DoD awards $46.5M to Northrop Grumman for aircraft parts, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $46,484,132 ($46.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-09-28

End Date: 2026-04-28

Contract Duration: 1,308 days

Daily Burn Rate: $35.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: WRA-7 AND WRA-8 KITS, SPARES AND RETROFITS

Place of Performance

Location: BALTIMORE, ANNE ARUNDEL County, MARYLAND, 21240

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $46.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: WRA-7 AND WRA-8 KITS, SPARES AND RETROFITS Key points: 1. The contract value of $46.5 million for aircraft parts and retrofits represents a significant investment in specialized equipment. 2. Sole-source procurement raises questions about potential price inflation and the absence of competitive pressure. 3. The extended performance period of over three years suggests a long-term need for these specific parts. 4. The contract is categorized under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicating a niche but critical supply chain component. 5. The lack of competition may limit opportunities for other qualified vendors to enter the market and offer alternative solutions.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific product line. Without competitive bids, it's difficult to ascertain if the $46.5 million represents a fair market price. However, the duration of the contract and the specialized nature of the WRA-7 and WRA-8 kits suggest a potentially high value for the government's specific needs. Further analysis would require access to historical pricing for similar sole-source procurements or internal cost estimates.

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. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in less price discovery and potentially higher costs for the government compared to fully competed contracts.

Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most cost-effective pricing that could have been achieved through a bidding process. This could lead to a higher overall expenditure for these aircraft parts and retrofits.

Public Impact

The Department of the Navy benefits from the acquisition of critical WRA-7 and WRA-8 kits, spares, and retrofits, ensuring the operational readiness of its aircraft fleet. This contract supports the maintenance and upgrade of specific aircraft systems, contributing to national defense capabilities. The primary geographic impact is within the Department of Defense's operational theaters and maintenance facilities. The contract likely sustains specialized manufacturing jobs within Northrop Grumman's facilities, particularly in Maryland.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Long contract duration could mask inefficiencies if not closely monitored.
Dependence on a single supplier for critical aircraft components.

Positive Signals

Award to an established defense contractor with a track record in aerospace manufacturing.
Contract addresses specific, likely critical, aircraft system requirements (WRA-7 and WRA-8 kits).
Firm Fixed Price contract type provides cost certainty for the government.

Sector Analysis

The aerospace and defense manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for specialized aircraft parts and retrofits, like this one, are crucial for maintaining the operational readiness and technological superiority of military fleets. The market is often dominated by a few large prime contractors, with specialized components frequently sourced through sole-source or limited competition due to proprietary technology or unique manufacturing capabilities. Spending in this sub-sector is driven by defense modernization programs and sustainment requirements.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the prime contractor being Northrop Grumman, a large aerospace company, the direct impact on small businesses through set-asides is unlikely. However, Northrop Grumman may engage small businesses as subcontractors, though this information is not detailed in the provided data. The absence of a set-aside means opportunities for small businesses to directly compete for this specific contract were not pursued.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and negotiation process would be subject to review by relevant oversight bodies within the Department of Defense. Transparency is limited due to the non-competitive nature, but contract performance, delivery schedules, and quality would be monitored. The Inspector General's office could investigate if any improprieties are suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Sustainment Programs
Aerospace Parts Manufacturing
Sole-Source Defense Contracts
WRA System Components

Risk Flags

Sole-source procurement
Lack of competitive bidding
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. WRA-7 AND WRA-8 KITS, SPARES AND RETROFITS

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 $46.5 million.

What is the period of performance?

Start: 2022-09-28. End: 2026-04-28.

What is the specific function and importance of the WRA-7 and WRA-8 kits?

The WRA-7 and WRA-8 kits are specialized components likely related to the Weapons Release Assembly (WRA) systems on specific naval aircraft. These systems are critical for the safe and effective deployment of ordnance (weapons) from the aircraft. The 'kits' may include the necessary hardware, software, and integration components for installation, repair, or upgrade of these systems. Their importance lies in ensuring the aircraft's primary combat or strike capability is functional and up-to-date, directly impacting mission effectiveness and safety. Without these specific kits, the aircraft may be unable to carry or deploy its intended weaponry.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source award. Justifications for sole-source contracts typically fall under specific exceptions in federal acquisition regulations, such as when only one responsible source can provide the supplies or services, or when there is a compelling urgency. For specialized aerospace components like WRA kits, the justification often relates to proprietary technology, unique manufacturing capabilities held by a single contractor (like Northrop Grumman), or the need for compatibility with existing platforms where only the original equipment manufacturer can provide the necessary parts. A formal justification document would typically be required and publicly available, detailing the specific reasons.

How does the $46.5 million contract value compare to similar sole-source procurements for aircraft parts?

Direct comparison of this $46.5 million sole-source contract to 'similar' procurements is difficult without more specific details on the exact nature of the WRA-7 and WRA-8 kits and their market. However, for specialized, high-technology aerospace components, contract values in the tens of millions are not uncommon, especially when they involve complex integration, retrofitting, or sustainment over several years. Sole-source awards inherently lack the price transparency of competitive bids, making it harder to benchmark against market rates. The value is likely influenced by factors such as the number of aircraft affected, the complexity of the upgrade or repair, and the limited number of qualified suppliers.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risk of a sole-source contract, especially one valued at $46.5 million and spanning over three years, is the potential for inflated pricing due to the absence of competitive pressure. The government may not be achieving the best possible value for its expenditure. Another risk is vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility or innovation. Performance risks also exist; while Northrop Grumman is a reputable contractor, any sole-source award warrants close monitoring of delivery schedules, quality control, and cost management to ensure the government's needs are met effectively and efficiently.

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

Northrop Grumman Systems Corporation is a major defense contractor with a long-standing and extensive relationship with the Department of the Navy, involved in numerous programs across various platforms, including aircraft, ships, and C4ISR systems. They have a significant history of manufacturing and sustaining complex aerospace components and systems. While specific details on their past performance for WRA kits are not provided here, their overall track record with the Navy suggests a capacity to deliver on large, technically demanding contracts. However, like any large contractor, past performance reviews and contract-specific data would be needed for a comprehensive assessment.

What are the implications of the Firm Fixed Price (FFP) contract type for this sole-source award?

The Firm Fixed Price (FFP) contract type offers significant cost certainty for the government, as the price is set and generally not subject to adjustment based on the contractor's cost experience. This is advantageous for budgeting and financial planning. For a sole-source award, FFP places the entire cost risk on the contractor. This means Northrop Grumman must accurately estimate all costs associated with producing and delivering the WRA kits, spares, and retrofits. If their costs exceed the fixed price, their profit margin will decrease. Conversely, if they manage costs efficiently, their profit could increase. This structure incentivizes the contractor to control costs, although the lack of competition means the initial fixed price might be set higher than in a competitive scenario.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580A W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $48,284,147

Exercised Options: $46,484,132

Current Obligation: $46,484,132

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline