DoD's $21.5M contract for cruise missile navigation elements awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $21,550,164 ($21.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-04

End Date: 2026-05-31

Contract Duration: 2,095 days

Daily Burn Rate: $10.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: REMANUFACTURE OF AIR LAUNCH CRUISE MISSILE INERTIAL NAVIGATION ELEMENT

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84116

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $21.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: REMANUFACTURE OF AIR LAUNCH CRUISE MISSILE INERTIAL NAVIGATION ELEMENT Key points: 1. Contract awarded to a single, established provider, raising questions about potential price inflation and limited innovation. 2. The firm-fixed-price structure shifts some risk to the contractor, but the lack of competition hinders optimal value assessment. 3. Performance is tied to a critical defense system, indicating high stakes for reliability and timely delivery. 4. This contract represents a small fraction of the DoD's overall spending on aerospace and defense manufacturing. 5. The duration of the contract suggests a long-term need for these specialized components.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature of the award and the specialized, niche product. Without competitive bids, it's difficult to ascertain if the $21.5 million represents a fair market price or if alternative, more cost-effective solutions exist. The firm-fixed-price contract type provides some cost certainty, but the absence of competition limits the government's ability to negotiate the best possible terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified for unique capabilities or existing sole-source products, they limit price discovery and can lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for this component due to the lack of competitive pressure to drive down prices. The absence of multiple bids means there was no opportunity to leverage market forces for cost savings.

Public Impact

The primary beneficiaries are the Department of Defense and the specific Air Force units utilizing the Air Launched Cruise Missile systems. The contract ensures the continued availability and operational readiness of critical navigation elements for these missiles. The geographic impact is primarily within the United States, supporting defense infrastructure and potentially specialized manufacturing facilities. Workforce implications include the continued employment of skilled technicians and engineers at Northrop Grumman involved in the remanufacturing process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source award limits opportunities for other qualified manufacturers to compete.
Potential for vendor lock-in with a single supplier for critical components.

Positive Signals

Award to an established contractor with likely experience in this specialized area.
Firm-fixed-price contract provides cost certainty for the government.
Contract ensures continued support for a critical defense asset.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' subsector. Spending in this area is driven by military modernization, sustainment of existing fleets, and technological advancements. Comparable spending benchmarks are difficult to establish without more specific product details, but the overall defense manufacturing market is substantial, with billions allocated annually to aircraft and missile systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like Northrop Grumman suggests that subcontracting opportunities for small businesses may be limited or dependent on Northrop Grumman's internal subcontracting plans. Without specific subcontracting goals outlined, the direct impact on the small business ecosystem for this particular award is unclear.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Department of the Air Force. Accountability measures are inherent in the firm-fixed-price contract, requiring Northrop Grumman to deliver the specified remanufactured components. Transparency is limited due to the sole-source nature of the award, with fewer public details available compared to competitively procured contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Air Launched Cruise Missile (ALCM) Program
DoD Aircraft Parts Manufacturing
Defense Navigation Systems
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. REMANUFACTURE OF AIR LAUNCH CRUISE MISSILE 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 $21.6 million.

What is the period of performance?

Start: 2020-09-04. End: 2026-05-31.

What is Northrop Grumman's track record with similar sole-source contracts for critical defense components?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in producing and supporting complex aerospace and defense systems, including missile components. While specific data on their sole-source contracts for inertial navigation elements of cruise missiles is not publicly detailed, their history suggests a capacity to deliver on such specialized requirements. However, sole-source awards, by their nature, limit transparency into pricing and competitive alternatives. Analyzing past performance on similar sole-source awards would require access to internal DoD procurement data or specific contract history reports that are not readily available in the public domain. Generally, the government relies on past performance evaluations and existing relationships when sole-source justifications are made, but the absence of competition means direct price-to-price comparisons are not feasible.

How does the $21.5 million cost compare to the market value of remanufactured inertial navigation elements for cruise missiles?

Determining the precise market value for remanufactured inertial navigation elements for Air Launched Cruise Missiles is exceptionally difficult without access to competitive bidding data or specialized industry cost analysis. These are highly specialized, low-volume components critical to national defense, often produced by a limited number of qualified entities. The $21.5 million figure represents the total contract value over its period of performance. Without comparable bids from other manufacturers or detailed cost breakdowns from Northrop Grumman, it's impossible to benchmark this against 'market rates' in a conventional sense. The sole-source nature of the award means the government did not benefit from competitive price discovery, making a direct value-for-money assessment challenging based solely on the provided data.

What are the primary risks associated with awarding a contract of this nature on a sole-source basis?

The primary risks associated with sole-source awards, like this $21.5 million contract for cruise missile navigation elements, include potential cost overruns and reduced innovation. Without competitive pressure, the contractor may have less incentive to minimize costs, potentially leading to a higher price for the government than if multiple bids were solicited. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier for critical components, limiting future flexibility and negotiation power. Furthermore, the lack of competition can stifle innovation, as alternative solutions or more efficient manufacturing processes might not be explored or proposed. While the firm-fixed-price structure mitigates some financial risk for the government, the overall value proposition is weakened without a competitive environment.

What is the historical spending pattern for remanufacturing of Air Launched Cruise Missile inertial navigation elements?

Historical spending patterns for the remanufacturing of Air Launched Cruise Missile (ALCM) inertial navigation elements are not readily available in public databases. This specific component is highly specialized, and its sustainment likely involves periodic, potentially sole-source, contracts rather than continuous, high-volume procurement. The current $21.5 million contract, spanning from September 2020 to May 2026, suggests a significant, multi-year effort. To understand historical spending, one would need to access detailed DoD procurement histories for the ALCM program, potentially identifying previous contracts for similar remanufacturing or sustainment activities. Without such data, it's difficult to establish a trend or compare current spending against past investments in this specific area.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) typically perform in terms of competition and pricing for DoD contracts?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' encompasses a broad range of specialized components. Within the defense sector, contracts under this code can vary significantly in terms of competition and pricing. While some segments might see robust competition among numerous suppliers, others, particularly those involving highly specialized, proprietary, or legacy systems like cruise missile navigation elements, are more prone to sole-source or limited competition awards. Pricing in this sector is often influenced by factors such as technological complexity, stringent quality requirements, long lead times, and the relatively small number of qualified manufacturers. Therefore, while the NAICS code itself doesn't dictate competition levels, the specific nature of the product being procured heavily influences whether contracts are competed broadly or awarded non-competitively.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA812820R0002

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: $21,550,164

Exercised Options: $21,550,164

Current Obligation: $21,550,164

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $379,475

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA812820D0003

IDV Type: IDC

Timeline