DoD awards $48M contract to Northrop Grumman for aircraft parts, highlighting sole-source procurement

Contract Overview

Contract Amount: $48,058,754 ($48.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-06-20

End Date: 2029-07-31

Contract Duration: 1,867 days

Daily Burn Rate: $25.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DOPLT PRIMARY EFFORT

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32935

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $48.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DOPLT PRIMARY EFFORT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price competition. 2. Long performance period of over 5 years suggests a sustained need for these aircraft parts. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 4. Focus on aircraft parts indicates a critical role in maintaining naval aviation readiness. 5. Geographic concentration in Florida for contract performance. 6. The absence of small business set-aside suggests larger prime contractor involvement.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns or comparisons to similar sole-source awards. The Cost Plus Fixed Fee structure requires diligent oversight to ensure costs remain reasonable and that the fixed fee is appropriate for the effort. Without competitive bids, it's difficult to definitively assess if the government is receiving optimal value for money, though the contractor's established role may justify the pricing.

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 considered. This typically occurs when a specific capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means there was no direct price comparison from multiple vendors, potentially leading to less aggressive pricing than in a fully competed scenario.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to drive down prices, potentially resulting in higher costs for taxpayers compared to a scenario with multiple competing bids.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation units, ensuring the availability of critical aircraft parts. Services delivered include the manufacturing and supply of aircraft parts, essential for maintaining operational readiness. Geographic impact is concentrated in Florida, where the contract will be performed. Workforce implications may include continued employment for specialized manufacturing roles at Northrop Grumman's Florida facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can lead to cost escalation if not managed effectively.
Long contract duration requires sustained oversight to ensure performance and value.
Lack of small business participation may limit opportunities for smaller firms in the supply chain.

Positive Signals

Award to an established contractor (Northrop Grumman) suggests a high likelihood of meeting technical requirements.
Contract supports critical naval aviation readiness, a key national security function.
Clear performance period and delivery order structure provide defined timelines.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is characterized by high technical barriers to entry, stringent quality requirements, and significant government procurement. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for similar aircraft components across the DoD, which often run into millions or billions of dollars annually.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Consequently, small businesses are unlikely to be direct prime contractors. However, Northrop Grumman may engage small businesses as subcontractors, depending on their supply chain strategy and the specific parts required. The absence of a set-aside means opportunities for direct prime contracting with small businesses are limited for this specific award.

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 in the contract terms, including delivery schedules and performance specifications. Transparency is generally maintained through contract databases like FPDS, though detailed cost justifications for sole-source awards may be less publicly accessible. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Naval Aviation Maintenance Program
Aircraft Component Manufacturing
Defense Logistics Agency (DLA) Procurement
Air Force Sustainment Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited price competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DOPLT PRIMARY EFFORT

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 $48.1 million.

What is the period of performance?

Start: 2024-06-20. End: 2029-07-31.

What is Northrop Grumman's track record with the Department of the Navy for similar aircraft parts contracts?

Northrop Grumman Systems Corporation has a long-standing and extensive history of contracting with the Department of the Navy, particularly in areas related to aircraft systems, components, and sustainment. They are a major defense contractor with significant experience in manufacturing complex aerospace parts. Analyzing their past performance on similar contracts would involve reviewing delivery histories, quality metrics, and any past performance evaluations or disputes. While specific data for this exact part type isn't provided, their overall profile suggests a capability to meet demanding requirements. However, the lack of competition here means we cannot directly compare their pricing or performance against other potential suppliers for this specific award.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for aircraft parts manufacturing?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is uncertainty in the costs associated with performance. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of the actual costs incurred, incentivizing the contractor to control expenses. For aircraft parts, fixed-price contracts are often preferred when requirements are well-defined to ensure cost certainty for the government. CPFF can be advantageous if innovation or flexibility is needed, but it carries a higher risk of cost growth if not rigorously managed and monitored by the government to ensure costs remain reasonable and the fixed fee is justified.

What are the primary risks associated with sole-source procurement of aircraft parts?

The primary risks associated with sole-source procurement of aircraft parts include a lack of price competition, which can lead to higher costs for the government and taxpayers. Without competing bids, there is less incentive for the contractor to offer the lowest possible price. Additionally, sole-source awards can limit innovation by excluding potential new entrants or alternative solutions that might be offered by other companies. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially impacting long-term availability and pricing. Ensuring fair and reasonable pricing often relies heavily on robust cost analysis and negotiation by the government contracting officer.

What is the typical duration and value range for contracts supplying aircraft parts to the Department of the Navy?

Contracts for supplying aircraft parts to the Department of the Navy can vary significantly in duration and value, depending on the criticality of the parts, the quantity required, and whether they are for new production, sustainment, or upgrades. Durations can range from short-term delivery orders lasting a few months to multi-year indefinite-delivery/indefinite-quantity (IDIQ) contracts that span five years or more, often with option periods. Values can range from thousands of dollars for individual components to hundreds of millions or even billions of dollars for comprehensive sustainment or major component manufacturing programs. This $48 million contract with a 5-year performance period falls within a moderate to significant range for specialized aircraft parts.

How does the geographic location of contract performance (Florida) impact the overall contract execution and oversight?

The geographic location of contract performance in Florida means that government oversight personnel, such as contract officers' representatives (CORs) or quality assurance specialists, will likely be located in or travel to Florida. This proximity can facilitate more direct oversight of manufacturing processes, quality control, and delivery schedules. However, it also means that travel costs for government personnel might be a factor. For Northrop Grumman, having performance concentrated in one state may streamline logistics and workforce management. The specific location within Florida could also be relevant if there are local industrial bases or specialized facilities that contribute to the contract's execution.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001924R0571

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: $48,058,754

Exercised Options: $48,058,754

Current Obligation: $48,058,754

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