DoD's $242M contract for navigation systems awarded to Northrop Grumman, raising questions about competition and value

Contract Overview

Contract Amount: $24,245,687 ($24.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-25

End Date: 2030-04-29

Contract Duration: 1,677 days

Daily Burn Rate: $14.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF SRAS, TRDS, LPDS, AND EDFPS.

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $24.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PROCUREMENT OF SRAS, TRDS, LPDS, AND EDFPS. Key points: 1. Contract awarded on a sole-source basis, limiting competitive pressure on pricing. 2. Significant contract value suggests a critical need for these specialized systems. 3. The duration of the contract (over 4 years) indicates a long-term requirement. 4. Northrop Grumman's established position in defense contracting likely influenced the award. 5. Lack of competition may lead to higher costs for taxpayers. 6. Performance context is limited due to the sole-source nature of the award.

Value Assessment

Rating: questionable

Benchmarking the value of this $242 million contract is challenging due to its sole-source nature and the specialized equipment procured. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if potential savings were forgone. The firm-fixed-price structure offers some cost certainty, but the absence of competition prevents a direct comparison to similar recent awards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Northrop Grumman Systems Corporation. The justification for not competing the award is not provided in the data, but such awards typically occur when only one vendor can meet the specific technical requirements or when there's a critical need that precludes a lengthy competition. The lack of bidders means there was no opportunity for price discovery through a competitive process.

Taxpayer Impact: Taxpayers may be paying a premium for this system due to the absence of competitive bidding. Without multiple offers, the government lacks leverage to negotiate the lowest possible price.

Public Impact

The Department of the Navy benefits from the procurement of critical navigation systems. These systems are essential for the operational readiness and effectiveness of naval assets. The contract supports advanced technological capabilities within the defense sector. Work is likely concentrated in areas where Northrop Grumman has significant operations, potentially impacting the workforce in those regions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency regarding the justification for a sole-source award.
Long contract duration could lead to cost overruns if not managed effectively.
Specialized nature of the equipment may create vendor lock-in.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Procurement of advanced navigation systems supports critical defense capabilities.
Northrop Grumman is a major defense contractor with a track record in complex systems.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of navigation, guidance, and control systems. The market for such specialized defense electronics is often characterized by high barriers to entry due to technological complexity and stringent qualification requirements. Spending in this area is driven by national security needs and technological advancements, with major defense contractors like Northrop Grumman dominating the landscape.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no information on subcontracting plans (sb: false). As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Northrop Grumman voluntarily includes them in its supply chain. There is no indication of specific efforts to engage the small business ecosystem through this particular procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and terms would be subject to review by relevant oversight bodies within the Department of Defense. Transparency is limited by the non-competitive nature, but contract performance and financial expenditures would be monitored to ensure compliance with the firm-fixed-price agreement.

Related Government Programs

Naval Navigation Systems Procurement
Defense Electronics Manufacturing
Aerospace and Defense Systems
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PROCUREMENT OF SRAS, TRDS, LPDS, AND EDFPS.

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 $24.2 million.

What is the period of performance?

Start: 2025-09-25. End: 2030-04-29.

What is Northrop Grumman's track record with similar sole-source contracts for navigation systems?

Northrop Grumman has a long history of securing sole-source contracts for complex defense systems, including navigation and guidance technologies. Their extensive experience and established relationships with the Department of Defense often position them favorably for such awards, particularly when specialized or proprietary technology is involved. While specific details on past sole-source awards for these exact systems are not provided, the company's overall profile suggests a pattern of being a primary, and sometimes sole, provider for critical defense components. Analyzing past performance on similar contracts would require deeper access to contract databases and performance reviews to assess reliability and adherence to schedule and budget.

How does the $242 million value compare to similar navigation system procurements?

Direct comparison of the $242 million value is difficult without knowing the exact specifications and quantities of the SRAS, TRDS, LPDS, and EDFPS being procured. However, for major defense platforms, the cost of advanced navigation and guidance systems can easily run into tens or hundreds of millions of dollars, especially when considering research, development, integration, and long-term support. Given that this is a sole-source award to a major defense contractor, the price is likely reflective of the specialized nature and potentially limited market. Benchmarking against competed contracts for less specialized or more commoditized navigation equipment would likely show this contract to be at a higher price point, as expected for advanced, sole-source defense technology.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($242 million) include potential overpricing due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may not receive the best possible value for their money. Additionally, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier for critical components, potentially limiting future flexibility and increasing long-term costs. Programmatic risks also exist if the sole provider faces financial difficulties or operational issues, as there are no immediate alternatives.

How effective are sole-source contracts in ensuring the timely delivery of critical defense capabilities?

Sole-source contracts can be effective in ensuring the timely delivery of critical defense capabilities, particularly when the technology is highly specialized, proprietary, or requires unique manufacturing expertise possessed by only one contractor. By bypassing the lengthy competitive bidding process, a sole-source award can accelerate the acquisition timeline, which is crucial for urgent national security needs. Northrop Grumman, as a large and experienced defense contractor, is likely capable of meeting delivery schedules. However, this speed comes at the potential cost of higher prices and reduced oversight compared to a competed contract, and effectiveness is contingent on the contractor's performance and the government's ability to manage the contract closely.

What is the historical spending trend for navigation systems by the Department of the Navy?

Historical spending by the Department of the Navy on navigation systems is substantial, reflecting the critical role these technologies play in naval operations across various platforms, including ships, submarines, and aircraft. While specific aggregate data for 'navigation systems' can be fragmented across different contract types and procurement vehicles, the overall trend indicates consistent and significant investment. Major defense contractors like Northrop Grumman are perennial recipients of such contracts. Spending levels are influenced by modernization programs, fleet expansion or upgrades, and the evolving threat landscape, often resulting in multi-year, high-value procurements for advanced systems.

What are the implications of the firm-fixed-price (FFP) contract type for this procurement?

The firm-fixed-price (FFP) contract type offers significant advantages for the government in terms of cost certainty. Under an FFP agreement, the contractor assumes most of the risk for cost overruns, meaning the price paid by the government will not change unless the contract terms are formally modified. This structure incentivizes the contractor to manage costs efficiently and complete the work within the agreed-upon budget. For a $242 million sole-source award, FFP provides a crucial layer of financial predictability, protecting taxpayers from unexpected cost increases, although it does not inherently guarantee the lowest possible price due to the lack of competition.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580 W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090

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: $24,245,687

Exercised Options: $24,245,687

Current Obligation: $24,245,687

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0016425GJW77

IDV Type: BOA

Timeline