Northrop Grumman awarded $77.3M for aircraft parts, with a significant portion for spares

Contract Overview

Contract Amount: $77,270,469 ($77.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2018-07-24

End Date: 2023-09-01

Contract Duration: 1,865 days

Daily Burn Rate: $41.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-KIT #6, 7 AND 8, AKIT AND BKIT SPARES

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92128

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $77.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: B-KIT #6, 7 AND 8, AKIT AND BKIT SPARES Key points: 1. Contract focuses on critical aircraft parts and auxiliary equipment, indicating a need for specialized manufacturing capabilities. 2. The duration of the contract (over 5 years) suggests a long-term requirement for these components. 3. Awarded under full and open competition, implying a robust bidding process. 4. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 5. The primary recipient is a large, established defense contractor, suggesting a focus on established supply chains. 6. The North American Industry Classification System (NAICS) code 336413 points to a specialized manufacturing sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the parts and quantities. However, the total award of $77.3 million over approximately five years suggests a substantial investment in aircraft parts. The firm fixed-price nature of the contract provides cost certainty for the government, but the ultimate value for money depends on the efficiency of Northrop Grumman's production and the market price of the components. Further analysis would require comparing unit costs for specific parts against industry benchmarks or similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This suggests a competitive environment where multiple companies likely vied for the opportunity. The presence of robust competition is generally expected to drive down prices and encourage innovation, leading to better value for the government.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible pricing for essential aircraft parts and spares.

Public Impact

The Department of the Navy benefits from the reliable supply of critical aircraft parts and auxiliary equipment, ensuring operational readiness. The contract supports the manufacturing and supply chain for specialized aircraft components, potentially impacting the aerospace industry. Workforce implications may include employment opportunities within Northrop Grumman's manufacturing and logistics operations. The geographic impact is primarily within the United States, supporting domestic manufacturing capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if market prices for raw materials or components fluctuate significantly, despite the FFP structure.
Dependence on a single large contractor could limit flexibility in sourcing or adapting to new technologies.
The long contract duration might not fully account for rapid technological advancements in aircraft components.

Positive Signals

Firm Fixed Price contract structure provides cost certainty and shifts risk to the contractor.
Awarded through full and open competition, suggesting a competitive process that should yield favorable pricing.
The contract supports a critical defense need, ensuring the availability of essential aircraft parts.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for these components is characterized by high technical barriers to entry, stringent quality control requirements, and significant government procurement. Spending in this area is driven by defense readiness needs and the lifecycle support of existing aircraft fleets. Comparable spending benchmarks would involve analyzing other contracts for similar aircraft parts or MRO (Maintenance, Repair, and Overhaul) services within the Department of Defense.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). While Northrop Grumman is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on Northrop Grumman's internal policies and the specific requirements of the contract, but it is not a primary focus based on the provided information.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures are inherent in the Firm Fixed Price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is facilitated through contract databases like FPDS-NG, where award details are publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Parts Manufacturing
Aerospace Defense Contracts
Department of the Navy Procurement
Northrop Grumman Contracts
Spares and Repair Parts

Risk Flags

Long contract duration may not fully account for rapid technological advancements.
Dependence on a large prime contractor could limit flexibility.
Potential for supply chain disruptions for specialized components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. B-KIT #6, 7 AND 8, AKIT AND BKIT SPARES

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 Navy).

What is the total obligated amount?

The obligated amount is $77.3 million.

What is the period of performance?

Start: 2018-07-24. End: 2023-09-01.

What is the historical spending trend for similar aircraft parts and auxiliary equipment by the Department of the Navy?

Analyzing historical spending trends for similar aircraft parts and auxiliary equipment by the Department of the Navy requires access to comprehensive procurement data over multiple fiscal years. Generally, spending in this category fluctuates based on fleet readiness requirements, modernization programs, and the retirement of older aircraft. Contracts for spares and auxiliary equipment are often recurring, especially for established platforms. The total value of such contracts can range from millions to billions of dollars annually, depending on the specific aircraft types supported and the overall defense budget. Factors like geopolitical events, new technology integration, and sustainment strategies for aging fleets also influence these spending patterns. Without specific historical data for NAICS code 336413 or related categories for the Navy, a precise trend cannot be established, but it is reasonable to assume consistent, significant investment in maintaining aircraft operational capability.

How does the unit cost of the parts procured under this contract compare to market rates or similar government contracts?

Determining the precise unit cost comparison for parts procured under this $77.3 million contract is not feasible with the provided data alone. The contract covers a range of items, including 'B-KIT #6, 7 AND 8, AKIT AND BKIT SPARES,' which are likely specific part numbers or kits. To perform a valid comparison, one would need access to the detailed line-item pricing within the contract and then benchmark these against publicly available pricing for identical or comparable parts from other government contracts or commercial suppliers. Factors such as volume discounts, specific technical requirements, and the supplier's overhead contribute to unit costs. The firm fixed-price nature of the contract implies that Northrop Grumman has factored these costs into their bid. A thorough analysis would involve requesting detailed pricing information or examining past awards for the same or similar components.

What is Northrop Grumman's track record with the Department of the Navy for similar types of contracts?

Northrop Grumman has a long-standing and extensive track record of contracting with the Department of the Navy, particularly in areas related to aerospace systems, defense electronics, and support services. They are a major defense contractor involved in numerous programs across various naval platforms, including aircraft, ships, and submarines. For contracts involving aircraft parts and auxiliary equipment, Northrop Grumman's experience is substantial, given their role as a prime contractor for several key aircraft systems. Their performance history with the Navy is generally characterized by the successful delivery of complex systems and components. However, like any large contractor, there can be instances of performance issues or contract disputes, which are typically documented in contract performance reports and databases. A detailed review of their past performance ratings and any significant issues on similar contracts would provide a more granular understanding of their reliability in this specific domain.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential cost overruns if market prices for raw materials or components increase significantly, despite the Firm Fixed Price (FFP) structure. There's also a risk related to supply chain disruptions, especially for specialized components, which could impact delivery schedules. Technological obsolescence is another concern, as aircraft technology evolves rapidly. Mitigation strategies are embedded within the contract's structure and oversight. The FFP nature shifts cost risk to Northrop Grumman. The requirement for full and open competition aims to ensure a competitive price and encourage efficient production. The contract's duration (over five years) suggests a need for robust supply chain management and contingency planning by the contractor. The Department of the Navy's oversight, including performance monitoring and quality assurance, also serves to mitigate risks related to delivery and quality.

How does the competition level for this contract impact its overall value and efficiency?

This contract was awarded under 'full and open competition,' which is generally considered the most effective method for ensuring value and efficiency. This means that all responsible sources were allowed to submit bids, fostering a competitive environment. In such scenarios, multiple bidders are incentivized to offer their best pricing and most efficient solutions to win the contract. This competitive pressure typically leads to lower prices for the government compared to sole-source or limited competition awards. Furthermore, a competitive process can drive innovation as contractors seek to differentiate themselves through technical merit or cost-effectiveness. The efficiency is enhanced as contractors strive to meet contract requirements within the agreed-upon terms to maintain profitability. Therefore, the full and open competition for this contract likely contributed positively to achieving better value for the taxpayer.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001914R0023

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $77,270,469

Exercised Options: $77,270,469

Current Obligation: $77,270,469

Actual Outlays: $12,200,479

Subaward Activity

Number of Subawards: 451

Total Subaward Amount: $410,679,887

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001915G0026

IDV Type: BOA

Timeline