Northrop Grumman awarded $22.8M for Air Force aircraft manufacturing support, a sole-source contract

Contract Overview

Contract Amount: $22,844,087 ($22.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2015-04-01

End Date: 2019-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $15.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF CY15-16 B-2 PERFORMANCE BASED LOGISTICS (PBL) INTERIM CONTRACTOR SUPPORT (ICS) DELIVERY ORDER

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $22.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF CY15-16 B-2 PERFORMANCE BASED LOGISTICS (PBL) INTERIM CONTRACTOR SUPPORT (ICS) DELIVERY ORDER Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value. 2. Performance-based logistics support indicates a focus on outcomes rather than specific deliverables. 3. The contract duration of four years suggests a long-term need for these services. 4. Limited competition may lead to higher costs for taxpayers compared to a fully competed contract. 5. The contractor, Northrop Grumman, is a major defense industry player with extensive experience. 6. The contract falls under aircraft manufacturing, a critical sector for national defense.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable bids. The cost-plus fixed-fee structure allows for cost reimbursement plus a fixed fee, which can incentivize cost overruns if not managed tightly. Given the lack of competition, it's difficult to assess if the pricing reflects fair market value. Further analysis would require access to the contractor's cost data and profit margins.

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 among multiple vendors. This typically occurs when only one vendor possesses the necessary capabilities, technology, or is deemed essential for national security reasons. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure the awarded price is reasonable.

Public Impact

The primary beneficiaries are the U.S. Air Force, receiving critical support for aircraft manufacturing. Services delivered include performance-based logistics and interim contractor support, ensuring operational readiness. The geographic impact is primarily within California, where the contractor is located. Workforce implications include the potential for continued employment for specialized personnel within Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus fixed-fee contracts can incentivize higher spending.
Limited transparency into contractor's cost structure due to sole-source nature.

Positive Signals

Contractor has significant experience in defense manufacturing.
Performance-based logistics aims for improved outcomes and efficiency.
Long-term contract provides stability for critical support services.

Sector Analysis

This contract operates within the aerospace and defense manufacturing sector, specifically focusing on aircraft. This sector is characterized by high technological complexity, significant government investment, and a limited number of large prime contractors. Spending in this area is often driven by national security requirements and long-term sustainment needs for complex weapon systems. Comparable spending benchmarks would typically involve other sustainment and manufacturing support contracts for major aircraft platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, there are no direct subcontracting implications for small businesses mandated by this specific award. However, the prime contractor may engage small businesses as subcontractors, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and potentially the Department of Defense's Inspector General. Given it's a sole-source award, rigorous oversight is crucial to ensure cost reasonableness and performance. Transparency may be limited due to the nature of the award, but contract performance reviews and financial audits are standard oversight mechanisms.

Related Government Programs

Aircraft Sustainment Programs
Defense Logistics Support
Aerospace Manufacturing Contracts
Air Force Readiness Initiatives

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.8 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF CY15-16 B-2 PERFORMANCE BASED LOGISTICS (PBL) INTERIM CONTRACTOR SUPPORT (ICS) DELIVERY ORDER

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $22.8 million.

What is the period of performance?

Start: 2015-04-01. End: 2019-03-31.

What is Northrop Grumman's track record with similar performance-based logistics contracts for the Air Force?

Northrop Grumman has a long history of supporting U.S. military aircraft, including performance-based logistics (PBL) arrangements. Their experience spans various platforms, where PBL aims to incentivize contractor performance by linking payment to achieving specific, measurable outcomes like aircraft availability or mission capable rates. While specific details of past PBL contracts are often proprietary, Northrop Grumman's extensive involvement in defense sustainment suggests a substantial track record. Analyzing their past performance on similar contracts would involve reviewing publicly available contract awards, performance reports (if accessible), and any documented issues or successes related to meeting availability or readiness metrics.

How does the cost-plus fixed-fee (CPFF) pricing structure compare to other contract types for aircraft manufacturing support?

The Cost-Plus Fixed-Fee (CPFF) structure is common for complex projects where the scope is not fully defined at the outset, or where innovation and research are involved, such as in aircraft manufacturing support. It allows the contractor to recover all allowable costs plus a predetermined fixed fee, representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as costs can fluctuate. However, it can be advantageous when risks are high or requirements are evolving. For sustainment and logistics, other models like Performance-Based Contracts (PBCs) or PBLs are increasingly favored as they tie payment more directly to outcomes, potentially offering better value for money than traditional cost-reimbursement structures if well-defined.

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

The primary risks associated with a sole-source award for critical aircraft manufacturing support include potential for inflated pricing due to the absence of competition, reduced incentive for the contractor to innovate or improve efficiency beyond contractual minimums, and a lack of transparency into cost structures. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, if the sole-source justification is weak or circumstances change, the government may be overpaying for services that could be obtained more competitively elsewhere. Robust oversight and negotiation are critical to mitigate these risks.

How has spending on aircraft manufacturing support by the Department of the Air Force evolved over the past five years?

Analyzing the evolution of spending on aircraft manufacturing support by the Department of the Air Force over the past five years requires access to detailed historical spending data, often categorized by specific programs, contract types, and service providers. Generally, spending in this area tends to be substantial and relatively stable, driven by the need to maintain aging fleets and introduce new platforms. Factors influencing spending include geopolitical events, modernization priorities, and budget allocations. While this specific contract represents a portion of that spending, a broader trend analysis would involve aggregating data across numerous contracts within the 'Aircraft Manufacturing' and 'Aircraft Support' categories over the specified period.

What are the implications of this contract's duration (four years) on long-term budget planning for the Air Force?

A four-year contract duration for aircraft manufacturing support implies a significant, multi-year commitment for the Air Force. This provides budget predictability for this specific service line, allowing for more stable long-term financial planning. However, it also means that funds are allocated for this period, potentially reducing flexibility to reallocate resources if priorities shift or if more cost-effective solutions emerge. The fixed duration necessitates careful consideration during the initial award to ensure the terms remain advantageous throughout the contract period and that contingency plans are in place for post-contractual needs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,844,087

Exercised Options: $22,844,087

Current Obligation: $22,844,087

Subaward Activity

Number of Subawards: 24

Total Subaward Amount: $20,480,556

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline