DoD's $29.8M contract for Aircraft Manufacturing parts awarded to Northrop Grumman Systems Corp

Contract Overview

Contract Amount: $29,827,138 ($29.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2017-09-27

End Date: 2019-06-27

Contract Duration: 638 days

Daily Burn Rate: $46.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROXIMITY SWITCH LOGIC UNIT (PSLU) FORM, FIT, AND FUNCTION (F3)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $29.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: PROXIMITY SWITCH LOGIC UNIT (PSLU) FORM, FIT, AND FUNCTION (F3) Key points: 1. Value for money assessed through benchmarking against similar contracts and market rates. 2. Competition dynamics indicate a sole-source award, potentially impacting price discovery. 3. Risk indicators include the sole-source nature and the specific technical requirements. 4. Performance context is tied to the delivery of critical aircraft components. 5. Sector positioning within Aircraft Manufacturing highlights the importance of specialized suppliers.

Value Assessment

Rating: fair

The contract value of $29.8 million for the PROXIMITY SWITCH LOGIC UNIT (PSLU) FORM, FIT, AND FUNCTION (F3) appears to be within a reasonable range for specialized aircraft components, though direct public benchmarks are scarce. Given the sole-source nature, a thorough review of cost build-ups and historical pricing for similar components would be necessary for a definitive value assessment. The firm-fixed-price structure offers some cost certainty but relies heavily on the initial negotiation's fairness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency and specialized requirements preclude a competitive process. The lack of competition means that price discovery through market forces was limited, and the government relied on negotiation and cost analysis to ensure a fair price.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers compared to competitive procurements, as the potential for cost savings through bidding is eliminated. This necessitates robust government oversight to prevent overpayment.

Public Impact

The Department of the Air Force benefits from the continued availability of critical aircraft components. Services delivered include the supply of specialized parts essential for aircraft maintenance and operation. Geographic impact is primarily within the defense supply chain, supporting Air Force readiness. Workforce implications are indirect, supporting specialized manufacturing roles within Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of public data makes independent value-for-money assessment challenging.
Reliance on a single supplier could create long-term dependency and supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established defense contractor suggests a degree of reliability.
Specific nature of the component implies a critical role in aircraft functionality.

Sector Analysis

The Aircraft Manufacturing sector (NAICS 336411) is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Contracts within this sector often involve highly specialized components with long lead times and stringent quality requirements. Spending benchmarks are difficult to establish due to the unique nature of each aircraft system and its associated parts. This contract for PSLU components fits within the broader ecosystem of defense aerospace manufacturing, where established players like Northrop Grumman are key suppliers.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the available data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on established capabilities rather than fostering small business participation through set-asides. Further analysis of subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which places cost risk on the contractor. Transparency is limited due to the sole-source nature and the proprietary aspects of defense manufacturing. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics and Support Services
Aerospace Component Production
Military Aircraft Maintenance and Repair

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns without competition
Supply chain dependency on a single vendor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.8 million to NORTHROP GRUMMAN SYSTEMS CORP. PROXIMITY SWITCH LOGIC UNIT (PSLU) FORM, FIT, AND FUNCTION (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 $29.8 million.

What is the period of performance?

Start: 2017-09-27. End: 2019-06-27.

What is the track record of Northrop Grumman Systems Corp. in delivering similar aircraft components to the Department of Defense?

Northrop Grumman Systems Corp. has a long-standing and extensive track record as a major defense contractor, involved in numerous aircraft manufacturing programs for the Department of Defense and allied nations. Their portfolio includes prime contracting for aircraft, as well as the development and production of complex systems, subsystems, and components. For specialized parts like the PROXIMITY SWITCH LOGIC UNIT (PSLU), their experience likely spans decades, encompassing design, engineering, testing, and manufacturing. Historical performance data, often found in contract award databases and performance assessment reports (e.g., CPARS), would detail their on-time delivery, quality adherence, and overall program execution for similar contracts. Given their scale and scope, they are generally considered a reliable, albeit high-cost, supplier for critical defense needs.

How does the $29.8 million contract value compare to similar procurements for aircraft components?

Directly comparing the $29.8 million contract value for the PROXIMITY SWITCH LOGIC UNIT (PSLU) FORM, FIT, AND FUNCTION (F3) to similar procurements is challenging due to the specificity of the item and the limited public data available for sole-source awards. Aircraft components can vary drastically in complexity, unit cost, and volume. However, for highly specialized, low-volume, or proprietary components within the defense aerospace sector, such a value for a multi-year delivery order (638 days duration) is not unusual. Benchmarking would ideally involve comparing the unit price and total value against other PSLU procurements or functionally equivalent components, considering factors like technological sophistication, material costs, and required certifications. Without access to detailed cost breakdowns or competitive bids, a definitive value comparison remains difficult, but it falls within the expected range for specialized defense manufacturing.

What are the primary risks associated with this sole-source contract for the Department of the Air Force?

The primary risks associated with this sole-source contract are centered around cost and supply chain. Firstly, the lack of competition means the Department of the Air Force (DAF) may not be achieving the lowest possible price, as there was no market pressure from competing bidders. This necessitates robust internal cost analysis and negotiation by the DAF to ensure fair pricing. Secondly, reliance on a single supplier, Northrop Grumman Systems Corp., creates a potential supply chain vulnerability. Any disruptions at the contractor's facility, labor issues, or strategic decisions by the company could impact the availability of these critical components, potentially delaying aircraft maintenance or operations. Lastly, there's a risk of vendor lock-in, making it difficult and costly to switch suppliers in the future if performance issues arise or if a more cost-effective alternative becomes available.

How effective is the firm-fixed-price (FFP) contract type in managing costs and performance for this specific component?

The Firm-Fixed-Price (FFP) contract type is generally effective in managing costs and performance for components like the PROXIMITY SWITCH LOGIC UNIT (PSLU) when the scope of work and requirements are well-defined. Under an FFP contract, the contractor, Northrop Grumman Systems Corp., assumes the majority of the cost risk, meaning they are obligated to complete the work for the agreed-upon price, regardless of their actual costs. This incentivizes the contractor to control costs and improve efficiency. For performance, the FFP structure clearly defines the deliverable, and any failure to meet specifications can lead to contract remedies. However, the effectiveness is contingent on the accuracy of the initial cost estimates and the clarity of the technical specifications. For highly complex or evolving technologies, an FFP contract might be less suitable than other types, but for established components with defined form, fit, and function, it provides significant cost certainty for the government.

What are the historical spending patterns for similar aircraft components or for Northrop Grumman Systems Corp. within the Aircraft Manufacturing sector?

Historical spending patterns for aircraft components and specifically for Northrop Grumman Systems Corp. within the Aircraft Manufacturing sector (NAICS 336411) indicate significant and consistent investment by the Department of Defense. Northrop Grumman is one of the largest defense contractors, consistently receiving billions of dollars annually across various programs, including aircraft manufacturing, systems integration, and component supply. Spending on specific components like the PSLU is often tied to the lifecycle of particular aircraft platforms. If this component is critical for a widely used or long-serving aircraft, historical spending could show sustained, albeit fluctuating, demand. Analyzing past contracts awarded to Northrop Grumman for similar parts or systems would reveal trends in contract values, durations, and the frequency of awards, providing context for the $29.8 million obligation.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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: $29,827,138

Exercised Options: $29,827,138

Current Obligation: $29,827,138

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline