DoD awards Northrop Grumman $8.2M for aircraft parts, with limited competition and a 3-year duration

Contract Overview

Contract Amount: $8,189,448 ($8.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-04-28

End Date: 2026-05-30

Contract Duration: 1,128 days

Daily Burn Rate: $7.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MC, APP SERVER, & FCTDS #1

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $8.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: MC, APP SERVER, & FCTDS #1 Key points: 1. Contract awarded for aircraft parts, indicating a need for specialized components in defense operations. 2. The contract's fixed-price nature suggests a defined scope and potential for cost predictability. 3. Limited competition raises questions about potential price inflation and the availability of alternative suppliers. 4. The contract duration of over three years implies a long-term requirement for these specific parts. 5. Northrop Grumman's role as a large defense contractor suggests established capabilities but also potential for market dominance. 6. The award is concentrated in Florida, potentially impacting the regional aerospace supply chain.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the aircraft parts and their market rates. The fixed-price structure provides some cost certainty, but the lack of robust competition could lead to less favorable pricing compared to a more open market. The contract value of approximately $8.2 million over three years suggests a moderate annual spend, but its true value-for-money depends heavily on the criticality and uniqueness of the parts supplied.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'NOT AVAILABLE FOR COMPETITION,' which is a form of limited competition. This suggests that only one or a very small number of responsible sources were determined to be capable of meeting the government's needs. While this can be justified for highly specialized or proprietary components, it significantly reduces the opportunity for price discovery through competitive bidding and may result in higher costs for the government.

Taxpayer Impact: Limited competition means taxpayers may not be getting the best possible price for these aircraft parts, as the government had fewer options to negotiate with.

Public Impact

The Department of the Navy benefits from the acquisition of critical aircraft parts necessary for maintaining its fleet. This contract supports the operational readiness of naval aviation assets. The primary beneficiaries are the military personnel who rely on well-maintained aircraft for their missions. The contract's geographic focus on Florida may stimulate economic activity and employment within the state's aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher prices than if the contract were fully competed.
Lack of transparency in the 'not available for competition' justification could obscure potential cost savings.
Reliance on a single large contractor might create dependencies and reduce future flexibility.

Positive Signals

Northrop Grumman is a well-established defense contractor with a proven track record.
The firm fixed-price contract type offers cost certainty for the government.
The contract duration aligns with potential long-term sustainment needs for specific aircraft.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The broader industry is characterized by high barriers to entry, significant R&D investment, and a concentrated number of large prime contractors. Spending in this area is driven by military readiness requirements and technological advancements. Comparable spending benchmarks would typically involve other contracts for similar specialized aircraft components or sustainment services within the Department of Defense.

Small Business Impact

The contract data indicates that small business participation is not a primary focus, as the award is not set aside for small businesses and the prime contractor is a large corporation. There is no explicit information on subcontracting plans for small businesses. This suggests that opportunities for small businesses may be limited to lower-tier supply chain roles, rather than direct prime contracting.

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 firm fixed-price contract type, which shifts some risk to the contractor. Transparency is limited by the 'not available for competition' designation. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Aircraft Parts Procurement
Naval Aviation Sustainment Contracts
Aerospace Manufacturing Contracts
Defense Contractor Support Services

Risk Flags

Limited Competition
Potential for Cost Overruns (inherent in complex manufacturing)
Sole Source Justification Scrutiny

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. MC, APP SERVER, & FCTDS #1

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 $8.2 million.

What is the period of performance?

Start: 2023-04-28. End: 2026-05-30.

What specific aircraft components are being procured under this contract, and what is their criticality to naval operations?

The provided data identifies the contract as being for 'MC, APP SERVER, & FCTDS #1,' which likely refers to specific components or systems related to mission computers, application servers, and potentially flight control or tactical data systems. Without further declassification or specific product codes, the exact nature of these parts remains proprietary. However, their procurement by the Department of the Navy suggests they are critical for the functioning and operational readiness of naval aircraft. The 'NOT AVAILABLE FOR COMPETITION' status further implies these are specialized, possibly proprietary, components for which Northrop Grumman is the sole or primary qualified manufacturer, essential for maintaining the performance and safety of specific naval aviation platforms.

How does the $8.2 million contract value compare to historical spending on similar aircraft parts by the Department of the Navy?

Comparing the $8.2 million contract value to historical spending requires access to detailed procurement databases and the ability to identify truly comparable items. The 'MC, APP SERVER, & FCTDS #1' designation is too generic for a direct historical comparison without further context. However, if these components are indeed critical, proprietary, or part of a new system, their initial procurement value might not have a direct historical parallel. If they are sustainment parts for existing platforms, the $8.2 million over three years (approximately $2.7 million annually) would need to be benchmarked against similar sustainment contracts for comparable aircraft systems. The limited competition aspect suggests that historical pricing from fully competed contracts might not be a relevant benchmark.

What are the primary risks associated with awarding a contract of this nature with limited competition?

The primary risk associated with awarding this contract under 'NOT AVAILABLE FOR COMPETITION' is the potential for inflated pricing. Without competitive pressure, the contractor may not be incentivized to offer the lowest possible price. This can lead to reduced value for taxpayer money. Another risk is a lack of innovation; limited competition can stifle the introduction of new technologies or more efficient solutions that might be offered by other potential suppliers. Furthermore, there's a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and increasing long-term costs if the supplier's pricing or performance deteriorates.

What is Northrop Grumman's track record with the Department of the Navy, particularly concerning contracts of similar value and type?

Northrop Grumman is a major defense contractor with extensive experience and a long-standing relationship with the Department of the Navy. They are involved in numerous large-scale programs, including shipbuilding, aerospace systems, and C4ISR capabilities. While specific data on their track record for 'MC, APP SERVER, & FCTDS #1' is not publicly available, their history with the Navy generally indicates a capacity to deliver complex systems and components. However, like many large defense contractors, they have faced scrutiny regarding contract performance, cost overruns, and pricing on various programs. A detailed review of their past performance ratings and any past performance issues on similar fixed-price contracts with the Navy would be necessary for a comprehensive assessment.

How does the firm fixed-price contract type influence the risk allocation between the government and Northrop Grumman for this contract?

The firm fixed-price (FFP) contract type significantly shifts the risk to Northrop Grumman. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This means that if Northrop Grumman's costs for manufacturing or delivering the aircraft parts exceed their estimates, the company absorbs those additional costs. Conversely, if their costs are lower than anticipated, they retain the profit. This structure incentivizes the contractor to manage their costs efficiently and perform the work within budget. For the government, the primary benefit is cost certainty, as the total price is fixed, barring any contract modifications or unforeseen circumstances that might trigger equitable adjustments.

Industry Classification

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

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

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: $8,189,448

Exercised Options: $8,189,448

Current Obligation: $8,189,448

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $2,594,203

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline