Air Force awards $27.7M contract for JTAGS P31 development to Northrop Grumman, citing sole-source justification

Contract Overview

Contract Amount: $27,770,161 ($27.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-05-20

End Date: 2024-12-31

Contract Duration: 956 days

Daily Burn Rate: $29.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVER ORDER 0001 JTAGS P31 BLK 2, PHASE 1 DEVELOPMENT

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $27.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DELIVER ORDER 0001 JTAGS P31 BLK 2, PHASE 1 DEVELOPMENT Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. The contract duration of 956 days suggests a significant development effort. 3. Firm Fixed Price contract type aims to control costs, but sole-source nature raises concerns. 4. Northrop Grumman, a large defense contractor, is the recipient. 5. The contract is for Phase 1 development of the JTAGS P31 system. 6. Geographic location of performance is Colorado.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive data. The $27.7 million award for Phase 1 development over approximately 2.6 years suggests a substantial investment. Without comparable sole-source awards or open market pricing, it's difficult to definitively assess if this represents excellent value for money. The firm fixed price structure is a positive cost control measure, but the lack of competition inherently limits the government's ability to secure the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was solicited. The justification for this approach is not detailed in the provided data. Sole-source awards bypass the competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The limited competition here means taxpayers may not have received the benefit of a more competitive pricing environment.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium compared to what could have been achieved through an open bidding process. This limits the government's leverage in negotiating the best possible price.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive the JTAGS P31 system. The contract supports the development of a critical defense system, likely enhancing intelligence, surveillance, and reconnaissance capabilities. Performance is located in Colorado, potentially impacting the local economy and workforce in that region. The development effort will likely involve specialized engineering and technical personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency regarding the sole-source justification hinders full assessment.
Contract duration is lengthy, increasing exposure to potential cost overruns if not managed tightly.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Northrop Grumman is an established defense contractor with a track record.
The contract is for a specific development phase, suggesting a structured approach.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to defense systems development. The aerospace and defense industry is characterized by large, complex contracts often awarded to a few major prime contractors. Spending in this sector is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale defense system development contracts, often in the hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Northrop Grumman Systems Corporation is a large business. There is no information provided regarding subcontracting plans to small businesses. The lack of a small business set-aside means opportunities for small businesses to directly participate in this specific contract are limited, though they might be involved as subcontractors to the prime.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Department of Defense contract, it is also subject to oversight by the Department of Defense Inspector General. Transparency is moderate, with basic contract award details available, but the justification for the sole-source award and detailed performance metrics are not publicly disclosed. Accountability will be managed through contract milestones and deliverables.

Related Government Programs

Joint Tactical Ground Station (JTAGS)
Intelligence, Surveillance, and Reconnaissance (ISR) Systems
Defense Engineering Services
Department of Defense Research and Development

Risk Flags

Sole-source award lacks competitive justification.
Limited transparency on specific development goals and metrics.
Potential for cost overruns due to long duration and sole-source nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DELIVER ORDER 0001 JTAGS P31 BLK 2, PHASE 1 DEVELOPMENT

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 Air Force).

What is the total obligated amount?

The obligated amount is $27.8 million.

What is the period of performance?

Start: 2022-05-20. End: 2024-12-31.

What is the specific capability or system being developed under JTAGS P31 Phase 1?

The provided data indicates the contract is for 'DELIVER ORDER 0001 JTAGS P31 BLK 2, PHASE 1 DEVELOPMENT'. JTAGS typically refers to the Joint Tactical Ground Station, a system used for processing and disseminating tactical intelligence, particularly from satellite sources. Phase 1 development suggests the initial stages of creating or enhancing this system, likely involving design, prototyping, or early software/hardware integration. The 'P31 BLK 2' likely denotes a specific block or version upgrade within the JTAGS program, aimed at improving its capabilities, security, or interoperability.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data explicitly states the contract was 'NOT COMPETED' and lists the contract type as 'sole-source'. However, the specific justification for this sole-source award is not detailed. Common reasons for sole-source awards in defense contracting include unique capabilities held by only one contractor, urgent and compelling needs where competition is impractical, or follow-on work to a previous contract where only the original contractor possesses the necessary knowledge or proprietary technology. Without further information from the Department of the Air Force, the precise rationale remains unknown, which is a common point of concern for oversight bodies.

How does the $27.7 million award compare to previous JTAGS development or sustainment contracts?

The provided data does not include historical spending information for JTAGS development or sustainment contracts, making a direct comparison impossible. However, $27.7 million for a Phase 1 development effort over nearly three years (May 2022 - Dec 2024) suggests a significant investment in a specific component or upgrade of the JTAGS system. Larger, full-system development or sustainment contracts for similar defense platforms can range from tens to hundreds of millions of dollars annually. This award appears to be a substantial, but potentially focused, investment within the broader JTAGS program lifecycle.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk associated with a sole-source contract of this magnitude is the lack of competitive pressure, which can lead to suboptimal pricing and reduced innovation. Taxpayers may not be getting the best value for their money, as the government cannot leverage multiple bids to drive down costs. Additionally, sole-source awards can create vendor lock-in, making it difficult to switch providers or negotiate favorable terms in the future. There's also a potential risk if the sole-source provider faces financial difficulties or internal issues, as there are no immediate alternatives. Oversight is crucial to mitigate these risks.

What is Northrop Grumman Systems Corporation's track record with the Department of Defense and similar systems?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience working with the Department of Defense across a wide range of programs, including intelligence, surveillance, reconnaissance, and advanced technology development. They are known for producing large-scale systems like aircraft, spacecraft, and advanced electronics. While specific details on their involvement with JTAGS prior to this contract are not provided, their status as a prime contractor on numerous complex defense projects indicates a significant track record and capability relevant to this type of work. Their history includes both successes and challenges typical of large, long-term defense contracts.

What does the 'Phase 1 Development' designation imply about the contract's scope and future funding?

The 'Phase 1 Development' designation suggests this contract covers the initial stages of creating or significantly upgrading the JTAGS P31 system. This typically involves activities like requirements definition, system design, prototyping, proof-of-concept testing, and potentially early integration efforts. It implies that subsequent phases (Phase 2, Phase 3, etc.) for further development, testing, production, and deployment are likely to follow, potentially involving additional contracts. This phased approach is common for complex defense systems, allowing for iterative development and risk management, but also suggests that the total program cost will likely exceed the current $27.7 million award.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W9113M22R0060

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 7575 COLSHIRE DR, MCLEAN, VA, 22102

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: $28,447,841

Exercised Options: $27,770,161

Current Obligation: $27,770,161

Subaward Activity

Number of Subawards: 275

Total Subaward Amount: $45,785,942

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W9113M22D0062

IDV Type: IDC

Timeline