DoD's $23.8M contract for EA-6B, F-5, E-2 aircraft support awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $23,822,341 ($23.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2009-07-30

End Date: 2015-01-31

Contract Duration: 2,011 days

Daily Burn Rate: $11.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LIFE CYCLE SUPPORT SERVICES FOR THE EA-6B, F-5 AND E-2 SERIES AIRCRAFT

Place of Performance

Location: SAINT AUGUSTINE, SAINT JOHNS County, FLORIDA, 32095

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $23.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LIFE CYCLE SUPPORT SERVICES FOR THE EA-6B, F-5 AND E-2 SERIES AIRCRAFT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential overpayment and lack of competitive pressure. 2. The contract covers life cycle support for multiple aircraft series, indicating a long-term need for specialized engineering services. 3. Limited competition suggests potential risks related to contractor lock-in and reduced innovation. 4. Performance context is crucial to assess if the fixed-price structure effectively managed costs over the contract's duration. 5. The significant dollar value for engineering services highlights the importance of this niche within the defense sector. 6. Oversight of sole-source contracts is paramount to ensure fair pricing and value for taxpayer funds.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The firm fixed-price structure aims to transfer risk to the contractor, but the absence of competition means there's no direct market comparison to assess if the pricing was optimal. Without a competitive process, it's difficult to ascertain if Northrop Grumman's pricing reflects true market value or if taxpayers paid a premium due to the lack of alternatives. Further analysis would require access to detailed cost breakdowns and historical pricing data for similar support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required services, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means there were no other bidders to drive down prices or offer alternative solutions. This limits the government's ability to leverage market forces for cost savings and potentially leads to higher prices than if the contract had been competed.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and innovation that typically arise from a competitive bidding process. This can result in higher overall spending for the same level of service.

Public Impact

The primary beneficiaries are the Department of Defense units operating and maintaining the EA-6B, F-5, and E-2 series aircraft. Services delivered include essential life cycle support, ensuring the continued operational readiness of critical military assets. The geographic impact is likely concentrated where these aircraft are based and maintained, primarily within the United States. Workforce implications include the employment of specialized engineers and technicians at Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Lack of competition may reduce incentives for contractor efficiency and innovation.
Dependence on a single contractor for critical support services creates a potential single point of failure.
Contract duration and scope require robust oversight to ensure continued value for money.

Positive Signals

Firm fixed-price contract structure shifts cost overrun risk to the contractor.
Northrop Grumman is an established defense contractor with significant experience in aerospace support.
Life cycle support ensures sustained readiness of important military aviation platforms.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting legacy defense aircraft. The aerospace and defense industry is characterized by high barriers to entry, specialized technical requirements, and significant government spending. Contracts for life cycle support are crucial for maintaining the operational effectiveness of aging military fleets. Comparable spending benchmarks would involve analyzing other sole-source or competed contracts for similar aircraft sustainment services across different branches of the military.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the 'ss' flag is also false, suggesting no specific small business subcontracting goals were mandated. This means that opportunities for small businesses to participate in this contract, either as prime contractors or subcontractors, were likely limited or not explicitly prioritized. The focus was on a large, sole-source provider.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet their contractual obligations. As a sole-source award, transparency and accountability are particularly critical. Robust oversight mechanisms would focus on monitoring performance, verifying costs, and ensuring compliance with contract terms. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Engineering and Technical Services
Defense Logistics and Sustainment
Military Aircraft Modernization
Electronic Warfare Systems Support

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without oversight
Aging aircraft platforms require continuous support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LIFE CYCLE SUPPORT SERVICES FOR THE EA-6B, F-5 AND E-2 SERIES AIRCRAFT

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $23.8 million.

What is the period of performance?

Start: 2009-07-30. End: 2015-01-31.

What is Northrop Grumman's track record with providing life cycle support for military aircraft?

Northrop Grumman has a long and extensive history of providing complex systems and support services for various military aircraft platforms, including electronic warfare systems. Their experience with the EA-6B Prowler, for instance, is well-documented, as they were the prime contractor for the aircraft itself. This deep institutional knowledge and established relationship with the platform suggest a strong capability to deliver life cycle support. However, the specific performance metrics and value delivered under this particular $23.8 million contract would require a detailed review of performance reports, delivery orders, and any associated contract modifications or claims.

How does the $23.8 million contract value compare to similar life cycle support contracts for legacy aircraft?

Directly comparing the $23.8 million total value of this sole-source contract to similar life cycle support contracts is challenging due to the unique nature of sole-source awards and the varying scope of 'life cycle support.' Competed contracts for similar services might offer a benchmark, but the absence of competition here means we lack a direct market comparison. Generally, legacy aircraft support can be costly due to diminishing manufacturing sources, specialized tooling, and the need for highly skilled personnel. The value is also dependent on the specific services included (e.g., depot maintenance, spare parts, engineering changes, technical data) and the duration over which the funds were obligated. Without more granular data on comparable competed contracts or the specific deliverables within this contract, a precise value comparison is difficult.

What are the primary risks associated with a sole-source award for critical aircraft support?

The primary risks associated with a sole-source award for critical aircraft support include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a risk of contractor lock-in. Taxpayers may end up paying more than necessary because there are no competing offers to drive down costs. Furthermore, the government becomes highly dependent on a single provider, which can create vulnerabilities if the contractor experiences financial difficulties, operational issues, or decides to exit the market. Robust contract management and oversight are essential to mitigate these risks, focusing on verifying costs, ensuring performance standards are met, and exploring future competitive opportunities where feasible.

How effective is a firm fixed-price contract in managing costs for long-term aircraft support services?

A firm fixed-price (FFP) contract is generally considered effective in managing costs for long-term services like aircraft support because it places the primary cost risk on the contractor. Under an FFP agreement, the contractor is obligated to perform the work for a set price, regardless of their actual costs. This incentivizes the contractor to control expenses and operate efficiently to maximize their profit margin. For the government, an FFP contract provides cost certainty, assuming the scope of work is well-defined and stable. However, if the scope changes significantly or unforeseen issues arise, contract modifications can increase the total price. In a sole-source context, the effectiveness is tempered by the lack of competitive benchmarking for that fixed price.

What is the historical spending pattern for life cycle support of the EA-6B, F-5, and E-2 series aircraft?

Analyzing the historical spending pattern for life cycle support of the EA-6B, F-5, and E-2 series aircraft would involve examining past contracts awarded for these specific platforms. This contract, awarded in 2009 with an end date in 2015, represents a portion of that historical spending. The EA-6B, known for its electronic warfare capabilities, has had a long service life, necessitating ongoing support. The F-5 is an older fighter jet, often used for training or adversary simulation, also requiring sustainment. The E-2 series are carrier-based AEW&C aircraft with complex systems. Total historical spending would likely be significantly higher than this single contract, spread across multiple contracts, delivery orders, and potentially different contractors over decades, reflecting the continuous need for maintenance, upgrades, and operational support for these aging but vital assets.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 5000 US HWY 1 N, SAINT AUGUSTINE, FL, 32095

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

Financial Breakdown

Contract Ceiling: $23,822,341

Exercised Options: $23,822,341

Current Obligation: $23,822,341

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0018909DZ052

IDV Type: IDC

Timeline