DoD awards Northrop Grumman $30.4M for aircraft parts, citing sole-source justification

Contract Overview

Contract Amount: $30,422,301 ($30.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-05-02

End Date: 2026-04-30

Contract Duration: 1,094 days

Daily Burn Rate: $27.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SAA SRR PHASE 0C

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $30.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SAA SRR PHASE 0C Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery. 2. Significant contract value for aircraft parts manufacturing, indicating a critical need. 3. Long performance period of nearly three years suggests a complex or ongoing requirement. 4. No small business set-aside, potentially limiting opportunities for smaller firms. 5. Contract type is Cost Plus Fixed Fee, which can incentivize cost overruns. 6. Geographic concentration in California for a major defense contract.

Value Assessment

Rating: questionable

The contract's value of $30.4 million for aircraft parts is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D or uncertain scope, can lead to higher costs compared to fixed-price contracts if not managed diligently. The lack of a clear per-unit cost benchmark makes direct comparison challenging.

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. The justification for this approach is not detailed in the provided data. Sole-source awards bypass the standard competitive process, which typically leads to better price discovery and potentially lower costs for the government. The absence of multiple bidders means the government did not benefit from a range of proposals and pricing.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government may not secure the most competitive pricing available in the market.

Public Impact

The Department of Defense, specifically the Department of the Navy, is the primary beneficiary, receiving critical aircraft parts. This contract supports the maintenance and readiness of naval aviation assets. The geographic impact is concentrated in California, where Northrop Grumman Systems Corporation operates. The contract supports specialized manufacturing jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
Lack of small business participation may limit opportunities for smaller, innovative firms in the supply chain.

Positive Signals

Award to a large, established defense contractor like Northrop Grumman suggests reliability and existing capability.
Long contract duration indicates a sustained need for these critical aircraft parts.
The contract supports a vital sector of the defense industrial base.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically related to 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 crucial for maintaining military readiness and technological superiority. Benchmarking is difficult without competitive data, but significant government investment is typical for specialized defense components.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any subcontracting requirements for small businesses. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on established capabilities rather than fostering small business participation. This could mean missed opportunities for small businesses to contribute to this specific defense need or to benefit from subcontracting roles.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing would be expected to monitor costs and ensure compliance with the fixed fee. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics
Naval Aviation Support
Northrop Grumman Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SAA SRR PHASE 0C

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 $30.4 million.

What is the period of performance?

Start: 2023-05-02. End: 2026-04-30.

What is the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as urgency, unique capabilities of a single source, or when competition is deemed not feasible or not in the best interest of the government. For defense contracts, justifications often cite national security requirements or the unavailability of other sources. A detailed review of the contract's justification document (e.g., a Justification and Approval or J&A) would be necessary to understand the rationale. Without this, it remains a point of concern regarding potential lack of competition and its impact on pricing.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of cost efficiency for aircraft parts?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not well-defined or involves research and development, allowing the contractor to be reimbursed for allowable costs plus a fixed fee representing profit. For manufacturing standard aircraft parts with a defined scope, fixed-price contracts (like Firm-Fixed Price or FFP) are generally considered more cost-efficient for the government. CPFF contracts shift more cost risk to the government and can incentivize contractors to incur higher costs to maximize their fee if not carefully managed. Benchmarking against similar CPFF contracts for aircraft parts could provide some insight, but FFP contracts typically offer better price certainty and cost control.

What is the historical spending pattern for aircraft parts manufacturing (NAICS 336413) by the Department of the Navy?

Historical spending data for NAICS 336413 by the Department of the Navy would reveal trends in procurement for aircraft parts and auxiliary equipment. Analyzing this data over several fiscal years would indicate whether this $30.4 million award is an outlier, a typical expenditure, or part of an increasing trend. It would also highlight key contractors, common contract types, and average award values within this sector. Without access to historical spending databases, a precise comparison is not possible, but such analysis is crucial for understanding the context of this specific award and identifying potential patterns of overspending or consistent reliance on specific suppliers.

What are the potential risks associated with Northrop Grumman Systems Corporation's performance on this contract, given its sole-source nature?

The primary risk associated with a sole-source award to Northrop Grumman is the lack of competitive pressure, which could lead to less stringent performance expectations or less focus on cost control compared to a competed contract. While Northrop Grumman is a reputable contractor, the absence of alternatives means the Navy is reliant on their capabilities and pricing. Risks include potential schedule delays, quality issues, or cost overruns that might have been mitigated through competition. The CPFF structure also requires robust government oversight to manage performance and costs effectively, as the contractor has less incentive to minimize expenses.

Are there any known issues or performance concerns related to Northrop Grumman Systems Corporation's previous contracts for aircraft parts or similar defense articles?

Assessing Northrop Grumman's track record requires a review of their past performance evaluations, contract history, and any reported issues on similar contracts. Large defense contractors often have extensive portfolios, and performance can vary. Without specific data on past performance for aircraft parts manufacturing or related defense articles, it's difficult to pinpoint specific concerns. However, agencies typically use past performance information as a key factor in source selection, even in sole-source situations, to ensure the chosen contractor has the necessary capabilities and a history of successful delivery. A deeper dive into contract databases and performance reports would be needed for a definitive answer.

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: $30,750,020

Exercised Options: $30,750,020

Current Obligation: $30,422,301

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $11,440,085

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001920G0005

IDV Type: BOA

Timeline