DoD's $810M Northrop Grumman Contract for Aircraft Parts Faces Scrutiny Over Competition and Cost Controls
Contract Overview
Contract Amount: $80,988,275 ($81.0M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2014-07-07
End Date: 2023-11-30
Contract Duration: 3,433 days
Daily Burn Rate: $23.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FATIGUE ARTICLE TEST
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32904
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $81.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FATIGUE ARTICLE TEST Key points: 1. Significant spending of $809.9M on aircraft parts highlights a major investment area. 2. Sole reliance on Northrop Grumman raises concerns about competitive pricing and innovation. 3. The 'Other Aircraft Parts' sector is critical for defense readiness but lacks transparency. 4. Long contract duration (3433 days) may obscure current market value and efficiency.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, coupled with a lack of competition, makes a direct pricing assessment difficult. Without benchmarks from similar competitively awarded contracts, it's hard to determine if $809.9M represents fair value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Northrop Grumman. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The absence of competition likely results in inflated prices, meaning taxpayers are potentially overpaying for these aircraft parts.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Dependence on a single supplier could impact the availability and cost of critical aircraft parts. The long contract duration raises questions about the government's ability to adapt to evolving technologies and market prices.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Critical component for defense operations
- Established contractor with relevant experience
Sector Analysis
This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a vital but often opaque segment of defense spending. Benchmarks are difficult to establish due to the specialized nature and limited competition often seen in this area.
Small Business Impact
The data does not indicate any subcontracting opportunities for small businesses. The sole-source nature of this large contract likely limits the potential for small business involvement.
Oversight & Accountability
The lack of competition and cost-plus structure warrants increased oversight to ensure cost reasonableness and prevent potential waste. Auditing mechanisms should be robust given the contract's value and duration.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition.
- Cost-plus-fixed-fee structure may reduce incentive for cost control.
- Long contract duration (over 9 years) may lead to outdated pricing and technology.
- Lack of transparency in specific cost breakdowns.
- Potential for contractor to prioritize profit over efficiency.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, fl, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $81.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FATIGUE ARTICLE TEST
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 $81.0 million.
What is the period of performance?
Start: 2014-07-07. End: 2023-11-30.
What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure cost efficiency?
The justification for a sole-source award typically involves unique capabilities or lack of alternatives. However, for a contract of this magnitude and duration, rigorous justification is essential. Ongoing oversight should focus on detailed cost audits, performance metrics, and exploring future competitive opportunities to drive down costs and ensure value for taxpayer money.
How does the cost-plus-fixed-fee structure impact the contractor's incentive to control costs, and what mechanisms are in place to mitigate potential overruns?
Cost-plus-fixed-fee contracts provide the contractor with reimbursement for allowable costs plus a predetermined fixed fee. While the fee is fixed, the contractor's primary incentive is to maximize profit by minimizing costs to ensure the fixed fee represents a larger percentage of the total contract value. However, without strong oversight and clear performance metrics, there's a risk of cost escalation. Mechanisms like detailed cost reviews, audits, and performance-based incentives are crucial to mitigate this risk.
Given the contract's end date in late 2023, what is the plan for future procurement of these aircraft parts to ensure continued supply and competitive pricing?
With the contract ending in late 2023, a strategic plan for future procurement is critical. This should involve market research to identify potential new sources, assessing the feasibility of breaking down the requirement into smaller, more competitive lots, and potentially transitioning to more performance-based or fixed-price contract types. Proactive planning will help secure supply chains and leverage competition to achieve better pricing.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001914R0021
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $81,621,043
Exercised Options: $81,621,043
Current Obligation: $80,988,275
Actual Outlays: $4,325,193
Subaward Activity
Number of Subawards: 3
Total Subaward Amount: $266,401
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-07-07
Current End Date: 2023-11-30
Potential End Date: 2023-11-30 00:00:00
Last Modified: 2025-07-18
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