Northrop Grumman awarded $213.8M contract for E-2 Hawkeye aircraft research and development

Contract Overview

Contract Amount: $213,800,034 ($213.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2003-03-28

End Date: 2009-09-30

Contract Duration: 2,378 days

Daily Burn Rate: $89.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200310!000112!1700!AA412 !NAVAL AIR SYSTEMS COMMAND !N0001903C0044 !A!N! !N! !20030328!20050128!077652761!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!SOUTH OYSTER BAY ROAD !BETHPAGE !NY!11714!06387!059!36!BETHPAGE !NASSAU !NEW YORK !+000020900000!N!N!000000000000!AC11!RDTE/AIRCRAFT-BASIC RESEARCH !A1A!AIRFRAMES AND SPARES !2AEB!E-2 HAWKEYE !336411!E! !1! ! ! ! ! !99990909!B!F!N!A! !D!N!J!1!001!N!1A!A!N!Z! ! !N!C!N! ! ! !B!B!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $213.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200310!000112!1700!AA412 !NAVAL AIR SYSTEMS COMMAND !N0001903C0044 !A!N! !N! !20030328!20050128!077652761!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!SOUTH OYSTER BAY ROAD !BETHPAGE !NY!11714!06387!059!36!BETHPAGE !NASSA… Key points: 1. Contract awarded for research, development, test, and evaluation (RDTE) of aircraft. 2. Focus on airframes and spares for the E-2 Hawkeye platform. 3. Contract was not competed, raising questions about potential cost efficiencies. 4. Long contract duration of approximately 6.5 years suggests a complex, multi-phase project. 5. Firm Fixed Price contract type aims to control costs, but limited competition may negate savings. 6. Northrop Grumman Systems Corporation is the sole awardee, indicating specialized capabilities.

Value Assessment

Rating: fair

The total award amount of $213.8 million for RDTE on the E-2 Hawkeye program appears substantial. Without comparable contract data for similar R&D efforts on advanced aircraft systems, it is difficult to definitively benchmark value. However, the lack of competition suggests that the government may not have achieved the most favorable pricing. The firm fixed-price nature of the contract provides some cost certainty, but the absence of competitive pressure could lead to less aggressive pricing than might be expected in a more open market.

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 among multiple vendors. This typically occurs when a single contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. While Northrop Grumman may be the only entity capable of performing this specific R&D, the absence of competition limits price discovery and potentially increases the overall cost to the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without alternative proposals, it's harder to ensure the most cost-effective solution was secured.

Public Impact

The primary beneficiaries are the U.S. Navy, which operates the E-2 Hawkeye aircraft, and Northrop Grumman Systems Corporation through continued development and potential future production. The contract supports the research, development, testing, and evaluation of advanced aircraft technologies and components for the E-2 Hawkeye. This contract's geographic impact is primarily centered around Northrop Grumman's facilities in Bethpage, New York, and potentially other research and development sites. Workforce implications include the retention and potential expansion of highly skilled engineers, technicians, and support staff involved in aerospace R&D at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration could introduce risks related to scope creep or evolving technological requirements.
Lack of transparency in the sole-source justification requires careful review to ensure necessity.
Potential for cost overruns if not rigorously managed due to limited market alternatives.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to an established contractor with likely expertise in the E-2 Hawkeye platform.
Focus on R&D is critical for maintaining and advancing the capabilities of a key military asset.
Contract supports a vital defense program, ensuring continued operational readiness.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on research and development for military aircraft. The market for advanced military aircraft R&D is characterized by high barriers to entry, specialized technical expertise, and significant government investment. Comparable spending benchmarks are difficult to establish without specific program details, but R&D contracts for major defense platforms often represent substantial portions of defense budgets, reflecting the complexity and criticality of these systems.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large prime contractor, the primary focus is on Northrop Grumman's direct performance. Subcontracting opportunities for small businesses may exist, but they are not explicitly mandated by the contract's award structure. The impact on the small business ecosystem is indirect, relying on the prime contractor's procurement practices.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the Naval Air Systems Command (NAVAIR). Accountability measures are embedded within the contract's performance requirements and reporting obligations. Transparency is generally limited for sole-source awards, but contract details and performance metrics are usually available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

E-2 Hawkeye Program
Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Research and Development
Aerospace Systems Development
Aircraft Airframe Manufacturing

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost inefficiencies
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $213.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200310!000112!1700!AA412 !NAVAL AIR SYSTEMS COMMAND !N0001903C0044 !A!N! !N! !20030328!20050128!077652761!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!SOUTH OYSTER BAY ROAD !BETHPAGE !NY!11714!06387!059!36!BETHPAGE !NASSAU !NEW YORK !+000020900000!N!N!000000000000!AC11!RDTE/AIRCRAFT-BASIC RESEARCH !A1A!AIRFRAMES AND SPARES !2AEB!E-2 HAWKEYE !336411!E! !1! ! ! ! ! !99990909!B

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 $213.8 million.

What is the period of performance?

Start: 2003-03-28. End: 2009-09-30.

What is Northrop Grumman's track record with the E-2 Hawkeye program and similar defense R&D contracts?

Northrop Grumman has a long-standing history with the E-2 Hawkeye program, serving as the prime contractor for its development and production for decades. Their expertise spans various iterations of the aircraft, including the E-2C and the more advanced E-2D Advanced Hawkeye. This deep institutional knowledge suggests a strong track record in understanding the platform's intricacies and developmental needs. The company also holds numerous other large-scale defense R&D contracts across various platforms, demonstrating a consistent capability in complex aerospace engineering and research. Their performance on these contracts is generally evaluated through metrics like on-time delivery, adherence to technical specifications, and budget management, with historical data available through federal contract databases and performance reports.

How does the $213.8 million award compare to historical spending on E-2 Hawkeye R&D?

Directly comparing this $213.8 million award to historical spending on E-2 Hawkeye R&D requires access to detailed historical contract data for specific research and development phases. The provided data indicates this is a definitive contract awarded in 2003 with an initial value, and the total award amount reflects the cumulative value over its period of performance. Without granular data on previous R&D efforts for specific upgrades or new capabilities, a precise comparison is challenging. However, given the complexity of aerospace R&D, multi-year contracts in the hundreds of millions are not uncommon for significant platform advancements. The 'RDTE/AIRCRAFT-BASIC RESEARCH' classification suggests a focus on foundational research and development, which can vary significantly in cost depending on the scope and technological ambition.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to suboptimal pricing and reduced incentive for cost efficiency. Without competing bids, the government may not be securing the best possible value for its investment. Another risk is potential contractor complacency or scope creep, as there is less market-driven pressure to innovate or control costs aggressively. Furthermore, reliance on a single source can create vulnerabilities if the contractor faces financial difficulties, technical challenges, or strategic shifts. Ensuring robust oversight and clear performance metrics becomes crucial to mitigate these risks and hold the contractor accountable for delivering on the contract's objectives.

How effective is the Firm Fixed Price (FFP) contract type in managing costs for this R&D effort?

The Firm Fixed Price (FFP) contract type is generally considered effective in managing costs by shifting the risk of cost overruns 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 and manage the project efficiently. For R&D efforts, FFP can provide cost certainty for the government, making budgeting more predictable. However, the effectiveness of FFP in a sole-source context can be diminished. If the initial price is not rigorously negotiated or benchmarked, the 'fixed' price might still be higher than what could be achieved through competition. Therefore, while FFP offers a structural advantage in cost control, its ultimate effectiveness here depends heavily on the pre-award negotiation and oversight processes.

What are the implications of the 'RDTE/AIRCRAFT-BASIC RESEARCH' classification for the contract's scope?

The classification 'RDTE/AIRCRAFT-BASIC RESEARCH' indicates that the contract's primary purpose is to conduct fundamental research and development related to aircraft. This suggests a focus on exploring new technologies, concepts, and designs rather than the production of existing systems or incremental improvements. Basic research aims to advance scientific knowledge and understanding, potentially leading to future breakthroughs in aircraft capabilities, performance, or efficiency. The scope could encompass areas like advanced aerodynamics, novel materials, propulsion systems, or integrated avionics. This classification implies a longer-term perspective, where the immediate deliverables might be prototypes, studies, and technical data, with the ultimate goal of informing future aircraft development programs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D 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: 925 OYSTER BAY RD, BETHPAGE, NY, 11714

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline