DoD awards Northrop Grumman $201.6M contract for critical airborne communications platform maintenance and logistics support

Contract Overview

Contract Amount: $201,643,713 ($201.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-01-23

End Date: 2027-01-23

Contract Duration: 1,461 days

Daily Burn Rate: $138.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BATTLEFIELD AIRBORNE COMMUNICATIONS NODE (BACN) E-11A PLATFORM MAINTENANCE AND MAIN OPERATING BASE (MOB) CONTRACTOR LOGISTICS SUPPORT (CLS)

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $201.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: BATTLEFIELD AIRBORNE COMMUNICATIONS NODE (BACN) E-11A PLATFORM MAINTENANCE AND MAIN OPERATING BASE (MOB) CONTRACTOR LOGISTICS SUPPORT (CLS) Key points: 1. Contract provides essential sustainment for the E-11A BACN platform, crucial for battlefield communications. 2. The contract is structured as Firm Fixed Price, aligning contractor incentives with performance. 3. Full and open competition was utilized, suggesting a robust market for these specialized services. 4. The contract duration of approximately four years indicates a long-term need for these sustainment services. 5. This award represents a significant investment in maintaining a key strategic asset for the Air Force. 6. The contractor, Northrop Grumman, is a major defense industrial base participant with extensive experience.

Value Assessment

Rating: good

The contract value of $201.6 million over roughly four years for specialized platform maintenance and logistics appears reasonable given the critical nature of the E-11A BACN system. Benchmarking against similar complex aerospace sustainment contracts is challenging due to the unique capabilities of the BACN platform. However, the firm-fixed-price structure suggests a degree of cost certainty for the government, provided performance is met. Further analysis would require detailed cost breakdowns and comparison to historical spending on this platform.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable contractors had the opportunity to bid. The specific number of bidders is not provided, but the use of this procurement method generally fosters competitive pricing and encourages innovation. The Air Force's decision to use full and open competition suggests confidence in the market's ability to provide the required services effectively and at a fair price.

Taxpayer Impact: Taxpayers benefit from the competitive process, which is expected to drive down costs and ensure the government receives the best value for its investment in maintaining this critical communication system.

Public Impact

The primary beneficiaries are U.S. military personnel operating in theaters requiring secure and reliable battlefield communications. Services delivered include maintenance, repair, and logistical support for the E-11A BACN aircraft and its associated systems. The geographic impact is global, supporting deployed forces in various operational environments. Workforce implications include the need for highly skilled aerospace technicians, engineers, and logistics personnel, likely supporting jobs within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical issues arise that are not adequately captured in the fixed-price structure.
Dependence on a single prime contractor for critical sustainment could pose risks if performance falters.
The specialized nature of the BACN system may limit the pool of qualified alternative providers in the future.

Positive Signals

Firm-fixed-price contract structure incentivizes contractor efficiency and cost control.
Full and open competition suggests a healthy market and potential for competitive pricing.
Contractor's established presence in defense systems provides a degree of confidence in execution.
Long-term contract duration allows for stable planning and sustainment of a critical asset.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government investment. This contract falls within the engineering services sub-sector, specifically supporting specialized military aircraft and communication systems. The market for such niche sustainment services is typically dominated by a few large, experienced defense contractors. Comparable spending benchmarks would involve other major platform sustainment contracts for similarly critical, technologically advanced military assets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. While the prime contractor is a large entity, there may be opportunities for small businesses to participate as subcontractors to Northrop Grumman. The extent of small business subcontracting will depend on the prime contractor's strategy and the availability of specialized services required for BACN sustainment.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring delivery of specified services. Transparency is generally maintained through contract award announcements and reporting requirements, though detailed performance metrics may not always be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Airborne Command, Control, and Communications Programs
Military Aircraft Maintenance and Sustainment
Battlefield Network Modernization Initiatives
Aerospace Engineering Services Contracts

Risk Flags

Potential for cost overruns in FFP contracts if scope is not well-defined.
Contractor performance risk for specialized, critical systems.
Long-term reliance on a single provider for essential sustainment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $201.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. BATTLEFIELD AIRBORNE COMMUNICATIONS NODE (BACN) E-11A PLATFORM MAINTENANCE AND MAIN OPERATING BASE (MOB) CONTRACTOR LOGISTICS SUPPORT (CLS)

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 $201.6 million.

What is the period of performance?

Start: 2023-01-23. End: 2027-01-23.

What is Northrop Grumman's track record with similar complex platform sustainment contracts for the U.S. Air Force?

Northrop Grumman has a long history of supporting complex military platforms for the U.S. Air Force and other branches. They are known for their work on various aircraft, including bombers, tankers, and specialized mission platforms. Their experience often encompasses systems integration, maintenance, logistics, and upgrades. While specific details on past BACN-related contracts are not provided here, their general portfolio suggests a strong capability in managing large-scale, technically demanding sustainment programs. Past performance evaluations, often available through government databases like the Contractor Performance Assessment Reporting System (CPARS), would offer more granular insights into their specific successes and challenges on similar endeavors.

How does the $201.6 million contract value compare to historical spending on BACN E-11A platform sustainment?

Without historical spending data specifically for the BACN E-11A platform sustainment, a direct comparison is difficult. However, the $201.6 million awarded over approximately four years equates to an average annual value of roughly $50.4 million. This figure should be assessed against the operational tempo, fleet size, and complexity of the BACN system. If the E-11A is a relatively small, highly specialized fleet, this annual value might be considered substantial, reflecting the unique technological requirements and limited contractor pool. Conversely, if it supports a larger or more extensively utilized fleet, it might represent standard sustainment costs. Accessing historical contract awards and spending reports for this specific platform would be necessary for a precise benchmark.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential cost growth if unforeseen technical issues arise beyond the scope of the firm-fixed-price (FFP) agreement, performance degradation impacting critical communication capabilities, and contractor dependency. Mitigation strategies are inherent in the FFP structure, which places cost risk on the contractor. Performance is monitored through contract requirements and potentially through quality assurance surveillance plans. The use of full and open competition aims to ensure a capable contractor is selected, and the contract duration allows for stable planning. However, the specialized nature of the BACN system could limit options for corrective action if the primary contractor fails to perform adequately.

How effective is the E-11A BACN platform in fulfilling its mission, and does this contract support its continued effectiveness?

The Battlefield Airborne Communications Node (BACN) E-11A platform is designed to bridge communication gaps between different radio systems and provide secure data links in contested or remote environments, significantly enhancing situational awareness and command and control for U.S. and allied forces. Its effectiveness is widely recognized as critical for modern military operations. This contract directly supports the continued effectiveness by ensuring the platform remains operational through essential maintenance, repair, and logistics. Without such sustainment, the platform's availability and reliability would degrade, diminishing its crucial role in battlefield communications.

What is the typical profit margin for defense contractors on similar firm-fixed-price sustainment contracts?

Profit margins on firm-fixed-price (FFP) defense sustainment contracts can vary significantly based on factors such as contract complexity, competition level, contractor efficiency, and the specific risk profile. Generally, FFP contracts aim to provide a reasonable profit for the contractor while shifting cost risk to them. Typical profit margins for defense contractors on FFP contracts often range from 7% to 15%, though this can be higher for highly specialized or risky endeavors and lower for more commoditized services. Without specific cost and pricing data for this Northrop Grumman contract, determining the exact profit margin is not possible. However, the competitive nature of the award process usually helps to moderate these margins to a level deemed fair and reasonable by the government.

Are there any known issues with the E-11A BACN platform itself that this contract might be addressing?

The provided data does not specify any known issues with the E-11A BACN platform that this contract is specifically intended to address. The contract is described as 'Platform Maintenance and Main Operating Base (MOB) Contractor Logistics Support (CLS)', which implies routine and ongoing sustainment activities rather than a response to a specific, newly identified problem. Such contracts are standard for ensuring the continued operational readiness, reliability, and safety of complex military assets throughout their lifecycle. Any platform-specific issues would typically be managed through separate technical directives, modifications, or repair actions, which may or may not be encompassed within the broader CLS scope.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: FA872622R0002

Offers Received: 1

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $627,328,328

Exercised Options: $281,773,872

Current Obligation: $201,643,713

Subaward Activity

Number of Subawards: 381

Total Subaward Amount: $103,817,647

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q14OADU125

IDV Type: IDC

Timeline