DoD's $523M Northrop Grumman Contract for Aircraft Manufacturing: Follow-on to Competed Action
Contract Overview
Contract Amount: $523,040,705 ($523.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2001-09-29
End Date: 2017-12-31
Contract Duration: 5,937 days
Daily Burn Rate: $88.1K/day
Competition Type: FOLLOW ON TO COMPETED ACTION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Place of Performance
Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $523.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Significant contract value of over $523 million awarded to a major defense contractor. 2. Follow-on to a competed action suggests prior competition, but current competition details are limited. 3. Risk associated with large, long-term defense contracts, especially Cost Plus Fixed Fee (CPFF) structures. 4. Aircraft Manufacturing sector, a critical area for national defense, with substantial government spending.
Value Assessment
Rating: fair
The contract's Cost Plus Fixed Fee (CPFF) structure can lead to cost overruns if not managed tightly. Benchmarking against similar aircraft manufacturing contracts is difficult without more granular data on scope and performance.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract is a 'Follow On To Competed Action,' indicating a prior competitive process. However, the current award mechanism is not fully detailed, raising questions about the extent of current price discovery and competition.
Taxpayer Impact: Taxpayer funds are committed to a large defense contract. The CPFF structure necessitates robust oversight to ensure cost efficiency and prevent unnecessary spending.
Public Impact
Impacts the aerospace and defense industrial base, supporting jobs and technological development. Ensures the continued availability of critical aircraft for national defense operations. Potential for technological advancements and innovation within the aircraft manufacturing sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee (CPFF) can incentivize contractor spending.
- Lack of detailed current competition information.
- Long contract duration increases risk exposure.
- Potential for scope creep over the contract's life.
Positive Signals
- Follow-on to a competed action suggests a foundation of competitive pricing.
- Award to a major, experienced contractor like Northrop Grumman.
- Critical component of national defense infrastructure.
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a key component of the defense industry. Spending in this sector is often characterized by high R&D costs, complex supply chains, and long production cycles, with significant government investment.
Small Business Impact
The data indicates this is a large prime contract awarded to Northrop Grumman, a major corporation. There is no direct information on small business participation as subcontractors within this specific award notice.
Oversight & Accountability
The 'Defense Contract Management Agency' is listed, suggesting oversight. However, the effectiveness of oversight for a CPFF contract of this magnitude depends heavily on detailed performance metrics and proactive management.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Cost overruns due to CPFF structure.
- Potential for contractor inefficiencies.
- Long contract duration leading to evolving requirements and risks.
- Limited transparency on current competition.
- Dependence on a single large contractor.
Tags
aircraft-manufacturing, department-of-defense, il, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $523.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
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 $523.0 million.
What is the period of performance?
Start: 2001-09-29. End: 2017-12-31.
What specific aircraft or aircraft systems does this contract cover, and how does its performance impact operational readiness?
The contract number and description do not specify the exact aircraft or systems. Understanding the specific platforms is crucial for assessing their impact on operational readiness. This information would allow for a more direct evaluation of the contract's contribution to national defense capabilities and the effectiveness of the awarded funds in meeting critical military needs.
How was the 'fixed fee' component determined, and what mechanisms are in place to prevent contractor profit inflation under the CPFF structure?
The determination of the fixed fee typically involves negotiation based on estimated costs, complexity, and risk. To prevent profit inflation under CPFF, robust oversight is essential, including detailed cost audits, performance monitoring, and strict adherence to contract terms. The agency must ensure that the fee remains fair and reflects the contractor's performance and efficiency.
What is the projected total cost, including potential cost overruns, given the CPFF structure and the contract's duration?
Predicting the total cost for a CPFF contract is inherently challenging due to its nature. While the initial award is $523 million, the 'cost plus' element means the final expenditure could exceed this. The duration of 5937 days (approx. 16 years) amplifies this uncertainty. Effective oversight and cost controls are paramount to mitigating potential overruns and managing taxpayer exposure.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: FOLLOW ON TO COMPETED ACTION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation (UEI: 967356127)
Address: 600 HICKS RD, ROLLING MEADOW, IL, 60008
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2001-09-29
Current End Date: 2017-12-31
Potential End Date: 2017-12-31 00:00:00
Last Modified: 2019-03-19
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