DoD's $9.91M contract for navigation systems awarded to Northrop Grumman, highlighting a mature industry segment

Contract Overview

Contract Amount: $9,912,850 ($9.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2005-09-22

End Date: 2009-01-30

Contract Duration: 1,226 days

Daily Burn Rate: $8.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $9.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. The contract value is within a typical range for specialized defense systems, suggesting moderate market competition. 2. The use of a Cost Plus Fixed Fee (CPFF) contract type may indicate complexity or uncertainty in project scope. 3. The duration of the contract (1226 days) suggests a long-term need for the specified navigation systems. 4. The award to a large, established defense contractor like Northrop Grumman is common for complex system development. 5. The absence of small business set-asides suggests the scope may not have been conducive to smaller firm participation. 6. The contract's focus on 'Search, Detection, Navigation, Guidance' systems places it within a critical defense technology area.

Value Assessment

Rating: good

The contract value of approximately $9.91 million for navigation systems appears reasonable given the specialized nature of defense technology and the contractor's established capabilities. Benchmarking against similar contracts for advanced navigation or guidance systems would provide a more precise value-for-money assessment. However, the award to a prime contractor of Northrop Grumman's size suggests a competitive bidding process likely yielded a fair price for the required technology and services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but the 'full and open' designation generally suggests a healthy level of competition for this type of defense system. This approach is intended to ensure the government receives the best possible value by considering a wide range of potential suppliers.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces and encourages innovation among a broader base of contractors, ultimately leading to more cost-effective procurement.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced navigation and guidance systems essential for military operations. The services delivered include the manufacturing and potential development of sophisticated navigation system components. The geographic impact is likely concentrated within defense installations and operational theaters where these systems are deployed. Workforce implications may include specialized engineering, manufacturing, and technical support roles within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can sometimes lead to cost overruns if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee.
The lack of specific details on performance metrics makes it difficult to fully assess the contractor's performance against expectations.
The long contract duration could present risks related to technological obsolescence if the systems are not adaptable to future upgrades.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process that likely secured competitive pricing.
The contractor, Northrop Grumman, is a well-established defense industry leader with a proven track record in complex systems.
The contract addresses a critical need for advanced navigation and guidance systems, vital for national security operations.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a highly specialized and technologically advanced segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Spending in this area is crucial for maintaining technological superiority in defense capabilities. Comparable spending benchmarks would typically involve other large-scale procurements of integrated systems for aircraft, ships, or ground vehicles.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for them mentioned in the provided data. The nature of advanced navigation systems often requires specialized expertise and infrastructure typically found in larger, established defense contractors. This suggests that the primary contract was likely awarded to a large business, and any small business involvement would be through the prime contractor's supply chain, the extent of which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring compliance with contract terms, quality standards, and delivery schedules. Accountability measures are inherent in the CPFF contract structure, which requires detailed cost reporting and justification. Transparency is facilitated through contract award databases, though specific performance reports may be less publicly accessible due to national security considerations. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Defense Navigation Systems Procurement
Aeronautical and Nautical Instrument Manufacturing
Northrop Grumman Defense Contracts
Cost Plus Fixed Fee Defense Contracts
DoD Search and Detection Systems

Risk Flags

Contract Type Risk (CPFF)
Potential for Cost Overruns
Technological Obsolescence Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $9.9 million.

What is the period of performance?

Start: 2005-09-22. End: 2009-01-30.

What is Northrop Grumman's track record with similar navigation system contracts for the Department of Defense?

Northrop Grumman has a long and extensive history of developing and supplying complex systems, including navigation, guidance, and control technologies, for various Department of Defense platforms. They are a major prime contractor involved in numerous large-scale defense programs. Their track record typically includes delivering sophisticated hardware and software solutions for aircraft, spacecraft, and naval vessels. While specific details on past navigation system contracts would require deeper analysis of historical procurement data, their position as a leading defense contractor suggests a substantial portfolio of relevant experience. This includes managing complex development cycles, integrating systems with existing platforms, and meeting stringent military specifications. Their performance on previous contracts would be a key factor in the DoD's decision-making process for awarding new contracts.

How does the $9.91 million contract value compare to other similar navigation system procurements?

The $9.91 million contract value for navigation systems appears to be in the mid-range for specialized defense components or subsystems. Procurements for complete, integrated navigation suites for major platforms (like aircraft carriers or advanced fighter jets) can run into hundreds of millions or even billions of dollars. Conversely, contracts for individual components or specific software upgrades might be significantly smaller. Given that this is a definitive contract awarded to a major defense contractor, it likely represents a substantial development or production effort for a critical system. Without knowing the exact scope (e.g., research and development, full-rate production, specific system components), a precise comparison is challenging. However, compared to smaller, off-the-shelf procurements, this value suggests a more complex, tailored solution.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for navigation systems?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for navigation systems revolve around cost control and potential for contractor inefficiency. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. The main risk for the government is that the contractor may have less incentive to control costs rigorously compared to fixed-price contracts, as cost overruns are generally covered. This can lead to the project exceeding its estimated budget. Additionally, defining 'allowable costs' can sometimes lead to disputes. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee remains profitable, especially if unforeseen technical challenges arise. Effective government oversight is crucial to mitigate these risks by scrutinizing costs and ensuring adherence to the contract's scope.

How effective are full and open competition processes in ensuring value for taxpayer money in specialized defense sectors?

Full and open competition is generally considered the most effective method for ensuring value for taxpayer money, even in specialized defense sectors. By allowing all responsible sources to submit bids, the government maximizes the potential for receiving competitive pricing and innovative solutions. This process encourages contractors to offer their best value propositions to win the contract. In specialized sectors like navigation systems, where technology is complex and R&D intensive, competition can drive down costs that might otherwise be inflated due to limited supplier options. While the initial bidding process might be more resource-intensive, the long-term benefits of competitive pricing, technological advancement, and broader supplier engagement typically outweigh these costs, leading to better outcomes for taxpayers.

What is the typical lifecycle and potential for obsolescence of defense navigation systems procured under contracts like this?

The typical lifecycle for defense navigation systems can vary significantly, but they are generally designed for longevity and robustness, often exceeding 10-20 years in service. However, the rapid pace of technological advancement, particularly in areas like digital processing, sensor technology, and software, poses a constant risk of obsolescence. Contracts like this, especially if they involve significant development, aim to incorporate state-of-the-art technology at the time of award. The risk of obsolescence is managed through several strategies: designing systems with modularity for easier upgrades, incorporating open architecture principles, and planning for mid-life upgrades or replacements. The specific contract duration (1226 days) suggests a focus on development and initial fielding, after which sustainment and modernization planning become critical to mitigate obsolescence over the system's operational life.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 600 HICKS RD, ROLLING MEADOW, IL, 60008

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline