DoD's $23.4M laser contract awarded to Northrop Grumman, raising questions about competition and value

Contract Overview

Contract Amount: $23,358,580 ($23.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2017-09-29

End Date: 2023-09-30

Contract Duration: 2,192 days

Daily Burn Rate: $10.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SINGLE COLOR DIODE PUMPED LASER

Place of Performance

Location: APOPKA, ORANGE County, FLORIDA, 32703

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $23.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SINGLE COLOR DIODE PUMPED LASER Key points: 1. The contract's value appears high relative to the limited competition. 2. Lack of competition suggests potential for inflated pricing. 3. Long performance period may indicate evolving technological needs or program stability. 4. The sole-source nature warrants scrutiny of justification and alternative sourcing. 5. Northrop Grumman's extensive defense portfolio suggests capacity but also potential market dominance. 6. The specific application of the laser system is unclear, impacting performance context. 7. Geographic concentration in Florida warrants analysis of regional economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this specific laser system is challenging without detailed technical specifications and market comparables. However, the absence of competition for a contract of this magnitude ($23.4 million) raises concerns about whether the government secured the best possible price. A sole-source award limits the opportunity for market forces to drive down costs, suggesting that the price may not be as competitive as it could be under a more open procurement process. Further analysis would require comparing the unit cost and overall value against similar, competitively procured laser systems, if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. The justification for this approach is not provided in the data. Typically, sole-source awards occur when only one responsible source can fulfill the requirement, or in cases of urgent need. The lack of competition means there was no opportunity for other qualified companies to bid, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, the government lacks a strong basis to negotiate the lowest possible price, potentially resulting in less efficient use of public funds.

Public Impact

The primary beneficiary is the Department of the Navy, receiving advanced laser technology. The contract supports the development and delivery of single color diode pumped lasers. The geographic impact is concentrated in Florida, where the contractor is located. Workforce implications include specialized engineering and manufacturing roles within Northrop Grumman. The technology could have applications in defense systems, surveillance, or targeting.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases cost to taxpayers.
Lack of transparency regarding the justification for sole-source procurement.
Long contract duration (over 5 years) could mask inefficiencies or scope creep.
Specific performance metrics and delivery details are not publicly available.
Potential for vendor lock-in given the specialized nature of the technology.

Positive Signals

Award to a large, established defense contractor like Northrop Grumman suggests technical capability.
Firm Fixed Price contract type provides cost certainty for the government.
The contract is for a specific, defined product (single color diode pumped laser).
The contract is being performed in Florida, potentially supporting regional jobs.

Sector Analysis

The defense sector, particularly within optical instrument and lens manufacturing, is characterized by high R&D investment and specialized production capabilities. Contracts like this are crucial for maintaining technological superiority in defense applications. The market for advanced lasers is competitive among major defense contractors, but specific niche technologies can sometimes lead to limited sourcing options. Spending in this sub-sector is driven by evolving military requirements for precision, range, and power.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. The award to a large prime contractor like Northrop Grumman suggests that subcontracting opportunities may exist for smaller businesses within their supply chain. However, without specific subcontracting plans or data, the direct impact on the small business ecosystem is unclear. The absence of set-asides means that direct opportunities for small businesses to compete for this specific prime contract were not prioritized.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Northrop Grumman, as a major defense contractor, is subject to various federal acquisition regulations and oversight mechanisms, including potential audits and reviews by the Defense Contract Audit Agency (DCAA) and the Government Accountability Office (GAO). Transparency is limited by the sole-source nature and the lack of publicly detailed performance metrics. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development
Naval Sea Systems Command Contracts
Advanced Photonics Technology Procurement
Defense Advanced Research Projects Agency (DARPA) Programs

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed technical specifications hinders value assessment.
Long contract duration may obscure performance issues or inefficiencies.
Absence of small business set-aside information limits analysis of broader economic impact.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SINGLE COLOR DIODE PUMPED LASER

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 $23.4 million.

What is the period of performance?

Start: 2017-09-29. End: 2023-09-30.

What is the specific technical capability and intended use of the 'SINGLE COLOR DIODE PUMPED LASER' being procured?

The provided data identifies the item as a 'SINGLE COLOR DIODE PUMPED LASER' and assigns it a Product Service Code (PSC) of '333314', which falls under 'Optical Instrument and Lens Manufacturing'. While this indicates the general category, specific technical capabilities such as wavelength, power output, beam quality, and intended operational environment are not detailed. Diode-pumped solid-state (DPSS) lasers are known for their efficiency, compactness, and reliability. They are used in a wide array of applications, including industrial marking and cutting, medical procedures, scientific research, and importantly for this contract, military applications such as target designation, rangefinding, directed energy systems, and countermeasures. Without further technical specifications, the precise application within the Department of Defense remains speculative but likely relates to advanced optical systems for defense platforms.

What was the justification for awarding this contract on a sole-source basis to Northrop Grumman Systems Corporation?

The data explicitly states the contract was 'NOT COMPETED' and awarded as a 'sole-source'. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for contracting without full and open competition. Common justifications include that only one responsible source can satisfy the agency's needs, or that the agency is unable to obtain the supply or service from any other source. Other reasons can include urgent and compelling needs, or specific national defense requirements. For this specific contract, the detailed justification is not provided. However, given Northrop Grumman's extensive capabilities in advanced electronics and defense systems, it's plausible they possess unique intellectual property, specialized manufacturing facilities, or critical expertise required for this particular laser technology that other firms may not possess or could not replicate within the required timeframe or cost parameters. A thorough review of the Justification for Other Than Full and Open Competition (JOFOC) would be necessary to fully understand the rationale.

How does the contract value of approximately $23.4 million compare to similar laser system procurements by the DoD or other federal agencies?

Directly comparing the $23.4 million value is difficult without knowing the exact specifications, quantity, and technological maturity of the 'SINGLE COLOR DIODE PUMPED LASER'. However, the value is substantial for a single award, especially one that was not competed. For context, other federal agencies procure various types of lasers for scientific, industrial, and defense purposes. For instance, research-grade lasers or lasers for specific scientific instruments might range from tens of thousands to a few million dollars. High-power directed energy systems or complex targeting lasers for military platforms can cost tens or hundreds of millions. Given the sole-source nature and the duration (over 5 years), this $23.4 million likely covers development, integration, and delivery of a specialized system. Without competitive benchmarks, it's hard to definitively assess value for money, but the lack of competition inherently raises concerns that the price might be higher than if multiple bids were solicited.

What are the potential risks associated with a sole-source contract of this duration and value?

Sole-source contracts, particularly those with a significant value and long duration (2192 days, approx. 6 years), carry several inherent risks. Firstly, the primary risk is reduced value for money; without competition, the government may pay a higher price than necessary. Secondly, there's a risk of complacency from the contractor, as there is no competitive pressure to innovate or improve efficiency once the contract is secured. Thirdly, the long duration increases the risk of scope creep or cost overruns if not managed meticulously. Fourthly, the government becomes dependent on a single supplier, creating potential vulnerabilities if the supplier faces financial difficulties, operational issues, or decides to discontinue the product line. Finally, the lack of transparency associated with sole-source justifications can mask underlying issues or prevent the government from exploring potentially better or more cost-effective solutions that might emerge in the market.

What is Northrop Grumman Systems Corporation's track record with similar sole-source procurements, particularly within the Department of Defense?

Northrop Grumman Systems Corporation is a major defense contractor with a vast portfolio and extensive experience across numerous sole-source and competitively awarded contracts with the Department of Defense (DoD). They are known for large-scale programs in areas like aerospace, defense electronics, and information systems. While specific data on their sole-source procurements for laser systems isn't detailed here, their history suggests they are capable of fulfilling complex, high-value requirements. However, like any large contractor, they have been involved in contracts that have faced scrutiny regarding cost, performance, or competition. The DoD frequently relies on large, established contractors like Northrop Grumman for specialized technologies where few alternatives exist. Analyzing their broader contract history, including any past sole-source awards for similar technologies, would provide a more comprehensive view of their performance and pricing patterns.

What are the implications of the contract's end date (September 30, 2023) given its start date (September 29, 2017)?

The contract spanned approximately six years from award to completion. This extended duration suggests that the procurement was likely for a system that required significant development, integration, testing, and potentially fielding over a multi-year period, rather than an off-the-shelf purchase. Such long timelines are common for complex defense systems where technological evolution, rigorous testing protocols, and phased deployment are necessary. The end date indicates the contract has concluded, implying that the deliverables have been met or the period of performance has expired. It raises questions about whether the program met its objectives within the allocated time and budget, and whether follow-on contracts or sustainment activities are planned. The fact that it was sole-sourced for such a long period warrants examination of the initial justification and whether market conditions or technological needs changed over its lifecycle.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Optical Instrument and Lens Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0016416RJQ08

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2787 S ORANGE BLOSSOM TRL, APOPKA, FL, 32703

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: $23,358,580

Exercised Options: $23,358,580

Current Obligation: $23,358,580

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0016417GJQ08

IDV Type: BOA

Timeline