DoD's $39.4M fuze procurement awarded to Northrop Grumman shows strong competition and value

Contract Overview

Contract Amount: $39,405,718 ($39.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2015-09-21

End Date: 2022-12-30

Contract Duration: 2,657 days

Daily Burn Rate: $14.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF THE FMU-139D/B FIRST ARTICLE TEST AND QUALIFICATION, AND LIVE AND INERT TEST FUZES

Place of Performance

Location: KEYSER, MINERAL County, WEST VIRGINIA, 26726

State: West Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $39.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: PROCUREMENT OF THE FMU-139D/B FIRST ARTICLE TEST AND QUALIFICATION, AND LIVE AND INERT TEST FUZES Key points: 1. The contract demonstrates a commitment to competitive sourcing for critical defense components. 2. Pricing appears reasonable given the specialized nature of ordnance manufacturing. 3. Performance risks are mitigated through first article testing and qualification phases. 4. This procurement aligns with broader defense modernization efforts for munitions. 5. The award falls within the established defense industrial base for ordnance. 6. Long-term sustainment and potential follow-on orders are key considerations.

Value Assessment

Rating: good

The total contract value of $39.4 million for the FMU-139D/B fuze procurement appears reasonable when considering the specialized nature of defense ordnance and the inclusion of first article testing and qualification. Benchmarking against similar complex ordnance procurements is challenging due to proprietary data, but the firm-fixed-price structure suggests a degree of cost certainty for the government. The duration of the contract (over 7 years) also indicates a significant scope of work, potentially encompassing multiple production runs and testing phases.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable suppliers were solicited. While the specific number of bidders is not provided, this approach generally fosters a competitive environment, driving better pricing and innovation. The use of a delivery order against a potential larger contract vehicle suggests a structured procurement process designed to leverage competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and ensures the government is not locked into a single supplier, potentially saving taxpayer dollars through market forces.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, ensuring the availability of critical munitions components. The contract delivers essential fuze components for advanced ordnance systems. The geographic impact is primarily within the United States, supporting domestic defense manufacturing. Workforce implications include skilled manufacturing and engineering roles within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if testing phases reveal unforeseen technical challenges.
Dependence on a single contractor for a critical component could pose supply chain risks.
Ensuring long-term availability and obsolescence management for specialized components.

Positive Signals

Awarded through full and open competition, suggesting a robust market for this capability.
Firm-fixed-price contract structure provides cost predictability.
Inclusion of first article testing and qualification mitigates technical risks.
Long contract duration may indicate a stable, long-term need for the component.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of ordnance and related accessories. The market for such specialized components is typically concentrated among a few key defense contractors. Spending in this sector is driven by military readiness requirements, technological advancements in munitions, and geopolitical factors. Comparable spending benchmarks are difficult to ascertain publicly due to the sensitive and specialized nature of defense procurement.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). While Northrop Grumman is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on the prime contractor's strategy and the availability of specialized small business capabilities within the supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms and the requirement for successful completion of first article testing and qualification. Transparency is generally limited for defense procurements due to national security considerations, but contract awards and basic details are publicly available through federal procurement databases.

Related Government Programs

Department of Defense Munitions Procurement
Ordnance Manufacturing Contracts
Naval Weapons Systems Support
Defense Industrial Base Sustainment

Risk Flags

Long contract duration may increase risk of obsolescence or changing requirements.
Dependence on a single contractor for critical ordnance components.
Potential for supply chain disruptions impacting material availability.
Need for robust quality assurance throughout extended production runs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.4 million to NORTHROP GRUMMAN SYSTEMS CORP. PROCUREMENT OF THE FMU-139D/B FIRST ARTICLE TEST AND QUALIFICATION, AND LIVE AND INERT TEST FUZES

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $39.4 million.

What is the period of performance?

Start: 2015-09-21. End: 2022-12-30.

What is the historical spending trend for the FMU-139D/B fuze or similar components by the Department of Defense?

Analyzing historical spending for specific fuze models like the FMU-139D/B is challenging due to the proprietary nature of defense procurement data and the potential for component-level details to be aggregated within larger program budgets. However, general trends in ordnance procurement indicate consistent investment by the DoD to maintain and modernize its munitions capabilities. Factors such as geopolitical tensions, operational tempo, and the lifecycle of existing weapon systems influence these spending patterns. The $39.4 million awarded to Northrop Grumman for this specific contract represents a significant, but likely not isolated, investment in fuze technology. Broader DoD spending on missile and ordnance components often runs into billions of dollars annually, reflecting the critical role these items play in national defense.

How does the unit cost of the FMU-139D/B fuze compare to similar fuzes used in other DoD programs?

Direct comparison of unit costs for specific fuze models like the FMU-139D/B is difficult without access to detailed pricing breakdowns and specific contract line item numbers (CLINs) which are often not publicly disclosed. The value of this contract ($39.4 million) covers not only the fuzes themselves but also the first article test and qualification, which are significant cost drivers. Factors such as technological sophistication, material requirements, production volume, and the specific performance characteristics of the fuze heavily influence unit pricing. Generally, advanced fuzes with multi-functionality, enhanced safety features, and compatibility with precision-guided munitions command higher unit costs compared to simpler, legacy designs. Benchmarking would require comparing fuzes with similar technical specifications and intended operational environments.

What are the key performance indicators (KPIs) used to evaluate the success of this contract?

The success of the FMU-139D/B fuze procurement contract is likely evaluated based on several key performance indicators (KPIs). Foremost among these would be the successful completion of the First Article Test and Qualification (FAT&Q) phase, ensuring the fuze meets all specified technical and performance requirements under various operational conditions. Delivery schedule adherence is another critical KPI; the contractor must deliver the required quantities of fuzes within the agreed-upon timelines. Quality assurance metrics, such as defect rates and failure analysis results during testing and initial production, are also paramount. Finally, cost control within the firm-fixed-price framework is essential, ensuring the government receives the contracted goods at the agreed-upon price without unexpected escalations.

What is Northrop Grumman's track record with similar ordnance or fuze manufacturing contracts?

Northrop Grumman has a substantial and long-standing track record in defense contracting, including significant experience in manufacturing complex ordnance systems and components. The company is a major player in the aerospace and defense industry, with a portfolio that includes missile systems, munitions, and related technologies. Their history likely encompasses the production of various types of fuzes, warheads, and other critical ordnance elements for different branches of the U.S. military and allied nations. While specific details on all past fuze contracts are not publicly available, Northrop Grumman's position as a prime contractor for major defense programs suggests a demonstrated capability to meet stringent quality, performance, and delivery requirements inherent in such sensitive procurements.

What are the potential risks associated with the long duration (2657 days) of this contract?

The extended duration of this contract, spanning over seven years, presents several potential risks. Firstly, there's the risk of technological obsolescence; defense technology evolves rapidly, and a fuze designed and qualified early in the contract period might face challenges integrating with newer weapon systems or countermeasures later on. Secondly, supply chain volatility is a concern; the availability and cost of raw materials and specialized components could fluctuate significantly over such a long period, potentially impacting production costs or schedules if not managed proactively. Thirdly, personnel expertise and knowledge transfer could become an issue; retaining skilled engineers and technicians familiar with the specific design and manufacturing processes over many years requires dedicated management. Lastly, changes in military requirements or budget priorities could lead to modifications or even termination of the contract, although the long duration suggests a stable, anticipated need.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001914R0025

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 210 STATE ROUTE 956, ROCKET CENTER, WV, 26726

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: $39,405,718

Exercised Options: $39,405,718

Current Obligation: $39,405,718

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001915D0030

IDV Type: IDC

Timeline