Northrop Grumman awarded $52.3M for RALT F3, a sole-source contract for aircraft components

Contract Overview

Contract Amount: $52,315,155 ($52.3M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2017-09-25

End Date: 2024-01-25

Contract Duration: 2,313 days

Daily Burn Rate: $22.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: B-2 RADAR ALTIMETER FORM, FIT AND FUNCTION (RALT F3)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $52.3 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 RADAR ALTIMETER FORM, FIT AND FUNCTION (RALT F3) Key points: 1. Contract awarded to a single, established supplier, raising questions about competitive pricing. 2. Long contract duration (2313 days) suggests a need for sustained component supply. 3. The contract type (Cost Plus Incentive Fee) allows for shared cost savings and performance incentives. 4. Focus on form, fit, and function indicates a need for precise, interchangeable parts. 5. The specific NAICS code (336411) points to the aircraft manufacturing sector. 6. Delivery order under a larger contract structure implies a phased approach to procurement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of the components. Without competitive bids, it's difficult to ascertain if the $52.3 million represents optimal value for money. The Cost Plus Incentive Fee structure aims to control costs, but the final price is dependent on performance and cost management by the contractor. Further analysis would require access to cost breakdowns and historical pricing for similar components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific supplier possesses unique capabilities, intellectual property, or when the item is a direct replacement for existing equipment. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government relies on the contractor's cost proposals and negotiation to achieve a fair price, which can be less effective than open market competition.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the continued operational readiness of aircraft requiring these specific components. The services delivered involve the manufacturing and supply of critical aircraft components, ensuring form, fit, and function. The geographic impact is primarily within California, where Northrop Grumman Systems Corp is located, and wherever the Air Force operates aircraft utilizing these parts. Workforce implications include employment for skilled manufacturing and engineering personnel at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Incentive Fee contracts can sometimes lead to cost overruns if not managed tightly.
Lack of transparency in sole-source justification requires careful review.
Long contract duration may indicate potential for scope creep or evolving requirements.
Dependence on a single supplier creates supply chain risk.

Positive Signals

Contract awarded to a known entity (Northrop Grumman) with established capabilities.
Cost Plus Incentive Fee structure incentivizes contractor efficiency and cost control.
Focus on form, fit, and function ensures compatibility and reduces integration risks.
Long duration provides stability for critical component supply.
Delivery order structure allows for phased funding and management.

Sector Analysis

The aircraft manufacturing sector (NAICS 336411) is a critical component of the defense industrial base. This contract falls within the broader aerospace and defense industry, characterized by high R&D investment, complex supply chains, and significant government procurement. Spending in this sector is often driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other sole-source or competitively awarded contracts for specialized aircraft parts and systems.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. Northrop Grumman Systems Corp is a large defense contractor. There is no explicit information regarding subcontracting plans for small businesses within this specific award. The absence of set-asides means that opportunities for small businesses to directly participate in this contract are limited, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Incentive Fee contract, Northrop Grumman's cost accounting and performance will be subject to review. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is limited by the sole-source nature, but contract modifications and performance reports would be key oversight documents.

Related Government Programs

Aircraft Component Manufacturing
Defense Procurement
Northrop Grumman Contracts
Air Force Logistics
Sole-Source Awards

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (CPIF)
Long contract duration
Technology obsolescence risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.3 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 RADAR ALTIMETER FORM, FIT AND FUNCTION (RALT F3)

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 $52.3 million.

What is the period of performance?

Start: 2017-09-25. End: 2024-01-25.

What is the specific justification for awarding this contract on a sole-source basis to Northrop Grumman Systems Corp?

The provided data indicates the contract was 'NOT COMPETED' and is a 'sole-source' award. Specific justifications for sole-source procurements typically include situations where only one responsible source can provide the required supplies or services, such as when the item is unique, proprietary, or a follow-on to a previously competed effort where only the original contractor can provide necessary compatibility. Without further documentation (e.g., Justification for Other Than Full and Open Competition - JOFOC), the precise reason remains unstated. However, given the nature of specialized aircraft components, it's plausible that Northrop Grumman possesses unique technical expertise, existing tooling, or intellectual property rights essential for producing the B-2 RADAR ALTIMETER FORM, FIT AND FUNCTION (RALT F3).

How does the Cost Plus Incentive Fee (CPIF) contract type aim to ensure value for money compared to other contract types?

The Cost Plus Incentive Fee (CPIF) contract type is designed to incentivize the contractor to control costs while meeting performance targets. In a CPIF contract, the final negotiated price is based on the actual allowable costs incurred by the contractor plus a fee that is adjusted based on the relationship between the final cost and a target cost. If the contractor achieves costs below the target, both the government and the contractor share in the savings according to a predetermined formula. Conversely, if costs exceed the target, the fee is reduced. This structure encourages efficiency and cost-consciousness from the contractor, aiming for better value than a simple cost-plus contract, but it still carries inherent risks of cost overruns if targets are not met or if the incentive structure is not well-designed.

What are the potential risks associated with a long contract duration of 2313 days for aircraft components?

A contract duration of 2313 days (approximately 6.3 years) for aircraft components presents several potential risks. Firstly, technology obsolescence is a concern; aircraft systems evolve, and components designed for older systems might become outdated or unsupported. Secondly, the long timeframe increases the risk of 'scope creep,' where requirements may change or expand over the contract period, potentially leading to cost increases and delays. Thirdly, maintaining consistent quality and performance over such an extended period requires robust contractor quality assurance processes. Finally, a long-term sole-source commitment can reduce the government's flexibility to adapt to new technologies or alternative suppliers that might emerge during the contract's life.

Can the $52.3 million award amount be benchmarked against similar contracts for aircraft components?

Benchmarking this $52.3 million award is difficult without more specific details about the components themselves and the contract's scope. The data identifies the award as being for 'B-2 RADAR ALTIMETER FORM, FIT AND FUNCTION (RALT F3)'. The B-2 is a highly specialized aircraft, and its components are likely unique and costly to produce. Furthermore, this was a sole-source award, which inherently limits direct price comparisons. To benchmark effectively, one would need to identify comparable sole-source or competitively awarded contracts for similar complex avionics or structural components for advanced military aircraft, considering factors like quantity, specifications, and contractor overhead. Publicly available data often lacks this level of granular detail for direct comparison.

What is Northrop Grumman Systems Corp's track record with the Department of Defense, particularly for aircraft manufacturing?

Northrop Grumman Systems Corp is a major defense contractor with a long and extensive history of working with the Department of Defense (DoD) across various platforms and systems, including aircraft manufacturing. They are known for producing significant defense assets, such as the B-2 Spirit stealth bomber (which this contract relates to), the F-35 fighter jet (as a key partner), and various unmanned aerial vehicles. Their track record generally includes delivering complex systems, though like any large contractor, they have faced scrutiny over cost, schedule, and performance on specific programs. For the B-2 program specifically, their role as a prime contractor suggests a deep understanding of its systems and components, making them a likely candidate for sole-source awards related to its sustainment and upgrades.

What are the historical spending patterns for aircraft components under NAICS code 336411 by the Department of the Air Force?

Historical spending patterns for aircraft components under NAICS code 336411 by the Department of the Air Force (DAF) are substantial, reflecting the DAF's large and aging fleet requiring continuous maintenance, repair, and upgrades. The DAF consistently procures a wide array of components, from raw materials to highly complex integrated systems, from numerous large and small businesses within this sector. Spending is often characterized by a mix of competitively awarded contracts for common parts and sole-source awards for specialized, proprietary, or legacy system components, similar to the RALT F3 contract. Fluctuations in spending are typically driven by modernization programs, depot maintenance schedules, operational tempo, and specific aircraft sustainment needs. Analyzing historical data would reveal significant investments in ensuring the airworthiness and operational readiness of platforms like the F-15, F-16, F-22, F-35, and C-130, among others.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $52,315,155

Exercised Options: $52,315,155

Current Obligation: $52,315,155

Subaward Activity

Number of Subawards: 134

Total Subaward Amount: $698,619,697

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline