DoD's $36.2M contract for aircraft parts awarded to Northrop Grumman, lacking competition, raises value concerns

Contract Overview

Contract Amount: $36,229,088 ($36.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-06-30

End Date: 2013-09-10

Contract Duration: 3,359 days

Daily Burn Rate: $10.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $36.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. The contract's value of $36.2 million over its duration suggests a significant investment in specialized aircraft components. 2. The absence of competition for this contract warrants scrutiny regarding potential overpricing and limited market responsiveness. 3. Awarded in 2004 and ending in 2013, the contract's long duration may indicate a stable, long-term need for these parts. 4. The firm fixed-price contract type offers cost certainty for the government, but the lack of competition hinders price validation. 5. Northrop Grumman's role as a major defense contractor suggests a capacity to fulfill complex requirements, but competition is key for best value. 6. The contract's focus on 'Other Aircraft Parts and Auxiliary Equipment' points to a critical, though not primary, role in aviation systems.

Value Assessment

Rating: questionable

Benchmarking the value of this $36.2 million contract is challenging without specific details on the aircraft parts procured and their market rates. However, the lack of competition is a significant red flag. Typically, competitive bidding drives down prices and ensures fair market value. Without this process, there's a heightened risk that the government may have paid more than necessary. Comparing this to similar sole-source or limited-competition awards for specialized aircraft components would be necessary for a more precise assessment, but the inherent lack of competitive pressure suggests a potentially suboptimal value proposition.

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 justified when only one source can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs where competition is impractical. The lack of bidders means there was no opportunity for market forces to drive down prices or encourage innovation. This significantly limits the government's ability to ensure it received the best possible pricing and terms.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can lead to higher overall program costs and reduced budget flexibility.

Public Impact

The primary beneficiaries are likely the Department of Defense and its aviation units, ensuring the availability of critical aircraft parts. The services delivered include the manufacturing and supply of specialized aircraft components, essential for maintaining operational readiness. The geographic impact is primarily centered around the contractor's facilities in Maryland, though the parts support DoD operations nationwide and globally. Workforce implications include employment at Northrop Grumman and its supply chain, supporting skilled manufacturing jobs in the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated prices.
Sole-source award limits transparency and potential for cost savings.
Long contract duration without competitive review could mask inefficiencies.
Specifics of the 'aircraft parts' are not detailed, hindering precise value assessment.

Positive Signals

Firm fixed-price contract provides cost certainty.
Award to a major defense contractor like Northrop Grumman suggests capability to meet requirements.
Contract duration indicates a sustained need, potentially reflecting critical system support.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aerospace components is often characterized by high barriers to entry, complex technological requirements, and a limited number of qualified suppliers. While the overall aerospace market is substantial, contracts for specific, non-standard parts can be niche. Benchmarking would require comparing this award to other sole-source or limited-competition contracts for similar aircraft components within the defense industry, where prices can vary significantly based on customization and technological sophistication.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false) and does not explicitly mention subcontracting plans for small businesses (sb: false). Therefore, this award likely did not directly benefit the small business ecosystem through set-asides. Large defense contracts can sometimes indirectly impact small businesses through the prime contractor's supply chain, but without specific subcontracting data, the direct impact is unclear and potentially minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA), which is listed as the 'sa'. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Aircraft Component Manufacturing
Defense Logistics and Support Services
Aerospace Parts Procurement
Northrop Grumman Defense Contracts
Sole-Source Defense Acquisitions

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency
Long Contract Duration without Re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.2 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $36.2 million.

What is the period of performance?

Start: 2004-06-30. End: 2013-09-10.

What specific types of aircraft parts were procured under this contract, and what is their criticality to DoD operations?

The contract, NAICS code 336413, covers 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad category suggests components beyond engines or airframes, potentially including avionics, structural elements, landing gear components, or specialized systems. Without more granular data, the exact nature and criticality remain unspecified. However, given the Department of Defense as the agency and the long duration, these parts are likely essential for maintaining the operational readiness and safety of specific military aircraft platforms. Their criticality could range from mission-essential systems to vital support equipment, impacting flight operations, maintenance, and overall fleet availability.

How does the $36.2 million total award value compare to similar sole-source contracts for aircraft parts within the DoD?

Direct comparison of the $36.2 million total award value is difficult without knowing the specific parts and their complexity. Sole-source contracts for specialized aerospace components can vary widely. If these parts are highly customized, technologically advanced, or produced in low volumes, the price per unit could be substantial. However, the absence of competition inherently prevents a definitive value assessment against market alternatives. Generally, sole-source awards are expected to be higher than competitively procured items. A comprehensive analysis would require benchmarking against other sole-source awards for comparable items or, ideally, against prices achieved through competitive processes for similar components, which is not available here.

What are the potential risks associated with awarding a contract of this magnitude ($36.2M) on a sole-source basis for nearly a decade?

The primary risk associated with a sole-source award of this magnitude and duration is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the contractor may not have had sufficient incentive to offer the lowest possible price. This can lead to inefficient use of taxpayer funds. Additionally, a long-term sole-source arrangement can stifle innovation, as there's less pressure to improve products or processes. There's also a risk of vendor lock-in, making it difficult and costly to switch suppliers later. Finally, without competition, oversight becomes even more critical to ensure quality and prevent potential overcharging or substandard performance.

What was the justification for awarding this contract as sole-source instead of seeking competitive bids?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. However, the specific justification for this determination is not included. Typical reasons for sole-sourcing include situations where only one responsible source can provide the required supplies or services, such as when the item is unique, proprietary, or requires specialized expertise possessed by only one contractor. Other justifications might include urgent and compelling needs where competition is impractical or impossible. Without the official justification documentation, it's impossible to definitively state why competition was precluded in this instance.

Given the contract ended in 2013, what is the current status of the supply chain for these specific aircraft parts, and has the DoD secured alternative sources?

The contract's expiration in September 2013 means that Northrop Grumman's role as the sole supplier under this specific award concluded over a decade ago. The current status of the supply chain for these particular parts is not detailed in the provided data. It is highly probable that the Department of Defense has either re-competed the requirement, sourced alternative parts, or phased out the aircraft platforms utilizing these components. Without further information on subsequent contracts or inventory management, it's impossible to ascertain the current supply chain status or if alternative sources have been established. The DoD typically manages such transitions through strategic sourcing and competitive processes.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: ELECTRONIC SYSTEMS, LINTHICUM HEIG, MD

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline