Northrop Grumman awarded $70.4M for wing assemblies, highlighting significant defense manufacturing investment

Contract Overview

Contract Amount: $70,404,452 ($70.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2007-08-17

End Date: 2016-08-31

Contract Duration: 3,302 days

Daily Burn Rate: $21.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: WING ASSEMBLY,AIRCRAFT

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $70.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: WING ASSEMBLY,AIRCRAFT Key points: 1. Contract value represents a substantial investment in critical aircraft components. 2. Sole-source award suggests limited market alternatives or specific technological requirements. 3. Long contract duration indicates a sustained need for these specialized parts. 4. Fixed-price contract structure aims to control costs and provide predictability. 5. Awardee's established presence in defense manufacturing suggests a strong track record. 6. Geographic concentration in California may point to specialized industrial clusters.

Value Assessment

Rating: fair

The contract value of $70.4 million for wing assemblies is significant, but without specific unit cost data or comparable contract benchmarks, a precise value-for-money assessment is challenging. The firm fixed-price nature of the contract provides cost certainty for the government. However, the lack of competitive bidding (as indicated by the award type) could potentially lead to higher prices than a fully competed contract might achieve. Benchmarking against similar, competitively awarded contracts for aircraft wing assemblies would be necessary for a more robust evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while competition was considered, specific reasons led to the exclusion of other potential bidders. This could be due to proprietary technology, unique capabilities of the awarded contractor, or specific national security requirements. The limited competition suggests that the government may have had fewer options, potentially impacting price negotiation and the range of innovative solutions available.

Taxpayer Impact: Limited competition can mean taxpayers may not benefit from the lowest possible price achievable through broader market engagement. It also suggests a reliance on a specific contractor's capabilities.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other Department of Defense branches requiring advanced aircraft wing assemblies. The contract delivers essential components for aircraft maintenance, repair, and potentially new production, ensuring operational readiness. The geographic impact is concentrated in California, supporting specialized aerospace manufacturing jobs and related supply chains within the state. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel at Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential price inflation and reduced incentive for cost optimization.
Lack of transparency in the 'exclusion of sources' process could mask underlying reasons for limited bidder pool.
Long-term reliance on a single supplier for critical components can create strategic vulnerabilities.

Positive Signals

Firm fixed-price contract provides budget certainty and transfers some cost risk to the contractor.
Award to a major defense contractor like Northrop Grumman suggests a high likelihood of meeting stringent technical and quality requirements.
Sustained contract indicates a consistent need for these components, supporting long-term program stability.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for aircraft components is characterized by high barriers to entry, significant R&D investment, and stringent quality and regulatory requirements. Northrop Grumman is a major player in this industry. Comparable spending benchmarks would involve analyzing other large-scale contracts for aircraft structural components awarded by the DoD, considering factors like aircraft type, complexity, and material science involved.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman, is a large aerospace corporation. While large prime contractors are often required to have subcontracting plans that include small businesses, the direct award itself does not prioritize small business participation. The impact on the small business ecosystem would depend on Northrop Grumman's specific subcontracting efforts, which are not detailed in this data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods. Transparency is limited due to the nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Manufacturing
Defense Procurement
Aerospace Components
Air Force Logistics
Major Weapon Systems Support

Risk Flags

Limited Competition
Potential for Price Inflation
Long-Term Contractor Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. WING ASSEMBLY,AIRCRAFT

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 $70.4 million.

What is the period of performance?

Start: 2007-08-17. End: 2016-08-31.

What is Northrop Grumman's track record with similar wing assembly contracts for the Department of Defense?

Northrop Grumman Systems Corporation has a long and extensive history as a prime contractor for the Department of Defense, particularly in aerospace and defense manufacturing. They are known for producing complex aircraft, including bombers and surveillance platforms. While specific data on 'wing assembly' contracts isn't provided here, their overall portfolio includes the design, development, and production of major aircraft structures and systems. Their track record generally indicates a capacity to meet demanding technical specifications and delivery schedules for large-scale defense programs. Past performance reviews and contract histories within DoD databases would offer more granular detail on their performance for similar components, including any historical issues or exceptional successes.

How does the $70.4 million contract value compare to industry benchmarks for aircraft wing assemblies?

Directly comparing the $70.4 million contract value to industry benchmarks for aircraft wing assemblies is challenging without more specific details about the type of aircraft, the complexity of the wing design, the materials used, and the quantity of units procured. Aircraft wing assemblies can range dramatically in cost based on these factors. For instance, wings for commercial airliners or highly specialized military aircraft (like stealth bombers or advanced fighters) would have vastly different cost profiles. A 'benchmark' would ideally involve analyzing multiple, similar firm-fixed-price contracts awarded competitively for comparable wing assemblies over a recent period. The 'limited competition' aspect also complicates direct benchmarking, as competitive awards often yield lower prices.

What are the primary risks associated with a 'limited competition' award for critical aircraft components?

The primary risks associated with a 'limited competition' award, such as 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' include potential price inflation, reduced innovation, and diminished accountability. When the bidder pool is restricted, the government may not achieve the most favorable pricing due to a lack of robust price competition. Furthermore, limiting the number of potential suppliers can stifle innovation, as contractors may feel less pressure to develop novel or more cost-effective solutions. Accountability can also be a concern, as the government might have fewer alternatives if the selected contractor fails to meet performance expectations, potentially leading to extended sole-source arrangements or costly transitions.

How effective is the firm fixed-price (FFP) contract type in managing costs for complex defense manufacturing like wing assemblies?

The Firm Fixed-Price (FFP) contract type is generally considered effective in managing costs for complex defense manufacturing, as it transfers significant cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to deliver the specified goods or services for a predetermined price, regardless of their actual costs. This incentivizes the contractor to control expenses and improve efficiency to maximize profit. For wing assemblies, where technical specifications can be well-defined, FFP provides budget certainty for the government. However, if the initial price is set too high due to inadequate cost estimation or limited competition, the government may end up overpaying. Conversely, if the contractor underestimates costs, they may cut corners on quality, necessitating robust government oversight.

What are the implications of the contract's long duration (3302 days) for program stability and contractor performance?

A long contract duration of 3302 days (approximately 9 years) for wing assemblies implies a sustained, long-term requirement for these components, likely tied to the lifecycle of a specific aircraft program. This extended period offers significant program stability for the government, ensuring a consistent supply of critical parts without the need for frequent re-competition. For the contractor, it provides a predictable revenue stream and allows for long-term planning and investment in specialized production capabilities. However, such a long duration also increases the risk of contractor underperformance going unnoticed or unaddressed if oversight is lax. It also means the government is locked into a specific supplier relationship for an extended period, potentially missing out on technological advancements or more competitive pricing that might emerge later in the contract lifecycle.

What does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code suggest about the nature of this contract?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that this contract is for components or parts of aircraft that are not specifically covered by other, more specialized codes (like engines or airframes). This suggests the wing assemblies procured might be highly customized, specialized, or include integrated auxiliary systems. It implies a focus on the manufacturing of specific sub-assemblies or components that contribute to the overall function and performance of an aircraft's wing structure, potentially including elements like control surfaces, internal structural members, or attachment hardware, rather than the complete wing structure itself or propulsion systems.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: ONE HORNET WAY, EL SEGUNDO, CA, 90245

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $70,404,452

Exercised Options: $70,404,452

Current Obligation: $70,404,452

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline