DoD's $22.6M contract for inertial navigation repair awarded to Northrop Grumman, lacking competition
Contract Overview
Contract Amount: $22,653,331 ($22.7M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2017-09-29
End Date: 2024-06-30
Contract Duration: 2,466 days
Daily Burn Rate: $9.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF REPAIR INERTIAL NAVIGATION ELEMENT
Place of Performance
Location: WOODLAND HILLS, LOS ANGELES County, CALIFORNIA, 91367
Plain-Language Summary
Department of Defense obligated $22.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF REPAIR INERTIAL NAVIGATION ELEMENT Key points: 1. Value for money is questionable due to the sole-source nature of the award. 2. Competition dynamics are absent, raising concerns about potential overpricing. 3. Risk indicators include a lack of competitive pressure and a long contract duration. 4. Performance context is for aircraft parts and auxiliary equipment manufacturing. 5. Sector positioning is within the defense aerospace manufacturing industry.
Value Assessment
Rating: questionable
The contract's value is difficult to benchmark without competitive bids. Awarded at a firm fixed price, the absence of competition means there's no market validation of the pricing. Comparisons to similar sole-source contracts for specialized aerospace components would be necessary to assess if the $22.6 million is reasonable. However, without a competitive process, the likelihood of achieving the best possible value for taxpayers is diminished.
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 Systems Corporation, was solicited. The data indicates no other sources were considered or competed. This lack of competition limits price discovery and may result in higher costs than if multiple vendors had the opportunity to bid.
Taxpayer Impact: Taxpayers may be paying a premium for this repair service due to the absence of competitive pressure. Without competing offers, the government has less leverage to negotiate favorable pricing.
Public Impact
The Department of the Air Force benefits from the continued operational readiness of its aircraft. Services delivered include the repair of inertial navigation elements, crucial for flight control and guidance. Geographic impact is primarily within California, where the contractor is located. Workforce implications include employment for specialized technicians and engineers at Northrop Grumman.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs.
- Sole-source awards can reduce innovation by limiting market entry.
- Long contract duration (2466 days) increases exposure to potential cost overruns or performance issues without recourse to competitive re-evaluation.
Positive Signals
- Contract awarded to an established defense contractor with presumed expertise.
- Firm fixed price contract provides cost certainty for the government.
- Contract supports critical defense capabilities, ensuring operational readiness.
Sector Analysis
This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for specialized defense components like inertial navigation systems is often characterized by high barriers to entry, proprietary technology, and a limited number of qualified suppliers. Spending in this area is critical for maintaining the operational effectiveness of military aviation assets. Comparable spending benchmarks would likely be found within other sole-source or limited-competition awards for similar high-tech defense components.
Small Business Impact
The contract data indicates that small business participation was not a stated requirement or outcome (ss: false, sb: false). As a sole-source award to a large prime contractor, there are no explicit subcontracting set-asides for small businesses mandated within this specific contract. The impact on the small business ecosystem is neutral to negative, as opportunities that might have arisen from a competitive bid process are foregone.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures are inherent in the firm fixed-price structure, which caps the government's liability. Transparency is limited due to the sole-source nature and the lack of publicly available detailed cost breakdowns. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Aircraft Maintenance and Repair
- Defense Logistics Agency Contracts
- Avionics Systems Procurement
- Naval Aviation Support Contracts
- Air Force Sustainment Programs
Risk Flags
- Sole-source award
- Lack of competition
- Long contract duration
Tags
defense, department-of-defense, department-of-the-air-force, northrop-grumman-systems-corporation, definitive-contract, firm-fixed-price, sole-source, aircraft-parts, repair-services, california, large-business, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $22.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF REPAIR INERTIAL NAVIGATION ELEMENT
Who is the contractor on this award?
The obligated recipient is NORTHROP GRUMMAN SYSTEMS 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 $22.7 million.
What is the period of performance?
Start: 2017-09-29. End: 2024-06-30.
What is Northrop Grumman's track record with similar sole-source inertial navigation repair contracts for the Department of Defense?
Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in aerospace and defense systems, including navigation and avionics. While specific data on their track record with *sole-source* inertial navigation repair contracts is not detailed here, their long-standing relationship with the Department of Defense suggests a history of performance. However, the absence of competition for this specific contract means that direct comparisons of their pricing and efficiency against other potential providers are not available. Further analysis would require examining historical contract awards to Northrop Grumman for similar services, looking for patterns in contract modifications, cost overruns, or performance issues that might indicate a trend beyond this single award.
How does the $22.6 million contract value compare to market rates for inertial navigation system repair?
Directly comparing the $22.6 million contract value to market rates is challenging due to the sole-source nature of this award and the specialized, high-technology components involved. Market rates are typically established through competitive bidding processes where multiple vendors offer their pricing. In a sole-source scenario, the government relies on negotiation and internal cost analysis, which may not fully reflect competitive market dynamics. To assess value, one would need to benchmark against similar sole-source contracts awarded to other large defense contractors for comparable systems, or against internal cost estimates if available. Without such comparative data, it's difficult to definitively state whether this price represents good or poor value relative to the broader market.
What are the primary risks associated with awarding a $22.6 million contract on a sole-source basis for over two years?
The primary risks associated with this sole-source award include potential cost inefficiency, reduced innovation, and contractor lock-in. Without competition, Northrop Grumman faces less pressure to offer the most competitive pricing, potentially leading to higher costs for the government. The lack of competitive solicitation can also stifle innovation, as other companies are not incentivized to develop more efficient or cost-effective repair methods. Furthermore, the long contract duration (2466 days, over 6 years) increases the risk of contractor lock-in, making it difficult and costly to switch providers if performance issues arise or if better alternatives become available. This extended period without competitive re-evaluation means the government is committed to a single vendor for a significant duration.
How effective is the Department of the Air Force likely to be in ensuring program effectiveness given the lack of competition?
Ensuring program effectiveness with a sole-source contract relies heavily on the government's internal oversight, contract management capabilities, and the contractor's commitment to performance. The Department of the Air Force must implement robust performance metrics, conduct regular reviews, and maintain strong communication channels with Northrop Grumman. The firm fixed-price nature of the contract provides some incentive for the contractor to perform efficiently to maximize profit. However, the absence of competitive pressure means that the Air Force cannot leverage market forces to drive improvements or cost reductions. Effectiveness will largely depend on the diligence of the contracting officers and technical representatives in monitoring performance and enforcing contract terms.
What are the historical spending patterns for inertial navigation system repair within the Department of Defense?
Historical spending patterns for inertial navigation system (INS) repair within the Department of Defense are likely characterized by a mix of competitive and sole-source awards, reflecting the specialized nature of the technology and the long lifecycle of military platforms. Major defense contractors like Northrop Grumman, Honeywell, and BAE Systems are typically involved in these types of contracts. Spending often increases during periods of heightened military operations or when aging aircraft fleets require extensive maintenance. Sole-source awards are common for unique or proprietary systems where only one entity possesses the necessary technical data, repair capabilities, or original equipment manufacturer (OEM) status. Analyzing historical data would reveal trends in contract values, durations, and the prevalence of competitive versus non-competitive procurements for INS components across different service branches.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: FA811916R0034
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 21240 BURBANK BLVD, WOODLAND HILLS, CA, 91367
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $22,653,331
Exercised Options: $22,653,331
Current Obligation: $22,653,331
Subaward Activity
Number of Subawards: 47
Total Subaward Amount: $2,662,375
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-09-29
Current End Date: 2024-06-30
Potential End Date: 2024-06-30 00:00:00
Last Modified: 2024-03-19
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