DoD awards $76M for E-2D aircraft spares, with limited competition and long-term delivery

Contract Overview

Contract Amount: $76,046,196 ($76.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-07-06

End Date: 2027-08-31

Contract Duration: 1,517 days

Daily Burn Rate: $50.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FRANCE E-2D SPARES

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32902

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $76.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FRANCE E-2D SPARES Key points: 1. Contract awarded for essential E-2D Hawkeye aircraft spare parts. 2. Significant portion of the contract value allocated to sustainment and readiness. 3. Sole-source award raises questions about price competitiveness. 4. Long contract duration suggests a strategic, long-term need for these components. 5. Geographic concentration of delivery in Florida may indicate specific operational bases. 6. Focus on aircraft parts manufacturing aligns with broader defense industrial base needs.

Value Assessment

Rating: fair

The contract value of $76 million for E-2D spares appears substantial, but without comparable contract data or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm-fixed-price structure provides cost certainty for the government, but the lack of competition could lead to inflated pricing. Benchmarking against similar sole-source awards for specialized aircraft components would be necessary for a more definitive evaluation of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was solicited. This approach is typically used when a specific contractor possesses unique capabilities or proprietary technology essential for the requirement. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single supplier for critical E-2D components.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust government oversight to ensure fair pricing.

Public Impact

The U.S. Navy's E-2D Hawkeye fleet benefits from the availability of critical spare parts, ensuring operational readiness. This contract supports the sustainment of advanced airborne early warning and control aircraft. Delivery is concentrated in Florida, likely supporting naval air stations and operational units in the region. The contract sustains jobs within the aerospace manufacturing sector, specifically in aircraft parts production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration (over 3 years) may lock in pricing without opportunities for renegotiation.
Lack of transparency in the sole-source justification could obscure potential cost efficiencies missed.
Dependence on a single supplier for critical components poses a supply chain risk.

Positive Signals

Ensures continued operational readiness for the vital E-2D Hawkeye fleet.
Firm-fixed-price contract provides cost predictability for the government.
Supports a key defense contractor with a proven track record on this platform.
Long-term award indicates strategic planning for aircraft sustainment.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' represents a segment of the broader aerospace industry. Spending in this area is critical for maintaining the operational capabilities of military aviation assets. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for specialized aircraft components across different branches of the military.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were mandated within this particular award. This means that opportunities for small businesses to participate in fulfilling this contract are not explicitly prioritized through set-asides or mandated subcontracting plans, potentially limiting their direct involvement.

Oversight & Accountability

The contract is a Delivery Order under a larger contract vehicle, implying that oversight mechanisms are likely tied to the parent contract's terms. The firm-fixed-price nature provides some cost control. However, the sole-source award necessitates careful review of pricing reasonableness by the contracting officer and potentially the Department of Defense's Inspector General to ensure fair value is obtained. Transparency regarding the justification for the sole-source award is crucial for public accountability.

Related Government Programs

E-2D Hawkeye Aircraft Program
Naval Aviation Readiness Programs
Defense Logistics Agency (DLA) Aviation Support
Aerospace Parts Manufacturing Contracts

Risk Flags

Sole-source award
Long-term delivery schedule
Lack of small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $76.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FRANCE E-2D SPARES

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 $76.0 million.

What is the period of performance?

Start: 2023-07-06. End: 2027-08-31.

What is the historical spending trend for E-2D Hawkeye spare parts with Northrop Grumman Systems Corporation?

Analyzing historical spending data for E-2D Hawkeye spare parts with Northrop Grumman Systems Corporation is crucial for understanding cost trends and identifying potential anomalies. While this specific award is for $76 million, examining previous contracts, delivery orders, and modifications awarded to Northrop Grumman for E-2D spares by the Department of the Navy can reveal patterns in pricing, volume, and the frequency of awards. A review of past performance and spending could highlight if costs have increased or decreased over time, whether the scope of parts procured has changed significantly, and if the government has consistently relied on sole-source awards for these components. Without access to a comprehensive contract history database, it is difficult to provide precise historical figures, but such an analysis would be key to assessing the long-term value and cost-effectiveness of this supplier relationship.

How does the pricing of these E-2D spares compare to similar components for other naval aircraft programs?

Benchmarking the pricing of these E-2D spares against similar components for other naval aircraft programs is essential for assessing value for money. This comparison would involve identifying comparable parts (e.g., complex avionics, structural components, engine parts) across different naval platforms like the F/A-18 Super Hornet, P-8 Poseidon, or MH-60 Seahawk. The analysis would need to account for factors such as technological complexity, manufacturing processes, and the volume of production for each aircraft type. If E-2D spares are found to be significantly more expensive on a per-unit or total cost basis, it could indicate issues with pricing reasonableness, the sole-source nature of the award, or unique manufacturing challenges. Conversely, if prices are in line with or lower than comparable items, it might suggest efficient procurement or a well-established supply chain for the E-2D.

What are the specific risks associated with a sole-source award for critical aircraft components?

A sole-source award for critical aircraft components like E-2D spares introduces several significant risks. Foremost is the risk of inflated pricing, as the absence of competition removes the incentive for the contractor to offer the most competitive rates. This can lead to higher costs for the government and, consequently, taxpayers. Another risk is potential complacency from the sole supplier, which might lead to reduced focus on quality control or delivery timelines, knowing there are no immediate alternatives. Furthermore, a sole-source arrangement can create a dependency on a single supplier, making the supply chain vulnerable to disruptions caused by the contractor's financial instability, production issues, or geopolitical factors. This dependency also limits the government's flexibility in adapting to technological advancements or seeking alternative, potentially more cost-effective solutions in the future.

What is the expected impact of this contract on the operational readiness of the E-2D Hawkeye fleet?

This contract is expected to have a positive and direct impact on the operational readiness of the E-2D Hawkeye fleet. By ensuring the availability of critical spare parts, the Department of the Navy can maintain its E-2D aircraft in a flight-ready status, minimizing downtime due to component failures or maintenance requirements. The E-2D Hawkeye is a vital asset for airborne early warning and control missions, and its sustained operational capability is crucial for national security. The long-term nature of the delivery order (ending August 2027) suggests a strategic commitment to supporting the fleet's sustainment needs over an extended period, thereby contributing to predictable readiness levels and mission accomplishment.

Are there any specific performance metrics or quality assurance measures tied to this contract?

While the provided data indicates a 'FIRM FIXED PRICE' contract type, it does not explicitly detail specific performance metrics or quality assurance measures. However, for defense contracts of this nature, especially those involving critical aircraft components, robust quality assurance provisions are typically embedded within the contract's terms and conditions, often referencing standard military specifications or industry best practices. Performance metrics might include on-time delivery rates, defect rates, and adherence to technical specifications. The government's quality assurance representatives (QARs) would likely be involved in inspecting the parts and verifying compliance. The effectiveness of these measures would be crucial in mitigating risks associated with a sole-source award and ensuring the delivered spares meet the stringent requirements of naval aviation.

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

Financial Breakdown

Contract Ceiling: $76,046,196

Exercised Options: $76,046,196

Current Obligation: $76,046,196

Subaward Activity

Number of Subawards: 145

Total Subaward Amount: $5,329,078,373

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