DoD awards Northrop Grumman $305.9M for aircraft engine components, raising cost concerns

Contract Overview

Contract Amount: $30,593,042 ($30.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2003-12-19

End Date: 2009-05-15

Contract Duration: 1,974 days

Daily Burn Rate: $15.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200505!000185!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD35 !09 !20050210!20050209!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000000837212!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !5!B!S!C! ! !20200930!B! ! !N!Z!D!N!R!1!001!N!1A!A!Y!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 $30.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200505!000185!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD35 !09 !20050210!20050209!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS … Key points: 1. Significant contract value for aircraft engine components. 2. Sole-source award to Northrop Grumman raises competition questions. 3. Cost-plus award fee structure may incentivize higher spending. 4. Long contract duration (1974 days) increases risk exposure.

Value Assessment

Rating: questionable

The contract's cost-plus award fee structure, combined with a sole-source award, suggests potential for cost overruns. Benchmarking against similar aircraft engine component contracts is difficult without competitive data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, limiting price discovery and potentially leading to higher costs for taxpayers. The lack of competition is a significant concern.

Taxpayer Impact: The absence of competition for a contract of this magnitude likely results in a higher cost to taxpayers than a competitively awarded contract.

Public Impact

Taxpayers may be overpaying due to lack of competition. Potential for cost overruns due to contract type and duration. Dependence on a single supplier for critical aircraft components. Long-term commitment could limit future technological advancements.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Sole-source award
Cost-plus award fee
Long contract duration
High contract value

Positive Signals

Established supplier relationship
Potential for specialized expertise

Sector Analysis

This contract falls within the Defense sector, specifically Aircraft Manufacturing. Spending on aircraft engines and components is substantial, but competitive bidding is crucial for cost efficiency.

Small Business Impact

This contract was awarded to a large corporation, Northrop Grumman Systems Corp. There is no indication of small business participation in this specific award.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential waste. The cost-plus award fee structure requires diligent monitoring of performance and costs.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Cost-plus award fee structure
Long contract duration
High contract value
Potential for cost overruns
Limited price transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.6 million to NORTHROP GRUMMAN SYSTEMS CORP. 200505!000185!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD35 !09 !20050210!20050209!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000000837212!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !5!B!S!C! ! !202

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 $30.6 million.

What is the period of performance?

Start: 2003-12-19. End: 2009-05-15.

What justification was provided for the sole-source award, and were alternative sources considered?

The provided data indicates the contract was 'NOT COMPETED'. A thorough review of the justification for this sole-source award is essential. Agencies must demonstrate that only one responsible source can satisfy agency requirements or that a compelling urgency dictates otherwise. Without this justification, it's difficult to assess if taxpayer funds were used efficiently or if competition was improperly excluded.

How does the cost-plus award fee structure impact the final price and incentivize performance?

Cost-plus award fee contracts allow the contractor to recover costs plus a fee that is adjusted based on performance. While intended to incentivize meeting or exceeding performance goals, this structure can also lead to higher overall costs if not tightly managed. The 'award' portion requires clear metrics and rigorous evaluation to ensure it truly reflects exceptional performance rather than just cost incurrence.

What is the long-term strategic impact of awarding such a significant contract for aircraft components on a sole-source basis?

Sole-source awards, especially for critical components like aircraft engines, can create long-term dependencies and stifle innovation. It limits the government's ability to benefit from competitive advancements and potentially lower prices from emerging suppliers. This approach may also hinder the development of a broader industrial base for these essential parts, impacting future readiness and cost-effectiveness.

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

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