DoD awards $47.1M to Northrop Grumman for long lead time aircraft parts, with limited competition

Contract Overview

Contract Amount: $47,104,773 ($47.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-02-04

End Date: 2024-12-10

Contract Duration: 1,771 days

Daily Burn Rate: $26.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LONG LEAD ITEMS FOR CM/HBLOS RETROFIT KITS

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $47.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LONG LEAD ITEMS FOR CM/HBLOS RETROFIT KITS Key points: 1. Contract awarded for long lead time items, crucial for future production. 2. Sole-source award raises questions about price competitiveness and value. 3. Significant duration of the contract (1771 days) suggests complex requirements. 4. Focus on aircraft parts manufacturing indicates a specific niche within defense. 5. Geographic concentration in Florida may have local economic implications. 6. Lack of competition could lead to higher costs for taxpayers.

Value Assessment

Rating: questionable

The contract's value of $47.1 million for long lead time items requires careful benchmarking against similar procurements for aircraft parts. Without competitive bidding, it is difficult to assess if the pricing reflects fair market value. The extended performance period suggests a need for robust oversight to ensure costs remain controlled and justified throughout the contract's life. The absence of a competitive process inherently limits the ability to definitively state whether this represents excellent value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they limit price discovery and can potentially lead to higher costs compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can result in a less efficient use of public funds if the awarded price is not rigorously justified.

Public Impact

The Department of the Navy benefits from securing critical long lead time components for its aircraft. This contract supports the production and maintenance of military aircraft, ensuring operational readiness. The primary impact is on the defense industrial base, specifically within aircraft parts manufacturing. Workforce implications are likely within Northrop Grumman's facilities, potentially in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Long contract duration increases risk of cost overruns without strong oversight.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Secures critical long lead time items essential for aircraft production.
Award to an established defense contractor suggests technical capability.
Contract duration aligns with potential long-term defense needs.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized defense components is often characterized by high barriers to entry, advanced technology requirements, and a limited number of qualified suppliers. Spending in this area is driven by military modernization programs and sustainment efforts. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition awards for similar aircraft components within the DoD.

Small Business Impact

The data indicates this contract was not competed and does not appear to have a small business set-aside component (ss: false, sb: false). This suggests that small businesses were not specifically targeted for this procurement. Consequently, there are no direct subcontracting opportunities for small businesses mandated by this award, and its impact on the broader small business ecosystem in this specific niche is likely minimal unless Northrop Grumman voluntarily engages them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the delivery of the specified long lead time items according to the contract's terms and conditions. Transparency may be limited due to the sole-source nature of the award. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Agency Contracts
Naval Aviation Sustainment
Long Lead Time Material Procurement

Risk Flags

Sole Source Award
Limited Competition
Long Contract Duration
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LONG LEAD ITEMS FOR CM/HBLOS RETROFIT KITS

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 $47.1 million.

What is the period of performance?

Start: 2020-02-04. End: 2024-12-10.

What is Northrop Grumman's track record with similar sole-source contracts for aircraft components?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in aerospace and defense. Analyzing their past sole-source awards for similar long lead time items or aircraft components would provide insight into their performance and pricing consistency. Historical data might reveal patterns in contract modifications, cost overruns, or on-time delivery rates for non-competitively awarded contracts. A review of publicly available contract data and watchdog reports could highlight any recurring issues or successes in managing such agreements, offering a basis for comparison to this specific $47.1 million award.

How does the $47.1 million value compare to market rates for similar long lead time aircraft components?

Benchmarking the $47.1 million contract value against market rates for comparable long lead time aircraft components is challenging due to the sole-source nature of this award. Typically, competitive bidding allows for price discovery and comparison. Without access to Northrop Grumman's cost breakdown or data from other suppliers for identical or substitutable items, a direct market rate comparison is difficult. However, analysis could involve examining historical pricing trends for similar components, consulting industry cost estimation models, or reviewing data from other government agencies that may have procured comparable items through competitive means. The extended delivery period (1771 days) also factors into the overall cost, making direct comparisons complex.

What are the specific risks associated with a sole-source award for long lead time items?

The primary risks associated with a sole-source award for long lead time items include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a higher likelihood of cost overruns if not managed stringently. For long lead time items, delays in procurement can have cascading effects on larger production or sustainment schedules, increasing program risk. Taxpayers face the risk of paying more than necessary. Furthermore, reliance on a single supplier can create supply chain vulnerabilities. Robust government oversight, including detailed cost analysis and performance monitoring, is crucial to mitigate these risks.

How effective is the Department of the Navy in managing sole-source contracts to ensure value?

The effectiveness of the Department of the Navy (DoN) in managing sole-source contracts varies and depends heavily on the specific program, contracting officers' expertise, and available oversight resources. The DoN employs various mechanisms, such as mengadakan cost and price analysis, conducting technical reviews, and implementing performance metrics, to ensure value even in non-competitive situations. However, the inherent limitations of sole-source procurements mean that achieving the same level of cost efficiency as a fully competed contract is often more challenging. Success hinges on rigorous justification for the sole-source award and diligent contract administration throughout its lifecycle.

What are the historical spending patterns for aircraft parts manufacturing by the Department of the Navy?

Historical spending patterns for aircraft parts manufacturing by the Department of the Navy (DoN) show consistent and significant investment, reflecting the large size and operational demands of its aviation fleet. Spending in this category typically fluctuates based on modernization programs, fleet readiness requirements, and the introduction of new aircraft platforms. Analyzing past contract awards, particularly for long lead time items and major component manufacturing, reveals trends in contractor concentration, average contract values, and the prevalence of competitive versus sole-source procurements. This specific $47.1 million award fits within the broader context of ongoing sustainment and upgrade efforts for naval aviation assets.

What is the strategic importance of 'long lead time' items in defense contracting?

Long lead time items are strategically critical in defense contracting because their procurement timelines often extend significantly beyond the manufacturing or assembly phases of the end-product (e.g., an aircraft). These components, such as specialized engines, avionics, or structural elements, require substantial manufacturing time, complex supply chains, or unique materials. Awarding contracts for these items early in the acquisition process is essential to prevent delays in the overall program schedule. Failure to secure long lead time items promptly can lead to costly schedule slippages, impacting operational readiness and potentially increasing the total program cost. Therefore, early and often sole-source or limited-competition awards are common for such critical components.

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

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: $47,104,773

Exercised Options: $47,104,773

Current Obligation: $47,104,773

Actual Outlays: $355,243

Subaward Activity

Number of Subawards: 277

Total Subaward Amount: $122,679,217

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