DoD's $186.6M contract for aircraft parts awarded to Northrop Grumman, with a significant portion for airframes

Contract Overview

Contract Amount: $21,655,027 ($21.7M)

Contractor: Teledyne, Inc

Awarding Agency: Department of Defense

Start Date: 2005-05-26

End Date: 2007-09-30

Contract Duration: 857 days

Daily Burn Rate: $25.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200508!000417!5700!FA8620!ASC/RAK !F3365703G4306 !A!N! !N!0025 ! !20050526!20050715!186618869!186618869!016435559!N!NORTHROP GRUMMAN CORPORATION !17066 GOLDENTOP RD !SAN DIEGO !CA!92150!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000004670916!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !000 !* !336411!E! !4! ! ! ! ! !20200930!B! ! !N!Z!D!N!U!1!001!N!1G!A!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $21.7 million to TELEDYNE, INC for work described as: 200508!000417!5700!FA8620!ASC/RAK !F3365703G4306 !A!N! !N!0025 ! !20050526!20050715!186618869!186618869!016435559!N!NORTHROP GRUMMAN CORPORATION !17066 GOLDENTOP RD !SAN DIEGO !CA!92150!66000!073!06!SAN DIEGO !SAN … Key points: 1. Contract awarded for aircraft parts, with a substantial focus on airframes and spares. 2. The contract value is substantial, indicating a significant need for these components. 3. Awarded to a major defense contractor, suggesting established capabilities and relationships. 4. The contract duration spans over two years, implying ongoing operational requirements. 5. The pricing structure is Cost Plus Fixed Fee, which can offer flexibility but requires careful oversight. 6. The geographic location of the contractor is in California, a hub for aerospace and defense.

Value Assessment

Rating: fair

The total contract value of $186.6 million for aircraft parts and airframes is substantial. Benchmarking this against similar contracts for aircraft components is challenging without more specific details on the exact parts and quantities. However, the Cost Plus Fixed Fee (CPFF) structure, while common for complex procurements, can sometimes lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. The absence of a competitive bid process also limits direct price comparison to market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This could be due to various reasons, such as the unique nature of the required parts, the contractor's proprietary technology, or a specific existing relationship. The lack of competition means there was no opportunity for multiple vendors to bid, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. Without a bidding process, it's harder to ensure the government received the best possible value.

Public Impact

The primary beneficiaries are likely the U.S. Air Force units requiring these aircraft parts for operational readiness. The services delivered include the provision of critical airframes and spare parts for fixed-wing aircraft. The geographic impact is primarily within the defense supply chain, supporting military aviation operations. Workforce implications include jobs at Northrop Grumman and its subcontractors involved in manufacturing and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer money.
The Cost Plus Fixed Fee contract type necessitates robust government oversight to control costs and ensure efficiency.
Limited transparency on the specific parts and their necessity could obscure potential cost savings.
The long duration of the contract could lock the government into a potentially suboptimal pricing arrangement if market conditions change.

Positive Signals

Award to a large, established defense contractor like Northrop Grumman suggests a high likelihood of meeting technical requirements.
The contract addresses a clear need for aircraft parts, essential for maintaining military aviation capabilities.
The fixed fee component of the CPFF contract provides some level of cost predictability for the government.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and maintenance. The market for aircraft parts and components is large and complex, with major players like Northrop Grumman dominating significant portions. Spending in this area is critical for national security, ensuring the operational readiness of military fleets. Comparable spending benchmarks would typically involve analyzing other large-scale procurements for similar aircraft systems or components within the Department of Defense.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the large value and the nature of aircraft manufacturing, it is likely that Northrop Grumman will utilize its own facilities and potentially engage larger subcontractors. The impact on the small business ecosystem is likely minimal unless specific subcontracting opportunities are mandated and actively pursued.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract would typically be managed by the contracting officer and program management office within the Department of the Air Force. Accountability measures would include regular reporting from the contractor on costs incurred and progress made, as well as performance reviews. Transparency is often limited in sole-source defense contracts, but contract modifications and payment reports are usually available through federal procurement databases.

Related Government Programs

Aircraft Component Procurement
Airframe Manufacturing
Defense Logistics
Aerospace Supply Chain
Fixed-Wing Aircraft Support

Risk Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee structure requires diligent oversight to manage costs.
Lack of detailed breakdown for specific parts makes value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.7 million to TELEDYNE, INC. 200508!000417!5700!FA8620!ASC/RAK !F3365703G4306 !A!N! !N!0025 ! !20050526!20050715!186618869!186618869!016435559!N!NORTHROP GRUMMAN CORPORATION !17066 GOLDENTOP RD !SAN DIEGO !CA!92150!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000004670916!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !000 !* !336411!E! !4! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is TELEDYNE, INC.

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 $21.7 million.

What is the period of performance?

Start: 2005-05-26. End: 2007-09-30.

What is the specific breakdown of the $186.6 million contract value between airframes and other aircraft parts?

The provided data indicates a Product Service Code (PSC) of '336411' for Aircraft Manufacturing and a North American Industry Classification System (NAICS) code of 'A1A' for Airframes and Spares. While the total contract value is $186,618,869, the exact allocation between 'airframes' and 'spares' or other 'aircraft parts' is not explicitly detailed in the summary data. However, the classification strongly suggests a significant emphasis on airframes, which are the primary structural components of an aircraft. Further analysis of the contract's statement of work or detailed financial reports would be necessary to ascertain the precise cost distribution.

What are the key performance indicators (KPIs) used to evaluate Northrop Grumman's performance under this contract?

The provided data does not specify the key performance indicators (KPIs) for this contract. Typically, for a Cost Plus Fixed Fee (CPFF) contract involving the manufacturing of aircraft components, KPIs would likely include metrics related to on-time delivery, quality of manufactured parts (e.g., defect rates, adherence to specifications), cost control (ensuring costs remain within projected budgets for the fixed fee portion), and compliance with technical requirements. The contracting officer's representative (COR) would be responsible for monitoring these KPIs and ensuring the contractor meets the contractual obligations. Regular performance reviews and milestone achievements would also serve as indicators of performance.

How does the pricing of this contract compare to industry benchmarks for similar aircraft parts and airframes?

Directly comparing the pricing of this $186.6 million contract to industry benchmarks is challenging without granular data on the specific types and quantities of aircraft parts and airframes procured. The contract is sole-source and uses a Cost Plus Fixed Fee (CPFF) structure. CPFF contracts inherently involve reimbursing the contractor for allowable costs plus a fixed fee, making direct price-per-unit comparisons difficult without knowing the underlying cost structure and the negotiated fee. Generally, sole-source contracts and CPFF arrangements can be less price-competitive than fixed-price, competitively awarded contracts. To establish a benchmark, one would need to analyze historical data for similar components, consider the complexity and technological requirements, and assess the market dynamics for those specific parts.

What is the historical spending pattern for aircraft parts and airframes by the Department of the Air Force?

The provided data pertains to a single contract awarded in 2005. To understand historical spending patterns for aircraft parts and airframes by the Department of the Air Force (DoAF), a broader analysis of federal procurement data over several fiscal years would be required. This would involve querying databases like USAspending.gov or FPDS-NG for contracts with relevant Product Service Codes (PSCs) such as '336411' (Aircraft Manufacturing) and '4120' (Aircraft and Airframe Structural Components), and filtering by the awarding agency (DoAF). Such an analysis would reveal trends in total spending, major contractors, types of components procured, and the prevalence of different contract types over time, providing context for the significance of individual awards like the one to Northrop Grumman.

What are the potential risks associated with a sole-source, Cost Plus Fixed Fee contract for aircraft manufacturing?

Sole-source contracts eliminate competitive pressure, which can lead to higher prices and reduced incentive for the contractor to innovate or optimize costs. The Cost Plus Fixed Fee (CPFF) structure, while providing flexibility for uncertain cost environments, carries risks of cost overruns if the government's oversight is insufficient. The contractor may have less incentive to control costs rigorously since their allowable costs are reimbursed. Additionally, the fixed fee, once negotiated, might not reflect actual effort or efficiency. For the government, risks include paying more than necessary, potential for scope creep, and a reduced ability to leverage market competition for better value. Robust contract administration, detailed cost monitoring, and clear performance standards are crucial to mitigate these risks.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: ATI Inc. (UEI: 949262737)

Address: 17066 GOLDENTOP ROAD, SAN DIEGO, CA, 92127

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: F3365703G4306

IDV Type: IDC

Timeline