Northrop Grumman receives $46.8M for KC-10 Contractor Logistics Support, a critical but costly service

Contract Overview

Contract Amount: $46,759,535 ($46.8M)

Contractor: Northrop Grumman Technical Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-10-01

End Date: 2018-12-31

Contract Duration: 456 days

Daily Burn Rate: $102.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST NO FEE

Sector: Defense

Official Description: KC-10 CONTRACTOR LOGISTICS SUPPORT (CLS)

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $46.8 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC. for work described as: KC-10 CONTRACTOR LOGISTICS SUPPORT (CLS) Key points: 1. Value for money is fair, with a significant portion of the contract value allocated to logistics and support services. 2. Competition dynamics indicate a full and open process, which should theoretically drive competitive pricing. 3. Risk indicators are moderate, given the complexity of maintaining aging aircraft systems. 4. Performance context suggests a focus on ensuring operational readiness for the KC-10 fleet. 5. Sector positioning places this contract within the broader defense aviation support industry.

Value Assessment

Rating: fair

The contract value of $46.8 million for approximately 1.5 years of service appears substantial for logistics support. Benchmarking against similar contracts for large aircraft fleet support is challenging without more granular data on the specific services provided. However, the cost-plus-no-fee (CPNF) contract type suggests that the contractor is reimbursed for allowable costs plus a fixed fee, which can sometimes lead to higher overall costs compared to fixed-price contracts if cost controls are not robust.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of full and open competition is generally a positive sign for price discovery and achieving competitive pricing. The number of bidders and the specific terms of the competition would provide further insight into the level of price pressure exerted.

Taxpayer Impact: Taxpayers benefit from the competitive process, which aims to secure the best possible price for essential logistics support services for the KC-10 fleet.

Public Impact

The primary beneficiaries are the U.S. Air Force and its air mobility command, ensuring the operational readiness of the KC-10 Extender aircraft. Services delivered include contractor logistics support, which encompasses maintenance, repair, and supply chain management for the KC-10 fleet. The geographic impact is national, supporting a critical asset for global reach and power projection. Workforce implications include employment for skilled technicians, engineers, and logistics personnel within Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in a cost-plus contract type if not closely monitored.
Reliance on a single contractor for critical logistics support could pose a risk if performance issues arise.
Aging KC-10 fleet may require increasingly complex and costly maintenance over time.

Positive Signals

Awarded through full and open competition, suggesting a competitive environment.
Contractor has a significant track record in aerospace and defense support.
Focus on maintaining a vital strategic asset for the U.S. Air Force.

Sector Analysis

The defense aviation support sector is characterized by long-term contracts, high technical expertise requirements, and significant government spending. This contract for KC-10 logistics support fits within the broader category of aircraft maintenance, repair, and overhaul (MRO) services. The market is dominated by a few large defense contractors with specialized capabilities. Comparable spending benchmarks would involve looking at other large fleet support contracts within the Department of Defense, which often run into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no explicit indication of small business set-asides for this specific contract based on the provided data. However, large prime contractors like Northrop Grumman are typically required to meet subcontracting goals with small businesses. The extent to which small businesses will participate as subcontractors on this contract will be crucial for assessing its impact on the small business ecosystem within the aerospace and defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the contract terms, including performance standards and reporting requirements. Transparency is generally maintained through contract awards databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

KC-46 Pegasus Tanker Program
C-17 Globemaster III Sustainment
Air Mobility Command Operations
Defense Logistics Agency Support Contracts

Risk Flags

Cost-plus contract type requires diligent oversight to prevent overruns.
Aging aircraft fleet may present increasing maintenance challenges and costs.
Reliance on a single prime contractor for critical support functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.8 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC.. KC-10 CONTRACTOR LOGISTICS SUPPORT (CLS)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN TECHNICAL SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $46.8 million.

What is the period of performance?

Start: 2017-10-01. End: 2018-12-31.

What is Northrop Grumman's track record with similar large-scale aircraft logistics support contracts?

Northrop Grumman Technical Services, Inc. has a substantial history of providing complex logistics, sustainment, and support services for various military aircraft platforms. This includes extensive experience with tanker aircraft, bombers, and other strategic assets. Their track record often involves managing intricate supply chains, providing depot-level maintenance, and ensuring fleet readiness for extended periods. While specific performance metrics for past contracts are not detailed here, their continued success in securing such high-value contracts suggests a generally positive performance history and capability to meet demanding requirements within the defense sector. This experience is critical for managing the long-term sustainment needs of the KC-10 fleet.

How does the cost of this KC-10 CLS contract compare to similar aircraft sustainment contracts?

Directly comparing the $46.8 million cost for approximately 1.5 years of KC-10 Contractor Logistics Support (CLS) to other aircraft sustainment contracts is difficult without detailed breakdowns of services rendered and fleet size. However, large military aircraft sustainment is inherently expensive due to the complexity, specialized labor, and parts required. Contracts for similar large, aging platforms like the C-17 or B-52 can easily run into hundreds of millions or billions over their service life. The cost-plus-no-fee (CPNF) structure here means costs are reimbursed plus a fixed fee, which can be less predictable than fixed-price contracts. While the total value appears significant, it must be evaluated against the scope of work and the criticality of maintaining the KC-10's operational capability.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include the potential for cost overruns due to the CPNF contract type, the inherent challenges of maintaining aging KC-10 aircraft, and the reliance on a single contractor for critical logistics. Mitigation strategies likely involve robust oversight from the Defense Contract Management Agency (DCMA), including detailed cost audits and performance monitoring. The contract's fixed fee component provides some cost certainty for the contractor's profit. For the aging aircraft, proactive maintenance schedules and component lifecycle management are crucial. The full and open competition at award aims to ensure the contractor is incentivized to perform efficiently to maintain future business opportunities.

How effective is the full and open competition in ensuring value for taxpayers on this contract?

Full and open competition is generally considered the most effective method for ensuring value for taxpayers, as it theoretically allows multiple capable vendors to bid, driving down prices through market forces. For this KC-10 CLS contract, the initial award through this process suggests that competitive pressures were applied. However, the long-term effectiveness depends on the number of bidders, the clarity of the solicitation requirements, and the evaluation criteria used. If only a few bidders participated, or if the requirements were overly prescriptive, the competitive advantage might be diminished. Ongoing monitoring of performance and costs throughout the contract duration is also essential to confirm that the initial competitive award translated into sustained value.

What is the historical spending trend for KC-10 Contractor Logistics Support?

Historical spending data for KC-10 Contractor Logistics Support (CLS) prior to this specific $46.8 million award (2017-2018) would provide crucial context. Without that data, it's difficult to establish a trend. However, the KC-10 fleet has been in service for decades, implying a continuous need for logistics and sustainment support. Spending on such programs typically fluctuates based on fleet readiness requirements, modernization efforts, and the age of the aircraft. It is reasonable to assume that spending on KC-10 CLS has been a consistent, significant line item within the Air Mobility Command's budget over many years, likely involving multiple contract actions and potentially different prime contractors over time.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2411 DULLES CORNER PARK STE 800, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $51,629,539

Exercised Options: $51,629,539

Current Obligation: $46,759,535

Subaward Activity

Number of Subawards: 148

Total Subaward Amount: $518,303,137

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810610D0001

IDV Type: IDC

Timeline