Defense IG: Navy failed to validate contractor bills for unmanned systems program

NAVAIR did not determine whether Northrop Grumman was entitled to millions in payments.

The Navy did not validate invoices worth $329.3 million that Northrop Grumman Corp. submitted for development of a remotely piloted aircraft the service will use to conduct high-altitude ocean reconnaissance, the Defense Department inspector general said in a report issued on Dec. 23.

Northrop Grumman won the Navy's $1.2 billion Broad Area Maritime Surveillance Unmanned Aircraft System development and low-rate production contract in April 2008 with a proposal to integrate maritime sensor systems on the high-flying Global Hawk UAS it produces for the Air Force.

In February 2009, Northrop Grumman received a revised development contract worth $627 million, bringing the total value of the contract to $1.8 billion. The Navy plans to deploy 40 BAMS UAS to five bases around the world with the overall cost estimated at $19 billion, the Defense IG estimated.

Since the Navy and Air Force both use the same Global Hawk airframe, the BAMS program, which the Naval Air Systems Command manages, was expected to share more than $150 million worth of government-furnished equipment with the Air Force, according to the Defense IG.

But, the report said, NAVAIR did not establish with the Air Force a complete property-sharing agreement, which should have covered more than 5,000 specialized tools and test equipment.

NAVAIR contracting officials and program managers did not review any bills from Northrop Grumman prior to payment, and as a result, approved bills for $22.6 million and $21.8 million lacking any detail, auditors found.

According to the report, this failure resulted from poor contract oversight on the part of the Defense Contract Management Agency in Bethpage, N.Y., home of Northrop Grumman's integrated systems sector.

In addition, NAVAIR failed to provide contract specialists with appropriate training, the report said.

Diane Balderson, NAVAIR's assistant commander of contracts, said contracting officials had completed the required training, as well as additional training last month.

Balderson said the Air Force, Navy and Northrop Grumman will work closely to leverage assets from the two services' UAS programs, which will save millions of dollars in unnecessary costs.

Northrop Grumman officials did not respond to a request for comment.