DoD's $23.1M Northrop Grumman Contract for Aircraft Manufacturing Lacks Competition

Contract Overview

Contract Amount: $23,171,550 ($23.2M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2013-02-15

End Date: 2015-12-31

Contract Duration: 1,049 days

Daily Burn Rate: $22.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CY13 INTERIM CONTRACT SUPPORT

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $23.2 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY13 INTERIM CONTRACT SUPPORT Key points: 1. Significant contract value awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing. 3. Aircraft manufacturing sector often involves complex, high-value contracts. 4. Limited transparency due to non-competitive award.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure, combined with a lack of competition, makes it difficult to benchmark pricing effectively against similar contracts. Without competitive bids, there's a higher risk of the awarded price not reflecting the best value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This method bypasses the price discovery benefits of a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: The absence of competition may result in taxpayers paying more than necessary for these aircraft manufacturing services.

Public Impact

Taxpayers may be overpaying due to the lack of competitive bidding. Limited visibility into the justification for a sole-source award. Potential for reduced innovation if competition is consistently avoided.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of small business participation

Positive Signals

Awarded to a known defense contractor

Sector Analysis

This contract falls within the aircraft manufacturing sector, a critical area for national defense. Spending in this sector is typically high-value and requires specialized capabilities, making competition important for cost control.

Small Business Impact

The data indicates no small business participation in this contract. Larger, sole-source awards often exclude small businesses, limiting opportunities for these entities within the defense supply chain.

Oversight & Accountability

The non-competitive nature of this award warrants scrutiny to ensure proper justification and adherence to procurement regulations. Oversight is needed to confirm the necessity of a sole-source approach.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Sole-source award justification unclear
Cost-plus contract type may inflate costs
No small business participation noted
Potential for reduced contractor incentive for cost control

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.2 million to NORTHROP GRUMMAN SYSTEMS CORP. CY13 INTERIM CONTRACT SUPPORT

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 $23.2 million.

What is the period of performance?

Start: 2013-02-15. End: 2015-12-31.

What was the specific justification for awarding this contract on a sole-source basis rather than through a competitive process?

The justification for a sole-source award typically involves factors such as unique capabilities, urgent need, or lack of alternative sources. Without access to the specific documentation, it's impossible to determine the precise rationale. However, the absence of competition inherently raises questions about whether alternatives were thoroughly explored or if market research was adequate.

How does the Cost Plus Fixed Fee structure impact the government's risk and the contractor's incentive for cost efficiency in this contract?

A Cost Plus Fixed Fee (CPFF) contract reimburses the contractor for allowable costs plus a fixed fee representing profit. While the fee is fixed, the contractor has less incentive to control costs compared to fixed-price contracts, as increased costs directly translate to higher overall payment. The government bears the risk of cost overruns beyond the negotiated allowable costs.

What is the potential long-term impact on aircraft manufacturing costs and innovation if sole-source awards become a common practice for similar needs?

A trend towards sole-source awards in aircraft manufacturing could stifle innovation and lead to persistently higher costs. Without competitive pressure, contractors may have reduced motivation to develop more efficient processes or technologies. This can also create barriers for new entrants and limit the government's access to potentially more cost-effective solutions from a wider range of suppliers.

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: $23,171,550

Exercised Options: $23,171,550

Current Obligation: $23,171,550

Subaward Activity

Number of Subawards: 65

Total Subaward Amount: $42,716,943

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline