Northrop Grumman awarded $30.5M for navigation systems, a sole-source contract with a 933-day duration

Contract Overview

Contract Amount: $30,498,908 ($30.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2012-11-21

End Date: 2015-06-12

Contract Duration: 933 days

Daily Burn Rate: $32.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PANEL,STRUCTURAL,AI

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714, UNITED STATES OF AMERICA

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $30.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PANEL,STRUCTURAL,AI Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. The contract was not competed, raising questions about potential price efficiencies. 3. Duration of 933 days suggests a long-term need for these navigation systems. 4. The award value of $30.5M falls within a moderate spending range for defense systems. 5. The North American Industry Classification System (NAICS) code 334511 points to specialized instrument manufacturing. 6. The contract was awarded to Northrop Grumman Systems Corporation, a major defense contractor.

Value Assessment

Rating: fair

Benchmarking the value of this $30.5 million contract is challenging without specific performance metrics or comparable sole-source awards. However, the firm-fixed-price structure suggests that the government aimed to lock in costs. Given the specialized nature of navigation systems and the sole-source award, it's difficult to definitively assess if this represents optimal value for money compared to a competitive scenario. Further analysis would require understanding the specific system's capabilities and market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition. This typically occurs when a specific contractor possesses unique capabilities or proprietary technology essential for the requirement. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs than if multiple bidders had vied for the contract. The government likely relied on internal cost analysis or negotiation to determine a fair price.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, there's less assurance that the price reflects the lowest possible cost for the required navigation systems.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical navigation systems. These systems are essential for the operational readiness and effectiveness of military assets. The contract supports the manufacturing and supply chain within the aerospace and defense sector. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in the procurement process due to non-competitive nature.
Long contract duration could lead to cost overruns if not managed tightly.
Reliance on a single supplier for critical navigation technology poses supply chain risk.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established contractor like Northrop Grumman suggests a focus on reliability and proven capability.
Specialized nature of the product implies advanced technological development.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, classified under NAICS code 334511. This is a highly specialized segment of the aerospace and defense industry, characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this sector is often driven by national security needs, with major players like Northrop Grumman dominating the market. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar advanced navigation or guidance systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is Northrop Grumman Systems Corporation, a large defense entity. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this award is not detailed here. The absence of a direct set-aside means small businesses were not specifically targeted for this prime contract opportunity.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. As a sole-source award, the government's oversight would focus on ensuring Northrop Grumman meets the technical specifications and delivery schedules outlined in the firm-fixed-price contract. Accountability measures would be tied to contract performance clauses. Transparency is limited due to the non-competitive nature, but contract award data is publicly available through federal procurement databases.

Related Government Programs

Defense Logistics Agency Procurement
Navigation and Guidance Systems
Northrop Grumman Defense Contracts
Sole-Source Defense Awards
Aerospace and Defense Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PANEL,STRUCTURAL,AI

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $30.5 million.

What is the period of performance?

Start: 2012-11-21. End: 2015-06-12.

What specific navigation systems are being procured under this contract, and what is their intended application?

The contract data indicates the procurement of 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' under NAICS code 334511. While the specific system details are not provided, this classification suggests advanced equipment critical for military operations. These systems likely enhance the accuracy and reliability of aircraft, vessels, or other defense platforms in determining position, course, and speed. Applications could range from tactical navigation in contested environments to strategic guidance for long-range assets, supporting the Department of Defense's mission-critical functions.

How does the $30.5 million award value compare to similar sole-source contracts for navigation systems?

Comparing this $30.5 million award value to similar sole-source contracts requires access to a broader dataset of defense procurements for navigation systems. However, for a contract spanning 933 days (approximately 2.5 years) awarded to a major defense contractor like Northrop Grumman, this value appears moderate. Sole-source awards for highly specialized or technologically advanced systems can vary significantly. Without specific details on the system's complexity, quantity, and technological maturity, a precise benchmark is difficult. It is plausible that this represents a fair price for a niche capability, but the lack of competition prevents definitive value assessment against market alternatives.

What are the primary risks associated with this sole-source contract, and how are they mitigated?

The primary risks associated with this sole-source contract include potential cost inefficiencies due to the lack of competition, and supply chain dependency on a single contractor. Without competitive pressure, there's a risk that the price may not be the lowest achievable. Additionally, relying solely on Northrop Grumman for these critical navigation systems could create vulnerabilities if the contractor faces production issues or if geopolitical factors impact their operations. Mitigation strategies likely involve robust government oversight, detailed performance monitoring, and potentially negotiating strong contract terms that incentivize efficiency and timely delivery. The firm-fixed-price structure itself aims to mitigate cost overrun risks for the government.

What is Northrop Grumman's track record with the Defense Logistics Agency and similar navigation system contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a long-standing relationship with various branches of the U.S. military, including the Department of Defense and its agencies like the Defense Logistics Agency (DLA). They have a significant history of developing and supplying complex systems, including navigation, guidance, and control technologies. While specific details of past performance on DLA contracts for navigation systems are not provided here, Northrop Grumman's extensive experience in this domain suggests a high level of technical expertise and established manufacturing capabilities. Their track record generally indicates a capacity to deliver on large, complex defense contracts, though like any large contractor, performance can vary across individual awards.

How has federal spending on navigation and guidance systems evolved over the past decade?

Federal spending on navigation and guidance systems has generally remained robust, driven by continuous modernization efforts within the Department of Defense and other agencies. While specific figures fluctuate annually based on budget allocations and program priorities, the overall trend reflects a sustained investment in advanced technologies to maintain military superiority. Spending is influenced by factors such as the development of new platforms (aircraft, ships, vehicles), upgrades to existing systems, and the integration of emerging technologies like AI and improved sensor fusion. Contracts in this area often involve significant R&D components and long production cycles, contributing to consistent, albeit variable, annual outlays.

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: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRPA111QZ249

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 600 GRUMMAN RD WEST, BETHPAGE, NY, 11714

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,498,908

Exercised Options: $30,498,908

Current Obligation: $30,498,908

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPM4AX12D9401

IDV Type: IDC

Timeline