DoD's $29M Northrop Grumman contract for aircraft manufacturing shows limited competition and potential value concerns

Contract Overview

Contract Amount: $29,036,747 ($29.0M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2012-04-17

End Date: 2019-04-04

Contract Duration: 2,543 days

Daily Burn Rate: $11.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASE CAR TO ALLOW CAPTURE OF CPFF FUNDS

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $29.0 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: BASE CAR TO ALLOW CAPTURE OF CPFF FUNDS Key points: 1. Contract awarded via a sole-source mechanism, limiting price discovery and potentially increasing costs. 2. The contract's duration of over 2500 days suggests a long-term need for these services. 3. Performance context is limited due to the lack of competitive bidding. 4. Risk indicators include the sole-source award and the cost-plus-fixed-fee pricing structure. 5. Sector positioning within Aircraft Manufacturing (NAICS 336411) is significant, but specific details are sparse. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the lack of publicly available comparable data for similar sole-source aircraft manufacturing services. The Cost Plus Fixed Fee (CPFF) structure, while common for complex projects, can incentivize cost overruns if not managed rigorously. Without competitive bids, it's difficult to ascertain if the fixed fee and associated costs represent a fair market price. Further analysis would require access to detailed cost breakdowns and performance metrics.

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 approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates a direct award. The lack of competition means there was no opportunity for price negotiation through a bidding process, which can lead to higher costs for the government and taxpayers. The absence of multiple bidders limits the government's ability to leverage market forces for better pricing and innovation.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from competitive bidding processes. This can result in higher overall expenditure for the government.

Public Impact

The primary beneficiary of this contract is Northrop Grumman Systems Corp, a major defense contractor. The services delivered are related to aircraft manufacturing, crucial for national defense capabilities. The geographic impact is centered in California, where the contractor is located. Workforce implications include employment opportunities for skilled labor within the aerospace and defense sector at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Cost-Plus-Fixed-Fee (CPFF) contract type can lead to cost overruns if not closely monitored.
Lack of transparency regarding specific deliverables and performance metrics.
Absence of small business participation raises concerns about broader economic impact.
Long contract duration (over 7 years) requires sustained oversight.

Positive Signals

Awarded to a known, established defense contractor with existing capabilities.
Contract supports critical national defense requirements in aircraft manufacturing.
The fixed fee component provides some level of cost predictability compared to pure cost-reimbursement contracts.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Aircraft manufacturing, a sub-sector, is dominated by a few large, established players like Northrop Grumman. Government contracts are a substantial portion of revenue for these companies. Comparable spending benchmarks are difficult to establish for sole-source awards, but the overall defense aircraft manufacturing market is valued in the tens of billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside. The absence of specific subcontracting plans or goals mentioned in the provided data raises questions about the extent to which small businesses will benefit from this award. Without a dedicated focus on small business participation, opportunities for innovation and cost-effectiveness that small businesses often bring may be missed.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of cost, schedule, and performance is crucial. The Inspector General's office within the DoD would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is limited by the non-competitive award, making public scrutiny more challenging.

Related Government Programs

Defense Production Act Purchases
Aircraft Procurement, Air Force
Combat Vehicles and Related Equipment
Missiles, Guided Missiles and Related Propulsion and Parts

Risk Flags

Sole-source award limits competition.
Cost-plus-fixed-fee structure requires diligent oversight to control costs.
Lack of detailed performance metrics hinders value assessment.
Limited transparency on specific deliverables.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.0 million to NORTHROP GRUMMAN SYSTEMS CORP. BASE CAR TO ALLOW CAPTURE OF CPFF FUNDS

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 $29.0 million.

What is the period of performance?

Start: 2012-04-17. End: 2019-04-04.

What specific aircraft systems or components is this contract for?

The provided data indicates the contract is for 'Aircraft Manufacturing' under NAICS code 336411. However, it does not specify the exact aircraft systems, components, or platforms involved. This level of detail is often found in the contract's statement of work, which is not included in the summary data. Understanding the specific nature of the aircraft manufacturing (e.g., new production, upgrades, maintenance, specific aircraft models) is crucial for a comprehensive assessment of its strategic importance and cost justification.

What is the historical spending pattern for this specific contract or similar sole-source awards to Northrop Grumman for aircraft manufacturing?

The provided data shows a single base contract with a value of $29,036,746.78, awarded on April 17, 2012, and ending on April 4, 2019, with a duration of 2543 days. This suggests a single, long-term delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a standalone contract. Without access to the broader contract vehicle or historical award data for similar sole-source aircraft manufacturing efforts by Northrop Grumman, it is difficult to establish a comprehensive spending pattern. Further research into DoD's contract databases would be needed to identify trends in sole-source awards for this category.

How does the fixed fee in this Cost Plus Fixed Fee (CPFF) contract compare to industry standards for similar aircraft manufacturing services?

Determining the 'fairness' of the fixed fee in a CPFF contract requires detailed knowledge of the contractor's cost structure, the complexity of the work, and the profit margins typical for the specific type of aircraft manufacturing. The provided data does not include the fixed fee amount or the estimated cost base. Industry standards for fixed fees in defense contracts can vary widely, often ranging from 5% to 15% of the estimated cost, depending on risk and complexity. Without this granular data, a precise comparison is not possible. The sole-source nature further complicates benchmarking, as there's no competitive pressure to drive the fee down.

What are the key performance indicators (KPIs) and deliverables associated with this contract, and how has Northrop Grumman performed against them?

The provided summary data does not contain information on the specific Key Performance Indicators (KPIs) or deliverables for this contract. In a CPFF contract, performance is typically measured against a Statement of Work (SOW) that outlines technical requirements, delivery schedules, and quality standards. Northrop Grumman's performance against these would be documented in contract performance reports, which are not publicly available in this dataset. The lack of transparency regarding performance metrics makes it difficult to assess the contractor's effectiveness and the overall value delivered.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The justification for a sole-source award typically falls under specific exceptions outlined in federal acquisition regulations, such as the existence of only one responsible source, or in certain emergency situations. For a contract valued at nearly $30 million for aircraft manufacturing, common justifications might include unique technical capabilities possessed solely by Northrop Grumman, proprietary technology, or a requirement for compatibility with existing systems where only one vendor can provide the necessary solution. The specific justification would be documented in a Justification and Approval (J&A) document, which is usually made public but is not included in the provided data.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

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: $29,036,747

Exercised Options: $29,036,747

Current Obligation: $29,036,747

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $595,101

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline