DoD awards $220.5M to Northrop Grumman for aircraft parts retrofitting, with limited competition

Contract Overview

Contract Amount: $220,500,477 ($220.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-08-23

End Date: 2029-06-15

Contract Duration: 2,123 days

Daily Burn Rate: $103.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS DELIVERY ORDER IS TO RETROFIT B9, B10, MB6P INTO THE IFC4.2 CONFIGURATION.

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $220.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THE PURPOSE OF THIS DELIVERY ORDER IS TO RETROFIT B9, B10, MB6P INTO THE IFC4.2 CONFIGURATION. Key points: 1. Contract focuses on retrofitting specific aircraft components to a new configuration. 2. The award was not competed, raising questions about price discovery and potential value. 3. A long performance period of over 5 years suggests a significant, ongoing need. 4. The contractor, Northrop Grumman, is a major defense industrial base player. 5. The contract type is Cost Plus Fixed Fee, which can shift risk to the government. 6. The North American Industry Classification System (NAICS) code 336413 indicates a focus on aircraft parts manufacturing.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its specific nature and lack of competition. The Cost Plus Fixed Fee (CPFF) structure means the government bears the cost of performance plus a fixed fee, which can lead to higher overall costs if not managed carefully. Without competitive bids, it's difficult to assess if the fixed fee represents a fair profit margin or if the overall cost is optimized. The total award amount of $220.5 million over approximately 5.7 years suggests a substantial investment, and the absence of competitive pricing makes it hard to determine if this represents good value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition means that the Department of the Navy did not solicit bids from multiple vendors, which can limit price discovery and potentially lead to higher costs for the government. The rationale for the sole-source award would need to be thoroughly documented to ensure it was justified.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can result in a higher overall expenditure for the government.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially its aviation fleet, which will receive upgraded aircraft components. The services delivered involve retrofitting specific aircraft parts (B9, B10, MB6P) into the IFC4.2 configuration. The geographic impact is likely concentrated within the operational areas of the Navy's fleet, primarily in California where the contractor is located. Workforce implications may include specialized manufacturing and technical roles at Northrop Grumman, supporting the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type shifts cost overrun risk to the government.
Long contract duration (over 5 years) requires sustained government oversight to manage performance and costs.
Specific technical configuration (IFC4.2) may limit the pool of potential alternative providers.
Lack of publicly available performance metrics makes it difficult to assess contractor efficiency.

Positive Signals

Northrop Grumman is an established defense contractor with significant experience in aerospace manufacturing.
The contract addresses a specific technical requirement for aircraft component retrofitting, indicating a critical need.
The fixed fee component of the CPFF contract provides some level of cost predictability for the contractor's profit.
The award is associated with a specific NAICS code (336413), indicating a specialized manufacturing capability.

Sector Analysis

The aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment, is a critical component of the defense industrial base. This contract falls within the broader defense sector, where specialized manufacturing capabilities are essential for maintaining and upgrading military assets. The total value of the contract, $220.5 million, is significant within this niche, reflecting the complexity and scale of retrofitting operations. Comparable spending in this area often involves large defense contractors undertaking complex modifications and upgrades for military platforms.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the awardee is Northrop Grumman Systems Corporation, a large defense contractor. There is no explicit mention of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Northrop Grumman voluntarily engages small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the Cost Plus Fixed Fee structure, rigorous oversight of costs, performance, and compliance will be crucial to ensure value for money. Transparency may be limited due to the sole-source nature and the specific technical details involved. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

Department of Defense Aircraft Modernization Programs
Naval Aviation Component Upgrades
Aerospace Manufacturing Contracts
Defense Supply Chain Management

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $220.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THE PURPOSE OF THIS DELIVERY ORDER IS TO RETROFIT B9, B10, MB6P INTO THE IFC4.2 CONFIGURATION.

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 $220.5 million.

What is the period of performance?

Start: 2023-08-23. End: 2029-06-15.

What is the specific technical justification for retrofitting B9, B10, MB6P into the IFC4.2 configuration, and what are the anticipated performance improvements?

The provided data does not detail the specific technical justification or anticipated performance improvements for retrofitting B9, B10, MB6P into the IFC4.2 configuration. This level of technical detail is typically found in program documentation, technical specifications, or justification for other than full and open competition (J&A) documents. The IFC4.2 configuration likely represents an updated standard or system architecture for a particular aircraft or avionics suite. Retrofitting suggests that existing components need to be modified or replaced to meet this new standard, potentially to enhance capabilities, improve reliability, ensure interoperability, or comply with new regulations. Without access to these supporting documents, the precise benefits and reasons remain unspecified in the contract award data.

What is the historical spending pattern for similar aircraft parts retrofitting contracts by the Department of the Navy?

Historical spending patterns for similar aircraft parts retrofitting contracts by the Department of the Navy are not detailed in the provided data. To assess this, one would need to query federal procurement databases (like FPDS or USASpending.gov) for contracts with similar NAICS codes (e.g., 336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing), contract types (e.g., CPFF), and agencies (Department of the Navy). Analyzing past awards for retrofitting, modification, or upgrade services on naval aircraft platforms would reveal trends in contract values, durations, competition levels, and contractor performance. This comparison is crucial for benchmarking the $220.5 million award against previous investments and understanding if current spending aligns with historical norms or represents a significant deviation.

How does the Cost Plus Fixed Fee (CPFF) contract type influence the risk allocation between the government and Northrop Grumman for this project?

The Cost Plus Fixed Fee (CPFF) contract type allocates significant risk to the government. Under CPFF, the contractor is reimbursed for all allowable costs incurred during performance, plus a predetermined fixed fee representing profit. While the fee is fixed, the government bears the risk of cost overruns; if the contractor's costs exceed estimates, the government is obligated to pay them. Northrop Grumman's risk is primarily limited to ensuring performance meets the contract requirements to earn the fixed fee. The government's risk is that the total cost could be substantially higher than anticipated if costs escalate, without a corresponding increase in the contractor's profit. Effective government oversight is critical to control costs and ensure the fixed fee remains reasonable relative to the effort.

What is Northrop Grumman's track record with the Department of the Navy, particularly on similar complex retrofitting or manufacturing contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a substantial track record of performing complex manufacturing and integration services for the Department of the Navy and other military branches. While specific details on their performance for retrofitting B9, B10, MB6P into IFC4.2 are not provided, their extensive experience in areas such as aircraft production, avionics systems, and defense electronics suggests a capability to handle such projects. Past performance evaluations, available through government sources like the Contractor Performance Assessment Reporting System (CPARS), would offer a more granular view of their historical success, adherence to schedule and budget, and overall quality on similar contracts. Their status as a prime contractor on numerous large-scale defense programs indicates a generally accepted level of competence and reliability.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent potential cost inflation?

For sole-source contracts, ensuring fair pricing and preventing cost inflation relies heavily on robust government oversight and negotiation. Mechanisms include detailed cost analysis by the contracting officer and technical teams to scrutinize the contractor's proposed costs, including labor rates, material costs, and overhead. The government may require detailed cost breakdowns and justifications from the contractor. Negotiation plays a key role in establishing a fair and reasonable price, including the fixed fee in this CPFF contract. Furthermore, contract clauses related to cost accounting standards and audits empower the government to verify incurred costs. Continuous monitoring of performance and expenditures throughout the contract's lifecycle is essential to identify and address any potential cost escalations proactively.

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: 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: $232,660,600

Exercised Options: $220,500,477

Current Obligation: $220,500,477

Subaward Activity

Number of Subawards: 47

Total Subaward Amount: $4,675,340

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