DoD's $46.7M Northrop Grumman C-130 PBL Contract Lacks Competition, Raises Cost Concerns

Contract Overview

Contract Amount: $46,714,423 ($46.7M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2013-01-01

End Date: 2015-03-31

Contract Duration: 819 days

Daily Burn Rate: $57.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY13 PERFORMANCE BASED LOGISTICS (PBL) CONTRACTOR INVENTORY CONTROL POINT (C-ICP), CLASSIFIED AIRCRAFT COMPONENT SUPPORT (CACS), AND ADAPTABLE COMMUNICATION SUITE (ACS) SUSTAINMENT.

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY13 PERFORMANCE BASED LOGISTICS (PBL) CONTRACTOR INVENTORY CONTROL POINT (C-ICP), CLASSIFIED AIRCRAFT COMPONENT SUPPORT (CACS), AND ADAPTABLE COMMUNICATION SUITE (ACS) SUSTAINMENT. Key points: 1. The contract for C-130 sustainment was not competed, limiting price discovery. 2. Northrop Grumman is the sole provider, indicating a potential lack of market competition. 3. The firm fixed-price contract type offers some cost control, but the absence of competition is a risk. 4. Spending is concentrated in the Aircraft Manufacturing sector, with a significant value.

Value Assessment

Rating: questionable

The contract value of $46.7M for a 2-year period is substantial. Without competitive benchmarking, it's difficult to assess if the pricing is optimal compared to similar sustainment contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, likely due to the specialized nature of sustainment for classified aircraft components and adaptable communication suites. This sole-source approach limits opportunities for price reduction through competitive bidding.

Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these sustainment services, as there was no market pressure to drive down costs.

Public Impact

Ensures continued operational readiness for critical C-130 aircraft. Supports complex sustainment needs for classified components, requiring specialized expertise. Potential for higher costs due to sole-source award impacts overall defense budget allocation. Long-term sustainment contracts can lock in providers, potentially limiting future cost-saving opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Potential for inflated pricing

Positive Signals

Firm fixed-price contract
Essential sustainment for critical aircraft

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically focusing on sustainment for specialized C-130 components. Spending benchmarks in this niche area are hard to establish due to the classified nature and limited providers.

Small Business Impact

The data indicates no specific set-aside for small businesses. Given the sole-source nature and specialized requirements, it is unlikely that small businesses were significantly involved in this particular contract.

Oversight & Accountability

The award was managed by the Defense Contract Management Agency. Oversight would focus on contract performance and adherence to terms, but the lack of competition limits oversight on price reasonableness.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award limits price competition.
Potential for above-market pricing.
Lack of transparency in cost build-up.
Dependency on a single contractor for critical sustainment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to NORTHROP GRUMMAN SYSTEMS CORP. CY13 PERFORMANCE BASED LOGISTICS (PBL) CONTRACTOR INVENTORY CONTROL POINT (C-ICP), CLASSIFIED AIRCRAFT COMPONENT SUPPORT (CACS), AND ADAPTABLE COMMUNICATION SUITE (ACS) SUSTAINMENT.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $46.7 million.

What is the period of performance?

Start: 2013-01-01. End: 2015-03-31.

What is the justification for the sole-source award, and were alternative competitive strategies considered?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or critical national security needs where only one contractor can fulfill the requirement. For this contract, the classified nature of components and specialized sustainment for the C-130 likely led to this determination. However, a thorough review would be needed to confirm if alternative, phased competition or market research was adequately explored to ensure the best value for the government.

How does the lack of competition impact the long-term cost-effectiveness of this sustainment contract?

The absence of competition inherently removes market pressure that drives down prices. While a firm fixed-price contract provides cost certainty for the government, the initial price may be higher than if multiple bidders competed. Over the contract's duration, this could lead to significant overspending compared to a competitively awarded contract, impacting the overall cost-effectiveness of the C-130 sustainment program.

What mechanisms are in place to ensure performance and value despite the sole-source nature of the contract?

Despite the sole-source award, performance and value are typically managed through robust contract administration and oversight. This includes detailed performance metrics, quality assurance surveillance plans, and regular reviews of contractor deliverables. The firm fixed-price structure also incentivizes the contractor to perform efficiently to maintain profitability. However, the government's leverage in negotiating future terms or pricing is diminished without competitive alternatives.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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: $46,714,423

Exercised Options: $46,714,423

Current Obligation: $46,714,423

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline