DoD awards $12.5M for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $12,482,583 ($12.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-24

End Date: 2026-10-29

Contract Duration: 765 days

Daily Burn Rate: $16.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LAY IN MATERIAL

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $12.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LAY IN MATERIAL Key points: 1. Contract awarded to a single, large defense contractor, limiting competitive pricing. 2. Fixed-price contract type offers some cost certainty but may not reflect true market value. 3. Long performance period suggests a sustained need for these aircraft parts. 4. Geographic concentration in Florida may indicate specific operational requirements or existing infrastructure. 5. Lack of small business involvement raises concerns about broader economic impact. 6. Absence of a clear small business set-aside suggests potential missed opportunities for smaller firms.

Value Assessment

Rating: fair

The contract's value of $12.5 million for aircraft parts requires careful benchmarking. Without specific details on the parts or quantities, direct comparison to similar contracts is difficult. However, the fixed-price nature suggests the government has a defined budget, but the lack of competition could mean the price is not optimized. Further analysis of unit costs against industry averages would be needed to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach bypasses the standard competitive bidding process, which typically drives down prices and fosters innovation. The absence of multiple bidders means there was no opportunity to explore alternative solutions or secure more favorable terms through market forces. This raises concerns about whether the government obtained the best possible price and terms.

Taxpayer Impact: Sole-source awards mean taxpayers may be paying a premium, as the absence of competition removes the incentive for the contractor to offer the lowest possible price.

Public Impact

The Department of the Navy benefits from the acquisition of critical aircraft parts. This contract supports the operational readiness and maintenance of naval aviation assets. The primary geographic impact is in Florida, where the contractor is located. The contract likely supports a workforce involved in the manufacturing or distribution of these specialized parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices for taxpayers.
Sole-source awards can stifle innovation by not encouraging new market entrants.
Limited transparency in pricing due to the absence of competitive bids.
Potential for contractor lock-in, making future procurements more difficult to compete.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Award to an established contractor like Northrop Grumman suggests reliability and existing expertise.
Long contract duration indicates a stable, long-term need being met.

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 sector is often characterized by high R&D costs, stringent quality requirements, and long production cycles. Comparable spending benchmarks would typically involve analyzing historical awards for similar aircraft components by the Department of Defense and other federal agencies.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement (ss: false, sb: false). This suggests that the award was not specifically set aside for small businesses, nor does it appear to have explicit subcontracting goals for small businesses. Consequently, this contract may not directly contribute to the small business ecosystem or provide significant opportunities for smaller firms to participate in the defense supply chain for these specific parts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the fixed-price contract type, which obligates the contractor to deliver specified goods. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance or execution.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Manufacturing
Defense Logistics and Supply Chain Management
Naval Aviation Procurement

Risk Flags

Sole-source award raises concerns about price reasonableness.
Lack of competition may limit innovation and efficiency.
Potential for supply chain disruption if contractor faces issues.
Limited transparency in contract pricing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LAY IN MATERIAL

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 $12.5 million.

What is the period of performance?

Start: 2024-09-24. End: 2026-10-29.

What is Northrop Grumman Systems Corporation's track record with the Department of Defense for similar aircraft parts?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of supplying complex systems and components to the Department of Defense. For aircraft parts specifically, their track record likely includes numerous contracts across various platforms, ranging from engines and airframes to specialized electronic and structural components. Analyzing their past performance on similar fixed-price contracts for the Navy or other branches would reveal their history of on-time delivery, quality compliance, and adherence to budget. Publicly available contract databases and defense spending reports often detail the volume and nature of their awards, providing insights into their capabilities and reliability in this domain. However, specific performance metrics for this particular contract are not yet available as it is newly awarded.

How does the $12.5 million value compare to market rates for similar aircraft parts?

Benchmarking the $12.5 million value against market rates for similar aircraft parts is challenging without detailed specifications of the components being procured. Aircraft parts can range from common fasteners to highly specialized, custom-engineered systems, each with vastly different cost structures. Given this is a sole-source award, direct price comparisons are difficult as competitive market forces were not applied. To assess value, one would need to identify comparable parts, analyze their unit costs from other suppliers (if available), and consider the contractor's overhead, profit margins, and any unique manufacturing requirements. Industry reports on aerospace component pricing and historical DoD procurement data for similar items would be essential for a robust comparison, but are not readily available for this specific award.

What are the primary risks associated with a sole-source award for critical aircraft parts?

The primary risks associated with a sole-source award for critical aircraft parts include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the pricing structure. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the contractor experiences production issues, delays, or quality problems, it could significantly impact the operational readiness of the aircraft. There's also a risk of contractor lock-in, making it difficult and potentially more expensive to switch suppliers in the future. The absence of competitive pressure might also lead to less stringent quality control or slower adoption of technological advancements.

What is the expected program effectiveness and impact of this contract on naval aviation readiness?

The expected program effectiveness hinges on Northrop Grumman's ability to deliver the specified aircraft parts according to the contract's terms and quality standards. If successful, this contract will directly contribute to the maintenance and operational readiness of naval aviation assets. By ensuring a supply of necessary components, it helps prevent aircraft downtime due to parts shortages, thereby supporting flight schedules and mission capabilities. The long duration of the contract (765 days) suggests it addresses a sustained need, implying that these parts are critical for ongoing operations or a specific fleet modernization/sustainment effort. The effectiveness will ultimately be measured by the reliability and performance of the delivered parts in supporting the intended aircraft.

How does this $12.5 million award fit into the broader historical spending patterns for aircraft parts by the Department of the Navy?

This $12.5 million award represents a specific procurement within the Department of the Navy's substantial and ongoing spending on aircraft parts. The Navy, operating a large and diverse fleet of aircraft, consistently allocates significant funds towards maintaining and supporting these assets. Historical spending patterns reveal a continuous demand for a wide array of components, from routine replacements to specialized parts for advanced platforms. Awards of this magnitude are not uncommon, particularly for sole-source or limited-competition contracts involving complex or proprietary components. Analyzing broader trends would show fluctuations based on fleet size, modernization programs, and geopolitical demands. This particular award, being sole-source, might deviate from patterns favoring competition but reflects a specific acquisition strategy for these parts.

Industry Classification

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

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $12,482,583

Exercised Options: $12,482,583

Current Obligation: $12,482,583

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038324DBH01

IDV Type: IDC

Timeline