Northrop Grumman awarded $336M for aircraft structural component repair, with limited competition

Contract Overview

Contract Amount: $33,624,253 ($33.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2003-01-01

End Date: 2008-06-30

Contract Duration: 2,007 days

Daily Burn Rate: $16.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200307!000214!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD30 !20030101!20031231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000011787500!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !811219!E! !5!B!S! ! ! !99990909!B! ! !N!Z!D!N!R!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $33.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200307!000214!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD30 !20030101!20031231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS A… Key points: 1. Contract awarded for maintenance and repair of aircraft structural components. 2. Significant value, exceeding $336 million, allocated for this service. 3. Limited competition suggests potential for higher costs and reduced innovation. 4. Contract duration spans over five years, indicating a long-term need. 5. Geographic focus on Palmdale, California, a hub for aerospace manufacturing. 6. Contractor has extensive experience in aircraft manufacturing and support.

Value Assessment

Rating: fair

The contract value of over $336 million for aircraft structural component repair is substantial. Benchmarking this against similar contracts is challenging without more specific details on the scope of work and the types of aircraft involved. However, the limited competition aspect raises concerns about whether the government achieved the best possible value. The pricing structure, a Cost Plus Award Fee (CPAF), can incentivize performance but also carries inherent risks of cost overruns if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not fully and openly competed, falling under a 'limited' competition category. Specific details on the solicitation process and the number of bidders are not provided in the data. Limited competition often arises when a specific contractor possesses unique capabilities or when the requirement is a follow-on to a previous contract. This can restrict price discovery and potentially lead to less favorable terms for the government.

Taxpayer Impact: Limited competition means taxpayers may not benefit from the most competitive pricing achievable through a broader bidding process. This could translate to higher overall expenditure for the services rendered.

Public Impact

The Department of the Air Force benefits from the maintenance and repair of its aircraft structural components, ensuring operational readiness. Services delivered include the repair and maintenance of structural components for aircraft, specifically noted for the B-2 Stealth program. The geographic impact is concentrated in Palmdale, California, supporting the local aerospace industry and workforce. Workforce implications include employment opportunities for skilled technicians and engineers involved in aircraft repair and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher prices and reduced incentive for cost efficiency.
Cost Plus Award Fee contracts require robust oversight to prevent cost overruns.
Lack of transparency in the limited competition process hinders public scrutiny.
Potential for vendor lock-in due to specialized nature of aircraft structural repair.

Positive Signals

Contract awarded to a known entity with significant experience in aerospace.
Focus on critical aircraft structural components ensures fleet readiness.
Long-term contract provides stability for both the government and the contractor.
Potential for high-quality service delivery due to contractor's expertise.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract for aircraft structural component repair fits within the broader 'Aircraft Manufacturing' industry (NAICS 336411). Spending in this sector is often driven by national security requirements and the need to maintain aging fleets. Comparable spending benchmarks are difficult to establish without detailed scope, but large-scale structural repair contracts for major defense platforms can run into hundreds of millions of dollars.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (SB is 'N'). There is no explicit information regarding subcontracting plans for small businesses. Given the specialized nature of aircraft structural repair for advanced platforms like the B-2, it is possible that the prime contractor relies on a limited number of specialized suppliers, which may or may not include small businesses. Further investigation into subcontracting reports would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Award Fee (CPAF) contract, performance metrics and cost controls are crucial. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse. Transparency is moderate, as the contract details and performance are not fully public.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Procurement
B-2 Bomber Program Support
Air Force Logistics Command

Risk Flags

Limited competition
Cost Plus Award Fee contract type
Potential for cost overruns without strict oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.6 million to NORTHROP GRUMMAN SYSTEMS CORP. 200307!000214!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD30 !20030101!20031231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000011787500!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !811219!E! !5!B!S! ! ! !99990909!B

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 $33.6 million.

What is the period of performance?

Start: 2003-01-01. End: 2008-06-30.

What is the specific scope of work for 'MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS' under this contract, and how does it compare to industry standards for similar aircraft?

The data indicates the contract covers 'MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS' for 'OTHER AIRCRAFT EQUIPMENT', specifically mentioning the 'B-2 STEALTH' program. This suggests a focus on the structural integrity and repair of critical airframe components for a highly specialized and advanced aircraft. Industry standards for such repairs involve rigorous inspection, material testing, component replacement or refurbishment, and extensive quality assurance protocols. Given the B-2's advanced composite materials and stealth coatings, the scope likely includes specialized techniques and materials beyond standard aircraft maintenance. A detailed statement of work (SOW) would be necessary to fully compare this to industry benchmarks, but the nature of the platform implies a high degree of technical complexity and stringent quality requirements.

How does the awarded amount of $336 million compare to historical spending on similar maintenance and repair services for the B-2 program or comparable aircraft?

The $336 million awarded amount represents a significant investment in maintaining the structural integrity of aircraft, particularly for a platform as complex as the B-2. Without access to historical spending data specifically for B-2 structural repairs or detailed breakdowns of maintenance costs over its lifecycle, a direct comparison is difficult. However, the duration of the contract (from 2003 to 2008, with an initial award in 2003 and an end date in 2008) suggests a substantial, multi-year effort. Large-scale structural repair and depot-level maintenance for advanced military aircraft can indeed cost hundreds of millions of dollars over several years, especially when factoring in specialized labor, materials, and the need to maintain operational readiness for a limited fleet.

What are the key performance indicators (KPIs) and award fee criteria used in this Cost Plus Award Fee (CPAF) contract to assess Northrop Grumman's performance?

The provided data identifies the contract type as 'COST PLUS AWARD FEE' (CPAF), but it does not detail the specific Key Performance Indicators (KPIs) or award fee criteria. In a CPAF structure, the contractor is reimbursed for allowable costs plus a fee that is composed of a fixed base fee and an award amount. The award amount is contingent upon meeting or exceeding certain performance objectives. For aircraft structural repair, typical KPIs might include on-time delivery of repaired components, adherence to quality standards (e.g., defect rates, rework percentages), cost control within projected budgets, and responsiveness to urgent repair needs. The specific criteria would be outlined in the contract's SOW and performance requirements documents, allowing the government to evaluate the contractor's performance and determine the level of award fee earned.

Given the limited competition, what mechanisms are in place to ensure Northrop Grumman remains incentivized to provide cost-effective solutions and high-quality repairs?

The Cost Plus Award Fee (CPAF) structure itself is designed to incentivize performance. While costs are reimbursed, the 'award' portion of the fee is earned based on exceeding performance expectations. To ensure cost-effectiveness and quality under limited competition, the government relies heavily on robust contract administration and oversight. This includes detailed monitoring of costs, performance metrics, and adherence to the Statement of Work (SOW). The government contracting officer and technical representatives play a critical role in managing the relationship, ensuring deliverables meet specifications, and potentially negotiating future contract terms based on demonstrated performance. Furthermore, the threat of negative past performance reviews can serve as a powerful incentive for future contracts.

What is the significance of the contract being awarded to Northrop Grumman Systems Corporation, and what is their track record with similar defense contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in aerospace and defense systems, including the development and manufacturing of advanced aircraft like the B-2 bomber. Awarding this contract to them is significant because they possess intimate knowledge of the B-2's design, materials, and manufacturing processes, which is crucial for structural repair. Their track record with similar defense contracts is generally strong, characterized by their involvement in complex, high-value programs. They have a history of performing maintenance, repair, and overhaul (MRO) services for various military platforms. However, like any large contractor, they have also faced scrutiny and challenges on specific contracts. Their established presence and expertise in this niche make them a logical, albeit limited, choice for such specialized work.

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

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline