DoD's $238M Northrop Grumman Contract for Aircraft Manufacturing: A Sole-Source Award

Contract Overview

Contract Amount: $238,245,060 ($238.2M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2007-05-15

End Date: 2013-11-15

Contract Duration: 2,376 days

Daily Burn Rate: $100.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: ESTABLISH/REINSTATE CLINS, REVISE/INCORP SEC I CLAUSES, ADMIN CHGS/CORRECTIONS, SEC J TOC & ATCHS UPDATES

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $238.2 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: ESTABLISH/REINSTATE CLINS, REVISE/INCORP SEC I CLAUSES, ADMIN CHGS/CORRECTIONS, SEC J TOC & ATCHS UPDATES Key points: 1. Significant contract value of $238.2M awarded to a single large business. 2. Sole-source award raises questions about competition and potential price discovery. 3. Aircraft manufacturing sector is critical for national defense, but this award lacks competitive pressure. 4. Contract duration of 2376 days (over 6 years) indicates a long-term commitment.

Value Assessment

Rating: questionable

The contract type is Cost Plus Award Fee (CPAF), which can incentivize performance but also carries risk of cost overruns. Without competitive benchmarks, assessing the value for money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may result in higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for a substantial contract value suggests potential for reduced taxpayer value and higher overall expenditure.

Public Impact

Taxpayers may be paying a premium due to the absence of competitive bidding. The long duration of the contract could lock in potentially suboptimal pricing for an extended period. Reliance on a single contractor for critical aircraft manufacturing components raises supply chain risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Award Fee contract type
Long contract duration
No small business participation indicated

Positive Signals

Awarded to a known large defense contractor
Addresses critical Department of the Air Force needs

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a key component of the defense industrial base. Spending in this area is substantial, and competitive procurement is generally preferred to ensure efficiency.

Small Business Impact

There is no indication of small business participation in this contract. The award to Northrop Grumman Systems Corp, a large business, suggests a focus on established prime contractors.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure fair pricing and effective contract management by the Department of the Air Force.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Potential for cost overruns (CPAF)
Limited transparency on justification
No small business subcontracting opportunities apparent
Long-term commitment without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $238.2 million to NORTHROP GRUMMAN SYSTEMS CORP. ESTABLISH/REINSTATE CLINS, REVISE/INCORP SEC I CLAUSES, ADMIN CHGS/CORRECTIONS, SEC J TOC & ATCHS UPDATES

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 Air Force).

What is the total obligated amount?

The obligated amount is $238.2 million.

What is the period of performance?

Start: 2007-05-15. End: 2013-11-15.

What was the justification for the sole-source award, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves specific circumstances like unique capabilities, urgent needs, or lack of viable alternatives. Without detailed documentation, it's impossible to confirm if alternative competitive strategies were thoroughly explored or if the justification holds up under scrutiny. This lack of transparency hinders a full assessment of value for money.

How does the Cost Plus Award Fee structure compare to other contract types for similar aircraft manufacturing services in terms of cost control?

CPAF contracts aim to incentivize contractor performance by linking a portion of the fee to achieving specific award criteria. While potentially effective for complex projects, they can be less predictable in terms of final cost compared to fixed-price contracts. Benchmarking against similar sole-source or competed contracts using different fee structures would be necessary to determine if this approach yielded optimal cost control.

What is the long-term strategic impact of awarding such a significant contract solely to Northrop Grumman for aircraft manufacturing?

Sole-source awards, especially for extended durations, can reduce market competition and potentially stifle innovation from other firms. This can lead to a long-term dependency on a single supplier, potentially impacting future pricing flexibility and the overall health of the defense industrial base. Strategic sourcing assessments should regularly evaluate the benefits of competition versus sole-source reliance.

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 AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $245,848,211

Exercised Options: $245,848,211

Current Obligation: $238,245,060

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline