DoD's $24.5M contract for system configuration sets awarded to Northrop Grumman, raising questions about competition

Contract Overview

Contract Amount: $24,496,919 ($24.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2025-01-21

End Date: 2026-09-09

Contract Duration: 596 days

Daily Burn Rate: $41.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SE- SYSTEM CONFIGURATION SETS - TERM NEW TASK ORDER SEPM 4_NG

Place of Performance

Location: WOODLAND HILLS, LOS ANGELES County, CALIFORNIA, 91367

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $24.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SE- SYSTEM CONFIGURATION SETS - TERM NEW TASK ORDER SEPM 4_NG Key points: 1. The contract's value of $24.5 million represents a significant investment in specialized system configurations. 2. Awarded to a single, large defense contractor, this raises concerns about the breadth of competitive bidding. 3. The 'NOT COMPETED' status is a key risk indicator, suggesting potential for higher costs and limited innovation. 4. This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector. 5. The duration of 596 days indicates a medium-term need for these system configuration sets.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar system configuration sets. The cost-plus-fixed-fee (CPFF) contract type can sometimes lead to cost overruns if not meticulously managed. Without competitive pressure, the pricing may not reflect the most economical option available in the market. Further analysis of the fixed fee and estimated costs would be necessary to provide a more definitive value assessment.

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 considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition limits the government's ability to explore alternative solutions and potentially secure more favorable pricing through a bidding war.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits opportunities for other capable businesses to secure government contracts.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive updated system configurations. The services delivered are crucial for enhancing the operational capabilities of naval systems. The contract is geographically focused within California, where the contractor is located. This contract supports specialized roles within the defense industry, potentially impacting a niche workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source awards can stifle innovation by limiting exposure to diverse technological approaches.
The CPFF contract type carries inherent risks of cost escalation if not closely monitored.

Positive Signals

Award to an established contractor like Northrop Grumman suggests a high degree of confidence in their capabilities.
The contract addresses a specific, likely critical, need within the Department of the Navy's operational framework.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on navigation and guidance systems. The North American Industry Classification System (NAICS) code 334511 covers establishments primarily engaged in manufacturing instruments for measuring, displaying, and controlling electrical properties; non-commercial scientific and technical instruments; and navigational and guidance systems. Spending in this sector is heavily influenced by defense budgets and technological advancements.

Small Business Impact

The contract data indicates no specific small business set-aside. Given the sole-source nature and the likely specialized requirements, it is improbable that subcontracting opportunities for small businesses would be a primary focus or requirement of this award. This contract does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

Naval Navigation Systems Modernization
Defense System Configuration Management
Aeronautical and Nautical Instrument Manufacturing
Department of Defense IT and Systems Procurement

Risk Flags

Sole-source award
Lack of competition
Cost-plus-fixed-fee contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SE- SYSTEM CONFIGURATION SETS - TERM NEW TASK ORDER SEPM 4_NG

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 $24.5 million.

What is the period of performance?

Start: 2025-01-21. End: 2026-09-09.

What is Northrop Grumman's track record with similar sole-source contracts for system configuration sets within the Department of Defense?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience across various platforms and systems. While specific data on their sole-source contracts for 'SE- SYSTEM CONFIGURATION SETS - TERM NEW TASK ORDER SEPM 4_NG' is not publicly detailed, the company frequently receives sole-source awards for complex, specialized systems where they possess unique capabilities or are the incumbent provider. Analysis of historical contract awards would reveal a pattern of such awards, often justified by proprietary technology, existing infrastructure, or critical program sustainment needs. However, the frequency of sole-source awards for this specific type of configuration set would require a deeper dive into DoD procurement databases to assess if this is a recurring practice or an exception.

How does the $24.5 million value compare to other contracts for similar system configuration sets, especially those that were competitively bid?

Direct comparison of the $24.5 million value to competitively bid contracts for 'SE- SYSTEM CONFIGURATION SETS - TERM NEW TASK ORDER SEPM 4_NG' is difficult due to the sole-source nature of this award. Competitively bid contracts often result in lower prices due to market forces. If this contract had been competed, it's plausible that the final award price could have been lower, or that alternative solutions offering better value might have emerged. Without access to benchmark data from similar, competed contracts for comparable system configurations, it's challenging to definitively state whether $24.5 million represents a fair market price. The cost-plus-fixed-fee structure also introduces variables that make direct price comparisons less straightforward than fixed-price contracts.

What are the primary risks associated with a 'NOT COMPETED' award of this magnitude?

The primary risks associated with a 'NOT COMPETED' award of $24.5 million include potential cost inefficiencies, reduced innovation, and a lack of market transparency. Without competition, the government loses the opportunity to leverage market dynamics to secure the best possible price and terms. This can lead to overpayment for goods or services. Furthermore, relying on a single source may limit exposure to new technologies or more efficient solutions that other vendors might offer. There's also a risk that the contractor may not feel the same pressure to perform at peak efficiency as they would in a competitive environment, potentially impacting delivery timelines or quality, although the CPFF structure aims to mitigate some performance risks through fee adjustments.

What is the expected program effectiveness or outcome of these system configuration sets for the Department of the Navy?

The system configuration sets, identified by 'SE- SYSTEM CONFIGURATION SETS - TERM NEW TASK ORDER SEPM 4_NG', are expected to enhance or maintain the operational effectiveness of specific naval systems. While the exact function is not detailed, such configurations typically involve software updates, hardware integration, or specialized parameter settings crucial for navigation, detection, or guidance systems. Improved system configuration can lead to enhanced accuracy, reliability, and potentially new functionalities, directly impacting the Navy's mission readiness and operational capabilities. The effectiveness will ultimately be measured by how well these updated configurations perform in real-world scenarios and contribute to the overall mission success of the naval assets they support.

How has the Department of the Navy's spending on navigation and guidance systems (NAICS 334511) trended over the past five years?

Analyzing the Department of the Navy's spending trends for NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing) over the past five years would require access to detailed federal procurement databases. Generally, spending in this sector is influenced by defense modernization priorities, geopolitical factors, and the lifecycle of existing naval platforms. Periods of significant fleet expansion or upgrades often correlate with increased spending. Conversely, budget constraints or shifts in strategic focus could lead to decreased investment. Without specific data, it's presumed that spending has likely remained substantial, reflecting the ongoing need for advanced navigation and guidance technologies to maintain a technological edge.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6893621R0009

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 21240 BURBANK BLVD, WOODLAND HILLS, CA, 91367

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: $24,544,130

Exercised Options: $24,544,130

Current Obligation: $24,496,919

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6893622D0028

IDV Type: IDC

Timeline