DoD's $316.7M Aircraft Manufacturing Contract Awarded to Northrop Grumman Systems Corporation

Contract Overview

Contract Amount: $316,700,711 ($316.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2005-08-24

End Date: 2011-08-12

Contract Duration: 2,179 days

Daily Burn Rate: $145.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $316.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract awarded for aircraft manufacturing services, indicating a significant investment in defense capabilities. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. A long contract duration of over 6 years suggests a need for sustained production and support. 4. The fixed-price incentive (FPI) contract type aims to balance cost control with performance incentives. 5. The substantial value of this contract highlights its importance within the broader defense procurement landscape. 6. Northrop Grumman's role as a major defense contractor positions them to fulfill complex manufacturing requirements.

Value Assessment

Rating: fair

Benchmarking the value of this $316.7 million contract is challenging without specific performance metrics and comparable aircraft manufacturing contracts. The fixed-price incentive structure suggests an attempt to manage costs while encouraging contractor performance. However, the lack of competition raises concerns about whether the government secured the best possible price and value. Further analysis would require detailed cost breakdowns and comparisons to similar aircraft production programs.

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 potential suppliers. This approach is typically used when only one contractor possesses the necessary capabilities, technology, or security clearances. While it can expedite procurement for specialized needs, it limits price discovery and potentially leads to higher costs for the government compared to a competitive process.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost savings that typically arise from a bidding process. The government relies on negotiation to achieve a fair price, which can be less effective than market forces.

Public Impact

The primary beneficiaries are the Department of Defense and potentially allied nations requiring advanced aircraft. Services delivered include the manufacturing of aircraft, likely involving complex assembly, integration, and testing. The geographic impact is centered around Northrop Grumman's manufacturing facilities, primarily in California. This contract supports a significant number of jobs within the aerospace and defense manufacturing sector, contributing to the skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Long contract duration could lead to cost overruns if not managed effectively.
Lack of transparency in the sole-source justification requires careful review.
Fixed-price incentive contracts can still result in significant cost increases if targets are not met or incentives are poorly structured.

Positive Signals

Award to a major defense contractor with established expertise in aircraft manufacturing.
Fixed-price incentive contract type aims to align contractor and government interests on cost and performance.
Contract duration suggests a long-term strategic need for the manufactured aircraft.
Significant investment indicates a commitment to maintaining and advancing defense capabilities.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. The market is dominated by a few large, specialized firms capable of meeting stringent military specifications. Spending in this area is driven by national security requirements and technological advancements in aviation.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the scale of aircraft manufacturing, it is unlikely that small businesses would be primary awardees. However, Northrop Grumman may engage small businesses as subcontractors, contributing to the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting officers and program managers. The Department of Defense's Inspector General would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is enhanced through contract databases, but detailed cost breakdowns and performance reviews for sole-source awards are often less publicly accessible.

Related Government Programs

F-35 Lightning II Program
B-2 Spirit Program
Advanced Tactical Aircraft Programs
Defense Production Act Investments

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $316.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.

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 $316.7 million.

What is the period of performance?

Start: 2005-08-24. End: 2011-08-12.

What specific type of aircraft is being manufactured under this contract?

The provided data indicates the contract is for 'Aircraft Manufacturing' (NAICS 336411) and was awarded to Northrop Grumman Systems Corporation by the Department of the Air Force. However, the specific model or type of aircraft is not detailed in the provided data. Northrop Grumman is known for producing various advanced aircraft, including bombers and stealth fighters. Without more specific contract details or line item information, identifying the exact aircraft is not possible from this summary alone. Further investigation into contract modifications or related procurements would be necessary to ascertain the specific aircraft type.

How does the $316.7 million value compare to other aircraft manufacturing contracts awarded by the DoD?

The $316.7 million value for this aircraft manufacturing contract is substantial, placing it among significant defense procurements. However, to provide a precise comparison, one would need to analyze a broader dataset of aircraft manufacturing contracts awarded by the DoD over a similar period. Major defense programs, such as the F-35 Joint Strike Fighter or the B-2 Spirit bomber, involve tens or hundreds of billions of dollars over their lifecycles. This $316.7 million contract likely represents a specific production lot, upgrade, or a component of a larger platform. Its relative size depends on whether it's for a new platform development, a production run of existing aircraft, or specialized components.

What are the key performance metrics and incentives within this Fixed Price Incentive (FPI) contract?

A Fixed Price Incentive (FPI) contract, like the one awarded to Northrop Grumman, establishes a target cost, target profit, and a price ceiling. The contractor is incentivized to keep costs below the target, sharing in any savings with the government. Conversely, if costs exceed the target, the contractor bears a larger portion of the overrun up to the price ceiling. Key performance metrics would typically relate to production schedules, quality standards, technical specifications, and delivery timelines. The specific metrics and the sharing formula for cost savings or overruns are defined in the contract's special provisions and would require detailed review of the contract document itself to ascertain.

What is the historical spending pattern for aircraft manufacturing by the Department of the Air Force with Northrop Grumman?

The provided data shows a single contract awarded on 2005-08-24 with an end date of 2011-08-12, totaling $316.7 million. This suggests a significant, multi-year engagement for aircraft manufacturing. To understand historical patterns, one would need to examine contract databases for all awards to Northrop Grumman by the Air Force in the aircraft manufacturing (NAICS 336411) or related sectors over an extended period. This would reveal trends in contract volume, value, types (e.g., sole-source vs. competitive), and specific aircraft programs supported, providing context for this particular award.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude ($316.7 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the most cost-effective solution. Other risks include vendor lock-in, where the government becomes dependent on a single supplier, potentially limiting future flexibility. There's also a risk that innovation might be stifled if the contractor faces less pressure to develop more efficient or advanced manufacturing techniques. Ensuring robust oversight and negotiation is crucial to mitigate these risks.

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

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 17066 GOLDENTOP RD, SAN DIEGO, CA, 92150

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline