DoD's $52.3M contract for Aircraft Manufacturing awarded to Northrop Grumman Systems Corp

Contract Overview

Contract Amount: $52,293,190 ($52.3M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2018-02-28

End Date: 2022-09-15

Contract Duration: 1,660 days

Daily Burn Rate: $31.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FLEX STRIKE PHASE 1 - ACAT II, B61-12 - ACAT III, MILITARY GLOBAL POSITIONING USER EQUIPMENT INTEGRATION - ACAT III

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: FLEX STRIKE PHASE 1 - ACAT II, B61-12 - ACAT III, MILITARY GLOBAL POSITIONING USER EQUIPMENT INTEGRATION - ACAT III Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract's duration of 1660 days suggests a long-term commitment to the services provided. 3. Limited competition may indicate specialized capabilities required, but also restricts opportunities for other vendors. 4. The 'Aircraft Manufacturing' NAICS code points to a focus on complex, high-value production or integration. 5. The contract's value, while significant, needs benchmarking against similar sole-source awards for value assessment. 6. The absence of small business set-asides suggests the prime contractor is expected to handle all aspects or subcontracting is not a primary focus.

Value Assessment

Rating: questionable

Benchmarking the value of this $52.3 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. Comparisons to similar sole-source awards for aircraft manufacturing components or integration services would be necessary to assess if the cost is reasonable. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs if not carefully managed, as the contractor is reimbursed for allowable costs plus a fixed fee. Further analysis of the fee structure and cost justification is recommended.

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. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of competition means there were no other bidders to compare against, limiting the government's ability to leverage market forces to achieve the best possible price and terms. This approach can be justified for unique capabilities or urgent needs, but it bypasses the standard competitive process.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price compared to a competitive process. The government must rely on its negotiation skills and oversight to ensure a fair price, which can be more difficult without competing offers.

Public Impact

The primary beneficiaries are likely the Department of Defense and potentially specific military branches relying on the integrated user equipment. The services delivered involve the integration of military global positioning user equipment, crucial for navigation and operational effectiveness. The geographic impact is likely national, supporting defense operations, with potential for international deployment of the equipment. Workforce implications may include specialized engineering, manufacturing, and integration roles within Northrop Grumman and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for taxpayer savings.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not rigorously managed.
Lack of transparency in the justification for sole-source award.
Limited visibility into the specific components or systems being integrated.
Potential for contractor lock-in due to specialized nature of the work.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests access to advanced technological capabilities.
Integration of GPS user equipment is critical for modern military operations, indicating a high-priority requirement.
The contract is for a significant duration, implying a stable and potentially efficient execution plan.
The specific project (B61-12, FLEX STRIKE) suggests alignment with strategic defense modernization efforts.

Sector Analysis

The defense sector, particularly within aircraft manufacturing and systems integration, is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Contracts like this are typical for major defense platforms and specialized equipment integration. The NAICS code 336411 (Aircraft Manufacturing) encompasses a broad range of activities, from component production to final assembly and integration of complex systems. Spending in this area is driven by national security priorities and technological advancements, with a few large prime contractors dominating the landscape.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the prime contractor, Northrop Grumman Systems Corp, is expected to perform the majority of the work, or that subcontracting opportunities for small businesses are not a primary focus of this specific award. Without specific subcontracting plans or goals outlined, the direct impact on the small business ecosystem is unclear, though large prime contractors often engage small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. Given the ACAT II and III designations, rigorous oversight is expected. The contract type (CPFF) necessitates close monitoring of costs and performance. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is limited by the sole-source nature, but contract modifications, performance reports, and financial audits would be key oversight mechanisms.

Related Government Programs

B61-12 Nuclear Gravity Bomb Program
FLEX STRIKE Program
Military GPS User Equipment
Aircraft Manufacturing Contracts
Defense Systems Integration

Risk Flags

Sole-source award lacks competitive pricing.
CPFF contract type carries inherent cost escalation risk.
Limited public information on specific deliverables and justification.
Potential for contractor dependency due to specialized nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.3 million to NORTHROP GRUMMAN SYSTEMS CORP. FLEX STRIKE PHASE 1 - ACAT II, B61-12 - ACAT III, MILITARY GLOBAL POSITIONING USER EQUIPMENT INTEGRATION - ACAT III

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: 2018-02-28. End: 2022-09-15.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is capable of providing the required goods or services, or when there is a compelling urgency, a national security concern, or a unique capability that cannot be replicated. For a contract of this nature, it could be related to proprietary technology, specialized integration expertise for specific defense platforms like FLEX STRIKE or the B61-12, or a critical need where competition would cause unacceptable delays. A full justification document (e.g., a Justification and Approval - J&A) would be required by federal acquisition regulations to detail the rationale.

How does the Cost Plus Fixed Fee (CPFF) contract type influence the overall cost and risk for the government in this specific award?

The Cost Plus Fixed Fee (CPFF) contract type means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee representing the contractor's profit. This structure shifts some cost risk to the government, as the final cost is not fixed upfront. However, the fixed fee provides the contractor with a defined profit margin, incentivizing them to complete the work efficiently to maximize their return on investment without necessarily driving up costs beyond what is necessary to achieve the fee. For the government, effective oversight and cost monitoring are crucial to ensure that costs remain reasonable and that the contractor does not exploit the cost-reimbursement aspect. The CPFF is often used when the scope of work is not precisely defined or when there is significant uncertainty in the cost of performance.

What are the implications of the ACAT II and ACAT III designations for program oversight and management?

ACAT (Acquisition Category) designations are used by the Department of Defense to classify major defense acquisition programs based on their estimated cost and importance. ACAT I programs are the highest level, followed by ACAT II, and then ACAT III. ACAT II programs typically involve significant investment and require milestone-based oversight from the Defense Acquisition Executive. ACAT III programs are generally lower cost and may have less stringent oversight, often managed at the departmental or agency level. The presence of both ACAT II (for FLEX STRIKE PHASE 1) and ACAT III (for B61-12 and MILITARY GLOBAL POSITIONING USER EQUIPMENT INTEGRATION) suggests that this contract encompasses elements of varying criticality and cost, requiring a tiered approach to oversight and management to ensure compliance with acquisition policies and program objectives.

Can we compare the value of this contract to other similar sole-source awards in the aircraft manufacturing sector?

Direct comparison of this $52.3 million sole-source contract to other specific awards is difficult without access to a comprehensive database of similar sole-source contracts, including their scope, duration, and justification. However, within the defense aircraft manufacturing sector, contracts of this magnitude are not uncommon for major system integration, upgrades, or specialized component production. The key challenge in comparison lies in the 'sole-source' aspect; each such award is justified by unique circumstances. To perform a meaningful comparison, one would need to identify contracts with similar technical requirements, contractor capabilities, and justifications for non-competitive awards. Benchmarking against competitively awarded contracts for similar services would also provide context, though the sole-source nature inherently limits direct price comparisons.

What is the historical spending pattern for Northrop Grumman Systems Corp with the Department of Defense in the 'Aircraft Manufacturing' category?

The provided data snippet focuses on a single contract and does not offer historical spending patterns. To analyze Northrop Grumman's historical spending with the DoD in 'Aircraft Manufacturing,' one would need to access broader contract databases (like FPDS or USASpending.gov) and filter for Northrop Grumman as the contractor, the Department of Defense as the agency, and NAICS code 336411 (Aircraft Manufacturing) or related codes. This would reveal the total value of contracts awarded over time, the types of contracts (competitive vs. sole-source), and trends in spending. Given Northrop Grumman's position as a major defense contractor, it is expected they would have a substantial history of awards in this sector.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

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: $60,662,479

Exercised Options: $53,800,305

Current Obligation: $52,293,190

Actual Outlays: $475,010

Subaward Activity

Number of Subawards: 152

Total Subaward Amount: $287,107,664

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