DoD awards $230M contract for navigation systems, with Northrop Grumman as prime

Contract Overview

Contract Amount: $230,272,015 ($230.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2008-04-18

End Date: 2015-01-31

Contract Duration: 2,479 days

Daily Burn Rate: $92.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SARGMTI

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $230.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SARGMTI Key points: 1. Contract value of $230M over 7 years suggests significant investment in critical defense technology. 2. Sole prime contractor indicates potential for concentrated expertise but also limits competitive pressure. 3. Fixed-price contract structure shifts cost risk to the contractor, potentially incentivizing efficiency. 4. Long contract duration implies a stable, long-term need for these navigation systems. 5. The award falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, aligning with industry specialization. 6. Contract awarded by the Department of the Army, a major consumer of advanced defense systems.

Value Assessment

Rating: good

The contract value of $230 million over approximately 7 years (2008-2015) for navigation systems appears reasonable given the specialized nature of defense technology and the prime contractor's established role. Benchmarking against similar, complex defense system contracts would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an expectation of predictable costs from the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of two bids suggests a degree of competition, though the specifics of the bidding process and the number of proposals received would offer a clearer picture of the competitive landscape. This level of competition is generally favorable for price discovery.

Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally benefits taxpayers by encouraging competitive pricing and potentially leading to better value.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize the advanced navigation systems for operational effectiveness. The contract delivers critical search, detection, navigation, guidance, aeronautical, and nautical systems and instruments. The geographic impact is likely nationwide, supporting Army operations across various bases and deployment locations. Workforce implications include specialized engineering, manufacturing, and technical support roles within Northrop Grumman and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to sole prime contractor status.
Long-term reliance on a single supplier could reduce future negotiation leverage.
Complexity of the systems may lead to unforeseen sustainment costs over the contract's life.

Positive Signals

Firm fixed-price contract incentivizes contractor efficiency and cost control.
Awarded through full and open competition, suggesting a competitive process.
Northrop Grumman's established expertise in defense systems likely ensures high-quality delivery.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of advanced navigation and guidance systems. The market for such specialized defense electronics is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Comparable spending benchmarks would involve other large-scale defense system development and production contracts, often in the hundreds of millions to billions of dollars.

Small Business Impact

While the contract was awarded to a large prime contractor, Northrop Grumman, there is no explicit indication of a small business set-aside. The prime contractor may engage small businesses as subcontractors, but the extent of this subcontracting and its impact on the small business ecosystem is not detailed in the provided data. Further analysis would be needed to determine subcontracting plans and performance.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded in the firm fixed-price structure, requiring the contractor to meet specifications within the agreed price. Transparency is generally maintained through contract award databases and reporting requirements, though specific oversight details are not provided.

Related Government Programs

DoD Navigation Systems Procurement
Army Aviation Systems
Defense Electronics Manufacturing
Guidance and Control Systems
Aerospace Instrument Manufacturing

Risk Flags

Sole prime contractor may limit future competition.
Long contract duration could lead to vendor lock-in.
Complexity of defense systems can introduce unforeseen risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $230.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SARGMTI

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 Army).

What is the total obligated amount?

The obligated amount is $230.3 million.

What is the period of performance?

Start: 2008-04-18. End: 2015-01-31.

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 producing complex systems for the Department of Defense, including navigation, guidance, and control systems. They are a major defense contractor with significant expertise in aerospace and electronic warfare. Their track record with similar contracts would likely show a pattern of successful, albeit often high-value and long-duration, awards. Specific performance metrics on past contracts, such as on-time delivery, adherence to budget (especially for fixed-price contracts), and system reliability, would be crucial for a comprehensive assessment. However, without access to detailed performance reports or historical contract data beyond the award itself, a definitive statement on their track record for *this specific type* of navigation system is limited to their general reputation and broad capabilities in the defense sector.

How does the $230 million contract value compare to other similar navigation system procurements by the DoD?

The $230 million contract value, awarded over approximately seven years (2008-2015), represents a substantial investment in navigation systems. To benchmark this value, one would need to compare it against other definitive contracts for similar navigation, guidance, or aeronautical/nautical instrument manufacturing (NAICS 334511) awarded by the DoD or other federal agencies during a comparable timeframe. Factors such as system complexity, technological sophistication, quantity, and specific performance requirements heavily influence contract value. Given that this was a firm fixed-price contract awarded under full and open competition, the price reflects negotiated terms based on anticipated costs and profit. Without access to a database of comparable contracts with detailed specifications and pricing, it's challenging to definitively state if $230 million is high or low, but it indicates a significant program.

What are the primary risks associated with a sole prime contractor for advanced defense systems like navigation technology?

The primary risks associated with a sole prime contractor, such as Northrop Grumman in this case, revolve around reduced competition and potential vendor lock-in. When only one company is responsible for developing and supplying a critical technology, the government may have less leverage in future negotiations for upgrades, sustainment, or follow-on contracts. This can lead to higher long-term costs. Additionally, reliance on a single source can create vulnerabilities if the contractor experiences financial difficulties, production issues, or strategic shifts. While a sole prime can foster deep expertise and streamlined development, it necessitates robust government oversight to ensure continued value and mitigate risks of complacency or price escalation over the system's lifecycle.

How effective is a firm fixed-price contract structure in managing costs for complex defense navigation systems?

A firm fixed-price (FFP) contract structure is generally considered effective in managing costs for complex defense navigation systems because it shifts the majority of the cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to control expenses, improve efficiency, and manage resources effectively to maximize their profit margin. For the government, it provides cost certainty, making budgeting more predictable. However, for highly complex or technologically uncertain projects, contractors may build significant contingency into their initial bids to account for potential cost overruns, which could lead to a higher initial price compared to other contract types. Effective implementation requires clear and stable requirements from the government.

What are the historical spending patterns for navigation system manufacturing (NAICS 334511) within the Department of Defense?

Historical spending patterns for navigation system manufacturing (NAICS 334511) within the Department of Defense are characterized by significant, long-term investments in advanced technologies. The DoD is a primary customer for this sector, driven by the need for sophisticated systems in aircraft, ships, ground vehicles, and munitions. Spending tends to be concentrated among a few large defense contractors who possess the necessary R&D capabilities, manufacturing infrastructure, and security clearances. Contracts are often awarded through competitive processes, but can also involve sole-source or limited competition for highly specialized or proprietary systems. The overall trend reflects a continuous cycle of modernization, upgrades, and sustainment of existing platforms, with substantial budgets allocated to ensure operational superiority and technological advantage.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15P7T07RP406

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 1580B W NURSERY RD, MS B585, LINTHICUM HEIGHTS, MD, 21090

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $611,771,013

Exercised Options: $450,560,958

Current Obligation: $230,272,015

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline