estimated annual value of this contract compare to similar electronic warfare system engineering efforts?

The estimated annual value of this contract is approximately $26 million ($128.7M / ~4.9 years). Comparing this to similar electronic warfare (EW) system engineering efforts requires access to detailed contract databases and market intelligence. However, for complex, integrated EW systems like JCREW, which likely involves advanced signal processing, jamming, and countermeasure technologies, an annual value in the tens of millions is not uncommon. Major EW programs often involve multi-year development and sustainment contracts ranging from tens to hundreds of millions of dollars annually, depending on the system's maturity, scope, and production phase. This contract appears to be in the mid-to-high range for a follow-on engineering services award within this specialized domain.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract type for this program?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract type for the JCREW engineering services is the potential for cost growth. While the contractor is reimbursed for allowable costs, the fixed fee provides a ceiling on their profit. This structure can sometimes incentivize contractors to incur higher costs if they believe it will lead to a larger overall contract value or if the fixed fee is not sufficiently motivating. For the government, the risk lies in managing and controlling the "cost" portion of the contract. Effective oversight, detailed cost tracking, and robust negotiation are crucial to mitigate the risk of the government paying more than necessary. The fixed fee itself is negotiated upfront, and its adequacy is a key factor in ensuring contractor motivation.

What is the expected impact of this contract on the overall effectiveness of U.S. electronic warfare capabilities?

This contract is expected to significantly enhance the overall effectiveness of U.S. electronic warfare (EW) capabilities by providing essential engineering services for the JCREW system. JCREW is designed to provide advanced EW capabilities, likely including threat detection, situational awareness, and electronic attack/protection. Continued engineering support ensures the system remains technologically relevant, adapts to evolving threats, and operates reliably. By maintaining and improving these systems, the contract directly contributes to the warfighter's ability to operate in contested electromagnetic spectrum environments, thereby bolstering national security and maintaining a technological edge over adversaries.

How has federal spending on navigation, guidance, and control systems manufacturing evolved over the past five years?

Federal spending on navigation, guidance, and control systems manufacturing, categorized under NAICS code 334511, has generally seen fluctuations driven by defense modernization priorities and broader economic conditions. While specific year-over-year data requires detailed analysis of federal procurement databases (like FPDS-NG or USAspending.gov), the trend has often been upward, particularly within the Department of Defense, reflecting investments in advanced platforms and systems. Periods of increased geopolitical tension or the introduction of new defense strategies can lead to surges in spending for these types of components. Conversely, budget constraints or shifts in acquisition priorities can cause temporary dips. The overall trajectory indicates a sustained, significant federal investment in this high-technology manufacturing sector.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002422R6427

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 15120 INNOVATION DR, SAN DIEGO, CA, 92128

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: $210,997,947

Exercised Options: $205,997,947

Current Obligation: $128,732,944

Actual Outlays: $893,070

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $13,427,211

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline