Northrop Grumman awarded $110M Navy contract for air transportation support, a significant investment in fleet readiness

Contract Overview

Contract Amount: $110,263,740 ($110.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-02-01

End Date: 2027-02-01

Contract Duration: 1,826 days

Daily Burn Rate: $60.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS TASK ORDER IS ISSUED UNDER AND PURSUANT TO THE PROVISIONS OF THE CMMARS CONTRACT, N61340-19-D-1014.

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $110.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THIS TASK ORDER IS ISSUED UNDER AND PURSUANT TO THE PROVISIONS OF THE CMMARS CONTRACT, N61340-19-D-1014. Key points: 1. The contract's value suggests a substantial need for ongoing support services, potentially indicating complex or critical operational requirements. 2. Given the firm-fixed-price structure, the government has defined costs upfront, shifting performance risk to the contractor. 3. The duration of the contract (5 years) implies a long-term strategic commitment by the Navy to these services. 4. The award to a single, large contractor like Northrop Grumman may limit opportunities for smaller, specialized firms in this niche. 5. The North American Industry Classification System (NAICS) code 488190 points to a specialized segment of the aviation support industry.

Value Assessment

Rating: good

The contract value of approximately $110 million over five years for 'Other Support Activities for Air Transportation' appears to be within a reasonable range for large-scale defense logistics. Benchmarking against similar long-term support contracts for aviation assets suggests that the pricing is likely competitive, especially considering the specialized nature of the services and the prime contractor's established role. The firm-fixed-price nature provides cost certainty for the government, although it necessitates careful performance monitoring to ensure value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of three bids suggests a healthy level of competition for this significant defense support requirement. Full and open competition generally leads to better price discovery and ensures that the government receives offers from a wide range of qualified contractors, potentially driving down costs and improving service quality.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider array of innovative solutions being considered for critical defense needs.

Public Impact

The primary beneficiaries are the Department of the Navy and its air operations, ensuring the continued readiness and operational capability of its aircraft. Services delivered likely encompass a broad range of support activities essential for maintaining air transportation infrastructure and logistics. The geographic impact is likely concentrated around Navy air bases and operational theaters where these support services are most critical. Workforce implications include the potential for sustained employment for skilled personnel within Northrop Grumman and its subcontractors, particularly in specialized aviation support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for contractor lock-in due to the long-term nature and specialized services.
Reliance on a single large contractor may reduce agility in adapting to rapidly changing technological or operational needs.
Ensuring robust performance metrics are met throughout the 5-year duration will be critical for value realization.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Firm-fixed-price contract provides cost certainty for the government.
Long-term contract duration indicates a stable and predictable support environment for the Navy.

Sector Analysis

The aviation support services sector is a critical component of the broader aerospace and defense industry. This contract falls under 'Other Support Activities for Air Transportation,' which can include a wide array of services such as maintenance, logistics, ground support, and specialized operational assistance. The market is characterized by large, established defense contractors and specialized service providers. Spending in this area is often driven by military readiness requirements and the operational tempo of air fleets. Comparable spending benchmarks would typically be found in other long-term support contracts for military aircraft or aviation infrastructure.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large prime contract awarded to Northrop Grumman, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting will depend on the prime contractor's subcontracting plan and the specific requirements of the task order. Without explicit set-aside provisions, the direct impact on the small business ecosystem for this specific contract is likely limited, though it contributes to the overall defense spending that indirectly supports small businesses in the supply chain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring Northrop Grumman to deliver specified services within agreed-upon costs and timelines. Transparency is typically facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Air Systems Command (NAVAIR) Contracts
Defense Logistics Agency (DLA) Aviation Support
Air Mobility Command (AMC) Services
Fleet Readiness Centers (FRCs)

Risk Flags

Long-term contract duration may pose risks related to technological obsolescence.
Reliance on a single large contractor could limit future flexibility.
Performance monitoring is crucial to ensure value delivery under firm-fixed-price terms.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $110.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THIS TASK ORDER IS ISSUED UNDER AND PURSUANT TO THE PROVISIONS OF THE CMMARS CONTRACT, N61340-19-D-1014.

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 $110.3 million.

What is the period of performance?

Start: 2022-02-01. End: 2027-02-01.

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

Northrop Grumman has a long-standing and extensive history of supporting Department of the Navy aviation programs. They are a major defense contractor involved in aircraft development, sustainment, and modernization. Their involvement in 'Other Support Activities for Air Transportation' is consistent with their broad capabilities in aerospace systems and logistics. Past performance reviews and contract histories with NAVAIR and other naval aviation entities would provide specific details on their execution of similar support services, including on-time delivery, quality of service, and cost management. The issuance of this significant delivery order under an existing CMMARS contract suggests a positive past performance evaluation by the Navy.

How does the $110 million value compare to typical spending for air transportation support services within the DoD?

The $110 million value for a five-year contract for 'Other Support Activities for Air Transportation' is substantial but not unusual for a major defense contractor supporting naval aviation. Large-scale, long-term support contracts for complex military assets often run into tens or hundreds of millions of dollars. This figure suggests a critical and ongoing need for these services, potentially encompassing a wide range of activities such as maintenance, repair, overhaul, logistics, and operational support for a significant portion of the Navy's air transport fleet or related infrastructure. Benchmarking against similar contracts for other branches of the military or for different types of aviation platforms would provide further context on its relative scale.

What are the primary risks associated with a firm-fixed-price contract of this magnitude and duration?

The primary risk with a firm-fixed-price (FFP) contract of this magnitude and duration is that the contractor, Northrop Grumman, bears the financial risk if costs exceed the agreed-upon price. This can incentivize the contractor to cut corners on quality or performance to maintain profitability, although robust quality assurance and oversight mechanisms are intended to mitigate this. For the government, the risk is paying a premium if the contractor's initial cost estimates were overly conservative, or if unforeseen circumstances (beyond the contractor's control but not covered by specific contract clauses) significantly impact performance. Additionally, the long duration (5 years) introduces the risk of technological obsolescence or changing operational requirements that the FFP structure might make difficult or costly to adapt to.

What does the NAICS code 488190 specifically encompass in the context of defense contracting?

The North American Industry Classification System (NAICS) code 488190, 'Other Support Activities for Air Transportation,' encompasses a broad range of services related to the operation and maintenance of air transportation. In the context of defense contracting, this can include services such as aircraft ground support, aircraft maintenance and repair (beyond depot-level), air traffic control support, airport operations support, cargo handling, and other logistical services necessary for the efficient functioning of military aviation operations. It is distinct from aircraft manufacturing (NAICS 3364) or air courier services (NAICS 492). For the Navy, this code likely covers essential functions that keep their air assets operational and ready for deployment.

How does the 'full and open competition' award impact the potential for innovation in air transportation support?

Awarding this contract under 'full and open competition' theoretically maximizes the potential for innovation. By allowing any responsible source to submit a bid, the Navy opens the door to a wider range of technical solutions and approaches from various companies, including potentially smaller, more agile firms or those with novel technologies. The competitive process encourages bidders to propose innovative methods to meet the government's requirements efficiently and effectively. While the award went to a large incumbent contractor, the initial competition itself serves as a catalyst for innovation by forcing all potential bidders to develop their best and most forward-thinking proposals to secure the contract.

What are the implications of this contract for small business participation in the defense aviation support sector?

As this contract was not specifically set aside for small businesses and was awarded under full and open competition to a large prime contractor (Northrop Grumman), the direct award to a small business is not applicable. However, large defense contracts often include subcontracting goals. The Navy typically encourages or mandates that prime contractors utilize small businesses for a certain percentage of the subcontracted work. Therefore, while Northrop Grumman receives the prime contract value, there is a significant opportunity for small businesses specializing in specific aviation support niches (e.g., component repair, specialized tooling, logistics support) to compete for and win subcontracts under this larger award, contributing to the small business ecosystem within the defense industrial base.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0001919R0012

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $157,125,206

Exercised Options: $126,790,095

Current Obligation: $110,263,740

Subaward Activity

Number of Subawards: 215

Total Subaward Amount: $12,914,678

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: N6134019D1014

IDV Type: IDC

Timeline