DoD awards $15.8M contract to Northrop Grumman for aircraft parts repair, raising value-for-money questions due to sole-source nature

Contract Overview

Contract Amount: $15,847,068 ($15.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-05-01

End Date: 2027-09-30

Contract Duration: 1,978 days

Daily Burn Rate: $8.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DON LAIRCM ROR 6 BASE AND 2 OPTION YEARS FOR REPAIR OF TEST ASSETS

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $15.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DON LAIRCM ROR 6 BASE AND 2 OPTION YEARS FOR REPAIR OF TEST ASSETS Key points: 1. The contract's value-for-money is questionable given the lack of competition. 2. Northrop Grumman is the sole awardee, indicating limited market engagement. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed tightly. 4. Performance context is limited to repair of test assets, suggesting a specialized need. 5. The contract falls within the Defense sector, specifically aircraft parts manufacturing. 6. The award is a delivery order against an existing contract, not a new procurement. 7. The duration of the contract (nearly 5 years) suggests a long-term need for these services.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar specialized repair services. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D or uncertain scope work, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the fixed fee adequately compensates the contractor for the effort or if the government is receiving optimal pricing. Further analysis would require understanding the specific test assets and the complexity of their repair.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple offerors. This typically occurs when only one source is capable of meeting the requirement, often due to proprietary technology, unique expertise, or urgent needs. The lack of competition means there was no price discovery through a bidding process, potentially leading to higher costs for the government compared to a competitively awarded contract.

Taxpayer Impact: Taxpayers may be paying a premium for this service due to the absence of competitive pressure. The government's ability to negotiate the best possible price is diminished in a sole-source scenario.

Public Impact

The Department of Defense benefits through the continued repair and maintenance of critical test assets. This contract ensures the operational readiness of specialized aircraft test equipment. The services are primarily delivered within Illinois, where Northrop Grumman's facility is located. The contract supports specialized technical roles within Northrop Grumman's workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not closely monitored.
Lack of transparency in the justification for sole-source award.
Limited public information on the specific test assets and repair complexity.
Long contract duration without competitive re-evaluation.

Positive Signals

Ensures continued availability of critical repair services for specialized test assets.
Maintains readiness of defense testing infrastructure.
Leverages specialized expertise of a known contractor (Northrop Grumman).
Delivery order mechanism allows for phased funding and management of services.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on the repair and maintenance of aircraft parts and auxiliary equipment. The North American Industry Classification System (NAICS) code 336413 covers 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' The total federal spending in this sector is substantial, with significant portions allocated to defense procurement and sustainment. This contract represents a small fraction of that overall spending but is critical for maintaining the operational capability of specific defense testing assets.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large defense contractor, the direct impact on the small business ecosystem is likely minimal. However, it is possible that Northrop Grumman may engage small businesses as subcontractors, but this information is not detailed in the award data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates robust financial oversight to monitor costs and ensure the fixed fee remains appropriate. Transparency is limited due to the sole-source nature and the specialized technical details involved. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics and Sustainment
Aerospace Repair and Maintenance Services
Naval Aviation Support Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DON LAIRCM ROR 6 BASE AND 2 OPTION YEARS FOR REPAIR OF TEST ASSETS

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 $15.8 million.

What is the period of performance?

Start: 2022-05-01. End: 2027-09-30.

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

Northrop Grumman, as a major defense contractor, has a long history of performing complex repair and sustainment services for various military aircraft and systems. While specific data on their sole-source contracts for 'test assets' repair is not publicly detailed in this context, their extensive experience in aerospace manufacturing and MRO (Maintenance, Repair, and Overhaul) suggests a capability to handle such requirements. However, the absence of competition in sole-source awards means that performance metrics and pricing from previous similar contracts are not readily available for direct comparison, making it difficult to assess value-for-money without deeper investigation into the contract's justification and historical performance data.

How does the $15.8 million value compare to similar aircraft parts repair contracts, especially sole-source ones?

Directly comparing the $15.8 million value of this sole-source contract is challenging without knowing the exact nature of the 'test assets' and the scope of 'repair.' Sole-source contracts inherently lack the price discovery mechanism of competitive bidding, making direct value comparisons difficult. Generally, sole-source awards may be higher than competitively bid contracts for similar services. To assess value, one would need to benchmark against other sole-source contracts for highly specialized or proprietary repair services within the DoD, or against internal cost estimates if available. The Cost Plus Fixed Fee (CPFF) structure also means the final cost could fluctuate based on actual expenses incurred.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for specialized repair services?

The primary risk with a CPFF contract is the potential for cost overruns. While the contractor receives a fixed fee, the government bears the risk of increased costs for labor, materials, and overhead. If the contractor's actual costs exceed initial estimates, the government pays those higher costs. This structure can incentivize contractors to be less cost-conscious than in fixed-price contracts. For specialized repair services, the complexity and potential for unforeseen issues can exacerbate this risk. Effective oversight, detailed cost tracking, and clear definition of work are crucial to mitigate these risks and ensure the fixed fee remains fair and reasonable.

What specific 'test assets' are covered under this contract, and why is sole-source procurement necessary?

The provided data does not specify the exact 'test assets' covered under this contract, only that they are related to aircraft. The justification for sole-source procurement is also not detailed. Typically, sole-source awards for such specialized equipment are necessary when only one contractor possesses the unique technical knowledge, proprietary data, specialized tooling, or manufacturing rights required for the repair. This could be due to the original equipment manufacturer (OEM) status, unique testing capabilities, or specific certifications required by the Department of the Navy. Without this specific justification, it remains difficult to fully assess the necessity of the sole-source approach.

What is the historical spending trend for aircraft parts repair and maintenance within the Department of the Navy?

Historical spending trends for aircraft parts repair and maintenance within the Department of the Navy are substantial and represent a significant portion of the overall defense budget. While specific figures for 'test assets' repair are not isolated here, the Navy operates a large and diverse fleet of aircraft, requiring continuous sustainment, repair, and upgrade services. Spending in this category typically fluctuates based on fleet readiness needs, modernization programs, and the introduction of new platforms. Analyzing broader categories like 'Aircraft Component Repair' or 'Aviation Depot Maintenance' would reveal multi-billion dollar annual expenditures, with a mix of competitive and sole-source awards driven by varying levels of technical complexity and market availability.

How does the geographic location (Illinois) impact the delivery and oversight of these repair services?

The contract's performance location in Illinois, where Northrop Grumman Systems Corporation is based, centralizes the repair operations. This can facilitate oversight by potentially co-locating government representatives or inspectors, simplifying site visits and direct communication. However, it also concentrates the risk associated with a single location. For the Department of the Navy, having a key repair facility in one state might be strategically advantageous for logistics or existing infrastructure, but it also means that disruptions in that region (e.g., natural disasters, labor issues) could directly impact the availability of these critical repair services. The state's specific business environment and workforce availability may also influence operational costs.

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: 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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,561,523

Exercised Options: $15,847,068

Current Obligation: $15,847,068

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $390,946

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920G0005

IDV Type: BOA

Timeline