DoD's $10.46M contract for aircraft parts awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $10,461,071 ($10.5M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 2001-01-12

End Date: 2009-09-30

Contract Duration: 3,183 days

Daily Burn Rate: $3.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $10.5 million to NORTHROP GRUMMAN CORPORATION for work described as: Key points: 1. The contract's value of over $10 million for aircraft parts suggests a significant need for specialized components. 2. The sole-source award raises concerns about potential overpricing and limited market exploration. 3. A long contract duration of over 8 years indicates a sustained requirement for these parts. 4. The lack of competition may limit opportunities for smaller, innovative suppliers to enter the market. 5. The firm-fixed-price structure aims to control costs, but its effectiveness is diminished without competitive pressure. 6. The award to a large, established defense contractor like Northrop Grumman is typical for complex aerospace needs.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the aircraft parts procured. However, a $10.46 million award over nearly 9 years for 'Other Aircraft Parts and Auxiliary Equipment' suggests a substantial, ongoing need. The absence of competition means a direct comparison to similar competitively awarded contracts is not possible, making it difficult to definitively assess if the price represents fair market value. The firm-fixed-price (FFP) contract type is generally favorable for cost control, but without competitive bids, the government cannot be assured it received the best possible pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of a competitive bidding process means that the government did not benefit from the price discovery that occurs when multiple companies vie for a contract. This can lead to higher prices than might be achieved in a fully open market.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to secure the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Air Force, which receives essential aircraft parts. The contract supports the operational readiness and maintenance of military aircraft. The geographic impact is primarily centered around Northrop Grumman's operations in California, where the contract was awarded. The contract sustains jobs within the aerospace manufacturing sector, particularly at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can stifle innovation by excluding potential new entrants.
Long contract duration without re-competition limits opportunities for cost savings over time.

Positive Signals

Firm-fixed-price contract type helps to establish a ceiling on costs.
Award to an experienced contractor like Northrop Grumman suggests a focus on reliability and proven performance.
The contract supports critical defense needs, ensuring aircraft availability.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the broader aerospace and defense industry. This industry is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this sector is heavily influenced by defense budgets and geopolitical factors. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft components, though such data is often proprietary or difficult to access.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss': false flag suggests it was not a small business prime award. Consequently, there are no direct subcontracting implications for small businesses mandated by this specific award. The lack of set-aside means that opportunities for small businesses to participate as prime contractors were not actively pursued through this sole-source vehicle.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management systems. Specific oversight mechanisms would include contract administration by the Air Force, performance reviews, and potentially audits by the Defense Contract Audit Agency (DCAA) or the Inspector General. Transparency is limited due to the sole-source nature and the proprietary aspects of defense contracting. Accountability rests with Northrop Grumman to deliver parts meeting specifications and with the DoD to manage the contract effectively.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Procurement
Air Force Logistics

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.5 million to NORTHROP GRUMMAN CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN CORPORATION.

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 $10.5 million.

What is the period of performance?

Start: 2001-01-12. End: 2009-09-30.

What specific types of aircraft parts were procured under this contract?

The data provided indicates the contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) category. While specific part numbers or types are not detailed in the provided summary, this classification typically encompasses a wide range of components beyond engines and airframes. This could include items such as landing gear components, hydraulic systems parts, avionics sub-assemblies, structural elements, or specialized electronic equipment. The exact nature of the parts would be detailed in the contract's Statement of Work (SOW), which is not publicly available in this data snippet. Understanding the specific parts is crucial for a more precise value assessment and risk analysis.

Why was this contract awarded on a sole-source basis?

Sole-source awards are generally justified when only one responsible source can provide the required supplies or services. Common reasons include the existence of unique capabilities, proprietary technology, critical sustainment needs for specific platforms where only the original equipment manufacturer (OEM) can provide parts, or urgent and compelling circumstances that preclude full and open competition. Without further details from the awarding agency (Department of the Air Force), the precise justification for this sole-source award to Northrop Grumman Corporation remains unspecified. However, for complex aerospace components, it is often related to specialized manufacturing processes, intellectual property rights, or the need to maintain the integrity and compatibility of existing weapon systems.

How does the contract duration of over 8 years impact its overall value and risk?

A contract duration of over 8 years (3183 days) for aircraft parts suggests a long-term, stable requirement for these components, likely tied to the lifecycle of specific military aircraft platforms. From a value perspective, such long-term agreements can offer predictability for both the contractor and the government, potentially leading to more stable pricing over the period. However, it also presents risks. Without periodic re-competition, the government may miss opportunities to benefit from market price fluctuations or technological advancements that could lower costs. The extended duration increases the risk of price escalation due to inflation or changes in material costs, which may not be fully mitigated by the firm-fixed-price structure if not adequately accounted for in the initial pricing.

What is Northrop Grumman Corporation's track record with the Department of Defense for similar contracts?

Northrop Grumman Corporation is a major defense contractor with an extensive history of supplying complex systems and components to the Department of Defense (DoD) and various military branches, including the Air Force. They have a well-established track record in aerospace manufacturing, including aircraft parts, electronics, and integrated systems. While this specific contract data doesn't detail past performance metrics for this particular award, Northrop Grumman's overall profile suggests significant experience and capability in meeting DoD requirements. Their long-standing relationship with the DoD implies a level of trust and familiarity, but also underscores the importance of robust oversight to ensure continued value and performance, especially in sole-source situations.

Can the $10.46 million award be benchmarked against industry standards for aircraft parts?

Benchmarking the $10.46 million award against industry standards for aircraft parts is difficult without knowing the specific components procured. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category is broad. Factors influencing cost include the complexity, materials, required certifications, and volume. For sole-source contracts, direct benchmarking is inherently limited as competitive market pricing is absent. Industry standards often relate to average costs for specific part types or manufacturing processes derived from competitive bids or market analyses. Given the sole-source nature and lack of specific part details, a precise comparison to industry benchmarks is not feasible with the provided data. However, the total value over nearly 9 years suggests a significant procurement.

What are the potential risks associated with a firm-fixed-price contract for specialized aircraft parts?

A firm-fixed-price (FFP) contract aims to provide price certainty for the government. For specialized aircraft parts, the primary risk for the government under an FFP contract, especially when sole-sourced, is that the fixed price may be set too high due to the lack of competitive pressure. The contractor bears the risk of cost overruns, but if the initial price is not well-negotiated or based on thorough market research (which is limited in sole-source scenarios), the government might overpay. Another risk is that the contractor might be incentivized to use lower-cost materials or processes if quality control is not rigorously monitored, potentially compromising performance or safety, although stringent specifications and acceptance testing are designed to mitigate this.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 8900 WASHINGTON BLVD, PICO RIVERA, CA, 38

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline