Northrop Grumman awarded $362.7M for aircraft engines, with a significant portion for TF-39 components

Contract Overview

Contract Amount: $22,948,736 ($22.9M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2003-01-15

End Date: 2008-12-31

Contract Duration: 2,177 days

Daily Burn Rate: $10.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200306!000166!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD31 !20030115!20040114!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000006000030!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !3BSJ!TF-39 !336412!E! !5!A!S! ! ! !99990909!B!B!Y!N!Z!D!U!R!1!001!N!1G!Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $22.9 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200306!000166!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD31 !20030115!20040114!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 aircraft engines and spares, specifically TF-39 components. 2. The contract was not competed, raising questions about potential price overruns. 3. A Cost Plus Award Fee (CPAF) structure suggests performance incentives but also potential for increased costs. 4. The contract duration is substantial, spanning over 7 years. 5. The primary contractor, Northrop Grumman Systems Corp, has a significant presence in aerospace manufacturing. 6. The contract is managed by the Defense Contract Management Agency.

Value Assessment

Rating: questionable

The total award value of $362.7 million for aircraft engines and spares, particularly TF-39 components, requires careful benchmarking against similar sole-source procurements. Without competition, it is difficult to ascertain if this price represents fair market value. The Cost Plus Award Fee (CPAF) contract type introduces variability in the final cost, as it includes incentives for performance. This structure can lead to costs exceeding initial estimates if performance targets are aggressively pursued or if the base cost is not well-defined. Further analysis of the cost breakdown and historical pricing for TF-39 components would be necessary to provide a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific product or service is only available from a single source, or in cases of urgent need where competition is not feasible. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process. This can potentially lead to higher prices than might be achieved in a fully competed scenario.

Taxpayer Impact: For taxpayers, a sole-source award means that the government may be paying a premium for goods or services, as the contractor faces less pressure to offer the most competitive pricing. This reduces the overall value for money achieved with public funds.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically units utilizing aircraft equipped with TF-39 engines. The contract delivers critical aircraft engines and spare parts essential for maintaining operational readiness. The geographic impact is centered around Northrop Grumman's facilities in Palmdale, California, and potentially extends to military bases receiving the components. Workforce implications include continued employment for engineers, technicians, and manufacturing personnel at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Cost Plus Award Fee structure can result in cost overruns.
Long contract duration increases exposure to potential cost escalations.
Sole-source nature limits transparency in pricing.

Positive Signals

Contract awarded to a major aerospace manufacturer with established capabilities.
Focus on critical aircraft engine components ensures operational readiness.
Award fee structure provides some incentive for contractor performance.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft engines and related components. The market for such specialized parts is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Major defense contractors like Northrop Grumman dominate this space. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition contracts for similar high-value, specialized aerospace components within the Department of Defense.

Small Business Impact

The data indicates that this contract was not competed and there is no explicit mention of small business set-asides or subcontracting plans. Given the nature of the prime contractor and the specialized components, it is possible that small businesses may be involved as subcontractors, but this is not detailed in the provided information. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large sole-source contracts can sometimes limit opportunities for smaller firms to enter the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Award Fee (CPAF) structure implies performance metrics and award criteria that would be monitored. Transparency is limited due to the sole-source nature, but contract modifications, payment reports, and performance reviews would be subject to internal government oversight and potentially Inspector General reviews if specific concerns arise regarding fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Procurement
Aerospace Component Manufacturing
Defense Logistics and Sustainment
TF-39 Engine Support Contracts

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of transparency in pricing
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.9 million to NORTHROP GRUMMAN SYSTEMS CORP. 200306!000166!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD31 !20030115!20040114!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000006000030!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !3BSJ!TF-39 !336412!E! !5!A!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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $22.9 million.

What is the period of performance?

Start: 2003-01-15. End: 2008-12-31.

What is the historical spending pattern for TF-39 engine components with Northrop Grumman or its predecessors?

Analyzing historical spending on TF-39 engine components with Northrop Grumman (and potentially its acquired entities) is crucial for understanding the baseline cost and identifying any significant deviations in the current $362.7 million award. Without specific historical data, it's difficult to determine if this contract represents an increase or decrease in expenditure for these parts. A review of past contracts, including their type (e.g., fixed-price, cost-plus), duration, and total value, would provide context. For instance, if previous contracts for similar quantities of TF-39 components were significantly lower, it would raise concerns about the current pricing, especially given the sole-source nature of this award. Conversely, if historical costs have steadily risen due to inflation, technological upgrades, or supply chain challenges, the current award might be more justifiable, though still requiring scrutiny due to the lack of competition.

How does the Cost Plus Award Fee (CPAF) structure typically impact final costs for similar defense contracts?

The Cost Plus Award Fee (CPAF) structure is designed to incentivize contractor performance by allowing the contractor to recover allowable costs plus a fee that is composed of a base fee (typically a small percentage of estimated costs) and an award fee. The award fee is determined by the government based on the contractor's performance against pre-defined criteria. While CPAF can encourage contractors to meet or exceed performance targets, it also introduces uncertainty regarding the final cost. If the contractor performs exceptionally well, the total fee (and thus the total cost) can be significantly higher than under a fixed-price contract. Conversely, poor performance can result in a reduced award fee. For taxpayers, the risk lies in the potential for costs to escalate beyond initial estimates, especially if the performance criteria are not tightly defined or if the base cost is not rigorously scrutinized. Benchmarking CPAF contracts against fixed-price contracts for similar services is essential to assess value for money.

What are the specific performance criteria used to determine the award fee for this contract?

The specific performance criteria used to determine the award fee for this contract are not detailed in the provided data. In a CPAF contract, these criteria are typically established in the contract's "schedule" or "award fee plan." Common criteria for aerospace component contracts might include on-time delivery, quality of parts (defect rates), adherence to technical specifications, cost control within estimates, and responsiveness to government requests. The government's evaluation of the contractor's performance against these criteria directly influences the amount of award fee earned. Without knowing these specific metrics, it's impossible to fully assess the incentive structure's effectiveness or the potential for the contractor to maximize their fee. A thorough review would require access to the contract's detailed performance work statement and award fee plan.

What is Northrop Grumman's track record with sole-source defense contracts of similar value and complexity?

Northrop Grumman has a long history of securing large, sole-source, and competitively awarded contracts within the defense sector, given its position as a major aerospace and defense prime contractor. Analyzing their track record with similar sole-source contracts is essential for assessing risk and value. This would involve examining past performance on contracts for aircraft engines, complex systems, or other high-value components where competition was limited. Key areas to investigate include their history of cost overruns, delivery performance, quality issues, and overall customer satisfaction ratings (e.g., CPARS - Contractor Performance Assessment Reporting System). A pattern of successful execution on comparable sole-source deals might mitigate some concerns, while a history of issues could heighten them, particularly when evaluating the $362.7 million award for TF-39 components.

Are there alternative sources or potential future competitors for TF-39 engine components?

The determination of this contract as sole-source suggests that, at the time of award, Northrop Grumman was considered the only viable source for these specific TF-39 engine components. This could be due to proprietary technology, unique manufacturing processes, existing infrastructure, or specific certifications required by the military. However, assessing potential future competitors or alternative solutions is important for long-term strategy. This might involve investigating whether other companies possess the capability to manufacture these parts, or if the engine itself is nearing obsolescence, potentially leading to different sustainment strategies. Understanding the long-term market dynamics for TF-39 components could inform future procurement decisions and potentially open avenues for competition or more cost-effective solutions down the line.

What is the projected sustainment cost and lifespan for the aircraft utilizing TF-39 engines?

The projected sustainment cost and lifespan for aircraft utilizing TF-39 engines are critical factors in evaluating the long-term value of this $362.7 million contract. The TF-39 is an older engine, primarily associated with the C-5 Galaxy transport aircraft. Understanding the remaining service life of these aircraft and the associated sustainment costs (including parts, maintenance, and upgrades) provides context for the ongoing investment in TF-39 components. If the aircraft fleet has a limited remaining lifespan, the justification for a large, multi-year contract for components might be questioned. Conversely, if the C-5 fleet is expected to remain operational for many more years, ensuring a reliable supply of TF-39 parts is essential for readiness. This analysis requires data on fleet size, operational tempo, maintenance schedules, and projected retirement dates.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

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, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline