DoD Awards $96M Contract for Aircraft Manufacturing to Northrop Grumman Systems Corp

Contract Overview

Contract Amount: $96,129,442 ($96.1M)

Contractor: Teledyne, Inc

Awarding Agency: Department of Defense

Start Date: 2003-04-08

End Date: 2007-09-30

Contract Duration: 1,636 days

Daily Burn Rate: $58.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200308!000438!5700!GU72 !ASC/RWKR !F3365702C5424 !A!N! !N! !20030408!20031231!008391203!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!17066 GOLDENTOP ROAD !SAN DIEGO !CA!92127!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000003114500!N!N!000006920000!9999!MISCELLANEOUS ITEMS !A1A!AIRFRAMES AND SPARES !3000!NOT DISCERNABLE OR CLASSIFIED !111110!E! !1! ! ! ! ! !99990909!B! ! !A! !D!N!R!1!001!N!1A!Z!N!Z! ! !N!C!N! ! ! !A!A!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 $96.1 million to TELEDYNE, INC for work described as: 200308!000438!5700!GU72 !ASC/RWKR !F3365702C5424 !A!N! !N! !20030408!20031231!008391203!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!17066 GOLDENTOP ROAD !SAN DIEGO !CA!92127!66000!073!06!SAN DIEGO !SAN D… Key points: 1. Significant contract value of $96.1 million awarded to a major defense contractor. 2. Competition was not utilized, raising questions about price discovery and potential overspending. 3. The contract carries a risk of higher costs due to the 'Cost Plus Award Fee' structure. 4. Spending is within the Aircraft Manufacturing sector, a critical area for national defense.

Value Assessment

Rating: questionable

The contract value of $96.1 million for aircraft parts and services is substantial. Without competitive bidding, it's difficult to benchmark against similar contracts to determine if the pricing is optimal.

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 potentially leads to higher costs for taxpayers as there is no market pressure to reduce prices.

Taxpayer Impact: The lack of competition for a nearly $100 million contract suggests that taxpayers may not be receiving the best possible value, potentially leading to millions in avoidable costs.

Public Impact

Taxpayers may be overpaying for aircraft parts and services due to the absence of competitive bidding. The Department of Defense relies on this contract for critical aircraft components, impacting readiness. The sole-source nature of this award could set a precedent for future non-competitive defense contracts.

Waste & Efficiency Indicators

Waste Risk Score: 58 / 10

Warning Flags

Lack of Competition
Cost Plus Award Fee Structure
Potential for Overpricing

Positive Signals

Awarded to established contractor
Supports critical defense needs

Sector Analysis

This contract falls under the Aircraft Manufacturing sector, which is crucial for national defense. Spending benchmarks in this sector can vary widely based on the specific aircraft and components involved.

Small Business Impact

The contract was awarded to Northrop Grumman Systems Corporation, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data.

Oversight & Accountability

The 'NOT COMPETED' status suggests a lack of robust oversight in the initial procurement phase. Further oversight would be needed to ensure the 'Cost Plus Award Fee' structure is managed effectively to control costs.

Related Government Programs

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

Risk Flags

Lack of competition raises concerns about fair pricing.
Cost Plus Award Fee structure can lead to higher-than-expected costs.
Potential for contractor to inflate costs without competitive pressure.
Limited transparency on specific items procured.
Long contract duration (over 4 years) increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $96.1 million to TELEDYNE, INC. 200308!000438!5700!GU72 !ASC/RWKR !F3365702C5424 !A!N! !N! !20030408!20031231!008391203!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!17066 GOLDENTOP ROAD !SAN DIEGO !CA!92127!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!+000003114500!N!N!000006920000!9999!MISCELLANEOUS ITEMS !A1A!AIRFRAMES AND SPARES !3000!NOT DISCERNABLE OR CLASSIFIED !111110!E! !1! ! ! ! ! !99990909!B

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 $96.1 million.

What is the period of performance?

Start: 2003-04-08. End: 2007-09-30.

What specific aircraft components or services does this contract cover, and how does their complexity justify a sole-source award?

The data indicates 'MISCELLANEOUS ITEMS' and 'AIRFRAMES AND SPARES' under PSC A1A. The complexity and proprietary nature of specific airframe components or specialized repair services could potentially justify a sole-source award, but this requires detailed justification beyond the scope of the provided data. Without this, the lack of competition remains a significant concern for value.

What are the potential cost overruns associated with the 'Cost Plus Award Fee' structure in this contract?

The 'Cost Plus Award Fee' (CPAF) structure allows the contractor to recover all allowable costs plus a fee that is adjusted based on performance against specific criteria. While intended to incentivize performance, CPAF contracts carry a risk of cost overruns if the award criteria are not tightly defined or if costs escalate unexpectedly. The government's ability to control costs depends heavily on robust oversight and well-defined performance metrics.

How does the $96.1 million expenditure compare to the typical spending for similar aircraft manufacturing contracts within the Department of Defense?

Benchmarking this $96.1 million contract requires detailed comparison with similar sole-source or competed contracts for airframes and spares within the DoD. Given the lack of competition and the 'Cost Plus Award Fee' structure, it's plausible that this amount could be higher than a competitively bid contract. A thorough analysis would involve examining contract types, scope, and duration for comparable procurements.

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: ATI Inc. (UEI: 949262737)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $99,000,169

Exercised Options: $99,000,169

Current Obligation: $96,129,442

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline