DoD's $37.9M FAAD C2 sustainment contract awarded to Northrop Grumman for R&D

Contract Overview

Contract Amount: $37,924,839 ($37.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-03-31

End Date: 2025-05-09

Contract Duration: 1,500 days

Daily Burn Rate: $25.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUSTAINMENT SERVICES REQUIRED TO MAINTAIN THE CURRENT OPERATIONAL STATUS OF THE FORWARD AREA AIR DEFENSE COMMAND AND CONTROL (FAAD C2) SYSTEM.

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $37.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SUSTAINMENT SERVICES REQUIRED TO MAINTAIN THE CURRENT OPERATIONAL STATUS OF THE FORWARD AREA AIR DEFENSE COMMAND AND CONTROL (FAAD C2) SYSTEM. Key points: 1. Contract focuses on maintaining the operational status of a critical air defense system. 2. Awarded to a single, large defense contractor, indicating potential for limited competition in specialized areas. 3. The contract duration of approximately 4 years suggests a long-term need for system sustainment. 4. Performance is categorized under Research and Development, aligning with the system's technical nature. 5. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not closely managed. 6. The value of the contract is significant, reflecting the importance of the FAAD C2 system.

Value Assessment

Rating: fair

The contract value of $37.9 million over approximately four years for sustainment services of the FAAD C2 system appears reasonable given the specialized nature of defense systems. Benchmarking against similar sustainment contracts for complex C4ISR systems is challenging due to unique technical requirements and limited public data. However, the Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost escalation, requiring robust oversight to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of a single award for this specific delivery order does not necessarily indicate a lack of competition at the broader contract level, but rather that Northrop Grumman was selected as the best value provider for this particular requirement. The specific number of bidders is not detailed, but the 'full and open' designation implies a competitive process.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation, leading to better value for the government's investment.

Public Impact

The primary beneficiaries are the U.S. Army units relying on the Forward Area Air Defense Command and Control (FAAD C2) system for operational effectiveness. The services delivered ensure the continued functionality and readiness of a critical component of the U.S. air defense architecture. Geographic impact is national, supporting Army operations across various theaters. Workforce implications include sustaining specialized technical and engineering roles within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can incentivize contractor to increase costs to maximize profit.
Reliance on a single contractor for sustainment may limit future competitive opportunities and potentially increase long-term costs.
The R&D classification for sustainment activities might obscure true operational costs and performance metrics.

Positive Signals

Awarded through full and open competition, indicating a potentially competitive pricing structure.
Contract duration suggests a stable and predictable need, allowing for efficient resource planning.
Northrop Grumman is a major defense contractor with extensive experience in C4ISR systems, suggesting technical capability.

Sector Analysis

The defense sector, particularly within command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) systems, is characterized by high technological complexity and significant government investment. This contract for sustaining the FAAD C2 system fits within the broader R&D and IT services categories, where specialized expertise is paramount. The market is dominated by a few large prime contractors capable of handling such intricate systems, with spending often driven by evolving threat landscapes and modernization efforts.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large prime contract awarded to Northrop Grumman, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in the provided information and would require further investigation into the contract's specific clauses and performance reports.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army, with potential involvement from the Department of Defense's Inspector General. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed cost reporting and performance metrics. Transparency is facilitated by the contract's full and open competition status, though specific performance data may be sensitive.

Related Government Programs

Forward Area Air Defense (FAAD)
Command and Control Systems
Missile Defense Systems
Army Aviation Systems
Defense R&D Spending

Risk Flags

Potential for cost overruns due to CPFF contract type.
Long-term reliance on a single contractor may reduce future competition.
Obsolescence risk for components of an aging C2 system.
Cybersecurity vulnerabilities inherent in defense systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SUSTAINMENT SERVICES REQUIRED TO MAINTAIN THE CURRENT OPERATIONAL STATUS OF THE FORWARD AREA AIR DEFENSE COMMAND AND CONTROL (FAAD C2) SYSTEM.

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 $37.9 million.

What is the period of performance?

Start: 2021-03-31. End: 2025-05-09.

What is the historical spending trend for FAAD C2 sustainment services?

Analyzing historical spending for FAAD C2 sustainment requires accessing detailed contract databases beyond the provided data. Typically, sustainment costs for complex defense systems can fluctuate based on system upgrades, operational tempo, and the availability of spare parts. Without specific prior contract data for FAAD C2 sustainment, it's difficult to establish a precise trend. However, it is common for such systems to require consistent, significant investment over their lifecycle to maintain operational readiness, often involving multi-year contracts similar to this one. The current $37.9 million award over approximately four years suggests a steady, albeit potentially increasing, investment if the system is critical and aging.

How does the Cost Plus Fixed Fee (CPFF) structure impact cost control for this contract?

The Cost Plus Fixed Fee (CPFF) contract structure means the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While the fee is fixed, the 'cost' portion is variable. This structure can incentivize contractors to incur higher costs, as their fee remains constant regardless of the total cost incurred. For taxpayers, this poses a risk of cost overruns if not managed diligently. Effective oversight by the contracting agency is crucial to scrutinize allowable costs, prevent inefficiencies, and ensure the contractor operates within reasonable cost parameters to achieve the fixed fee without excessive expenditure.

What are the key performance indicators (KPIs) for this FAAD C2 sustainment contract?

Specific Key Performance Indicators (KPIs) for this FAAD C2 sustainment contract are not detailed in the provided summary. However, typical KPIs for such defense sustainment contracts often include system availability rates (e.g., percentage of time the system is operational), mean time between failures (MTBF), mean time to repair (MTTR), response times for technical support, and successful completion of scheduled maintenance. For R&D-focused sustainment, KPIs might also include successful implementation of system updates or modifications, and adherence to research milestones. The contracting officer's representative (COR) would be responsible for monitoring these KPIs against contract requirements.

What is Northrop Grumman's track record with similar C4ISR sustainment contracts?

Northrop Grumman is a major defense contractor with a substantial track record in developing, integrating, and sustaining complex Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) systems for the U.S. military and allied nations. They have been involved in numerous large-scale programs across various branches of the armed forces, including air defense, naval systems, and aerospace. While specific details on their performance for FAAD C2 sustainment prior to this award are not provided, their extensive experience in the sector suggests a high level of technical capability and program management expertise. Past performance reviews and contract award histories would offer a more granular assessment.

Are there any known risks associated with the FAAD C2 system itself that impact sustainment?

The Forward Area Air Defense Command and Control (FAAD C2) system is a critical component for ground-based air defense, designed to integrate various sensors and effectors. Risks associated with sustainment can stem from the system's age, obsolescence of certain components, integration challenges with newer platforms, and evolving threat environments requiring system upgrades. If the system relies on legacy technology, finding replacement parts or skilled personnel for maintenance could become increasingly difficult and costly. Furthermore, cybersecurity vulnerabilities are a constant concern for any connected defense system, requiring ongoing vigilance and updates to protect against potential breaches.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $56,195,040

Exercised Options: $37,924,839

Current Obligation: $37,924,839

Subaward Activity

Number of Subawards: 106

Total Subaward Amount: $12,940,119

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W15P7T19D0178

IDV Type: IDC

Timeline