DoD's $134M MK54 Array Kits Contract with Northrop Grumman Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $134,454,218 ($134.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2013-07-25
End Date: 2024-09-30
Contract Duration: 4,085 days
Daily Burn Rate: $32.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: MK54 ARRAY KITS
Place of Performance
Location: ANNAPOLIS, ANNE ARUNDEL County, MARYLAND, 21409
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $134.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: MK54 ARRAY KITS Key points: 1. Significant contract value ($134M) for specialized ammunition components. 2. Sole awardee Northrop Grumman raises questions about competitive pricing. 3. Long contract duration (over 11 years) may impact cost-effectiveness. 4. Focus on a niche defense sector (ammunition manufacturing).
Value Assessment
Rating: questionable
The total award value of $134.4M over an 11-year period suggests a high per-unit cost, especially given the lack of readily available public benchmarks for this specific component. Without competitive bids, it's difficult to assess if this price reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Although listed as 'Full and Open Competition,' the data shows only one awardee, Northrop Grumman. This raises concerns about whether the competition was truly robust or if other potential bidders were deterred or unable to participate effectively, potentially limiting price discovery.
Taxpayer Impact: The substantial investment in a single-source award for a long duration warrants scrutiny to ensure taxpayer funds are used efficiently and competitively.
Public Impact
Impacts naval readiness and operational capabilities requiring these specific array kits. Potential for cost overruns or inefficiencies due to extended sole-source-like award. Highlights the complexity and cost of specialized defense manufacturing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of demonstrated competition despite 'Full and Open' status
- Long contract duration potentially leading to price escalation
- Limited transparency on per-unit cost and value for money
Positive Signals
- Addresses a critical defense need for naval operations
- Established relationship with a known defense contractor
Sector Analysis
This contract falls within the Defense sector, specifically ammunition manufacturing. Spending in this area is critical for national security but often involves high costs due to specialized materials, R&D, and stringent quality requirements. Benchmarks are difficult to establish due to the niche nature of components like the MK54 array kits.
Small Business Impact
The data indicates no specific set-aside for small businesses. The prime contractor, Northrop Grumman, is a large corporation, suggesting limited direct opportunities for small businesses in this particular contract award, though they may be involved as subcontractors.
Oversight & Accountability
The long duration and single award nature of this contract warrant close oversight to ensure performance standards are met and costs remain justified. Further review of the competitive process and ongoing performance is recommended.
Related Government Programs
- Ammunition (except Small Arms) Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential lack of true competition
- Extended contract duration
- Limited transparency on cost justification
- Sole awardee for a critical component
Tags
ammunition-except-small-arms-manufacturi, department-of-defense, md, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $134.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. MK54 ARRAY KITS
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 $134.5 million.
What is the period of performance?
Start: 2013-07-25. End: 2024-09-30.
What specific factors contributed to Northrop Grumman being the sole awardee under a 'Full and Open Competition' for the MK54 Array Kits?
The sole award despite 'Full and Open Competition' status suggests potential barriers to entry for other firms, such as highly specialized technical requirements, proprietary technology, or unique manufacturing capabilities possessed by Northrop Grumman. It could also indicate a flawed solicitation process or insufficient outreach to potential competitors, impacting the government's ability to secure the best possible price and value.
How does the $134M contract value compare to industry benchmarks for similar ammunition components, considering the 11-year duration?
Direct industry benchmarks for the MK54 Array Kits are not publicly available due to their specialized nature. However, a contract of this magnitude over such an extended period necessitates rigorous cost analysis. Without competitive bidding, assessing value for money is challenging. The firm fixed-price structure offers some cost control, but the lack of competition raises concerns about potential inefficiencies or above-market pricing over the contract's life.
What are the potential risks to operational effectiveness and taxpayer investment given the long-term, single-award nature of this contract?
The primary risks include potential complacency from the sole awardee leading to reduced innovation or quality control, and the possibility of escalating costs over the 11-year period if market conditions change unfavorably. Taxpayers face the risk of overpaying due to the absence of competitive pressure. Furthermore, reliance on a single source could create vulnerabilities in the supply chain for critical naval components.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002412R6231
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 895 OCEANIC DR, ANNAPOLIS, MD, 21409
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $147,446,872
Exercised Options: $135,376,316
Current Obligation: $134,454,218
Subaward Activity
Number of Subawards: 2171
Total Subaward Amount: $3,527,455,699
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2013-07-25
Current End Date: 2024-09-30
Potential End Date: 2024-09-30 00:00:00
Last Modified: 2024-10-01
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