DoD's $63.5M aircraft structural component repair contract awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $63,560,705 ($63.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2003-12-30

End Date: 2008-12-31

Contract Duration: 1,828 days

Daily Burn Rate: $34.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200403!000090!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD37 ! !20031230!20060103!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000010141811!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !5!B!S! ! ! !99990909!B! ! !N!Z!D!N!J!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $63.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200403!000090!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD37 ! !20031230!20060103!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS … Key points: 1. Significant investment in aircraft structural component repair, highlighting the importance of maintaining aging fleets. 2. Sole-source award raises questions about potential overpricing and lack of market-driven cost efficiencies. 3. Long contract duration (5 years) suggests a sustained need for these specialized repair services. 4. Geographic concentration of contractor in California may indicate limited regional repair capabilities or specific expertise. 5. The 'Other Aircraft Equipment' PSC code suggests a broad scope, potentially encompassing various aircraft types. 6. Lack of competition is a key risk indicator for value for money.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable contract data for similar specialized aircraft structural component repairs. The absence of competition means there's no direct market price discovery. Without competitive bids, it's difficult to ascertain if the $63.5 million represents a fair market price or if there's potential for cost savings through competitive bidding. The contract's value is substantial, underscoring the need for robust justification for its non-competitive award.

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. This typically occurs when only one responsible source is available or authorized by statute. The lack of competition means that potential alternative providers were not considered, which can limit price discovery and potentially lead to higher costs for the government. The absence of multiple bidders prevents a direct comparison of capabilities and pricing in the open market.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, the government cannot be assured it received the best possible price for these critical aircraft repair services.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, ensuring the operational readiness of aircraft. Services delivered include the maintenance and repair of aircraft structural components, crucial for flight safety and longevity. The geographic impact is primarily centered around the contractor's location in Palmdale, California, though the repaired components support Air Force assets nationwide. Workforce implications include employment for specialized technicians and engineers at Northrop Grumman's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Long contract duration without competition could lead to complacency or reduced incentive for cost efficiency.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in due to specialized nature of repairs.

Positive Signals

Contract awarded to a known, large defense contractor with established capabilities.
Ensures continued maintenance of critical aircraft structural components, supporting operational readiness.
Long-term contract provides stability for essential repair services.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, specialized technical expertise, and significant government procurement. Contracts for aircraft maintenance and repair are a substantial segment of this market, driven by the need to maintain aging fleets and ensure operational readiness. Northrop Grumman is a major player in this industry. Comparable spending benchmarks for aircraft structural repair can vary widely based on aircraft type, component complexity, and service level agreements, but large-scale sustainment contracts often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to Northrop Grumman. There is no explicit information regarding subcontracting opportunities for small businesses within this specific award. The lack of competition may limit opportunities for small businesses that could potentially offer specialized repair services if the contract were competed.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and financial management regulations. Accountability measures would be tied to contract performance clauses and delivery schedules. Transparency is limited due to the sole-source nature of the award, with the justification for this approach being key to understanding oversight. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Aircraft Component Repair Services
Aerospace Sustainment Contracts
Defense Maintenance and Repair
Air Force Logistics and Maintenance

Risk Flags

Sole-source award
Lack of competition
Long contract duration without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.6 million to NORTHROP GRUMMAN SYSTEMS CORP. 200403!000090!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD37 ! !20031230!20060103!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000010141811!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !5!B!S! ! ! !999

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 $63.6 million.

What is the period of performance?

Start: 2003-12-30. End: 2008-12-31.

What specific justification was provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed in the data snippet, sole-source awards are typically justified under circumstances such as: only one responsible source being available; urgent and compelling needs where competition is not feasible; or when a specific national security interest dictates a sole provider. For a contract of this magnitude and duration, a detailed justification would typically be required, outlining why other qualified contractors could not fulfill the requirement and the rationale for selecting Northrop Grumman exclusively. This justification is crucial for understanding the necessity of foregoing a competitive process and ensuring taxpayer funds are used appropriately.

How does the $63.5 million total value compare to similar aircraft structural repair contracts?

Direct comparison of the $63.5 million total value to similar aircraft structural repair contracts is difficult without more specific details on the types of components repaired and the scope of services. However, for major defense contractors like Northrop Grumman, large sustainment and repair contracts for complex aircraft systems frequently fall within this range or exceed it. The value suggests a significant scope of work, likely encompassing a substantial portion of the Air Force's needs for these specific structural components over the contract period. The lack of competition, however, prevents a definitive statement on whether this represents optimal value compared to what a competitive bidding process might yield.

What are the primary risks associated with a sole-source contract of this size and duration?

The primary risks associated with a sole-source contract of this size ($63.5 million) and duration (5 years) include: 1. **Cost Overruns:** Without competitive pressure, the contractor may have less incentive to control costs, potentially leading to prices higher than what could be achieved through competition. 2. **Reduced Innovation:** A lack of competition can stifle innovation, as the contractor may not feel compelled to develop more efficient or advanced repair techniques. 3. **Vendor Lock-in:** The government becomes dependent on a single provider, making it difficult and costly to switch suppliers in the future, even if performance or pricing becomes unsatisfactory. 4. **Potential for Complacency:** The contractor might become complacent in service delivery or responsiveness due to the guaranteed business.

What is Northrop Grumman's track record with similar DoD contracts?

Northrop Grumman Systems Corporation is a major defense contractor with an extensive history of performing large-scale contracts for the Department of Defense, including those related to aircraft manufacturing, maintenance, and repair. They are known for handling complex systems and components across various military platforms. While this specific data point doesn't detail their performance on past aircraft structural repair contracts, their overall profile suggests a capacity to manage such requirements. However, the track record on *sole-source* awards specifically would be a more pertinent area for risk assessment, focusing on their history of cost control and performance under non-competitive conditions.

How does the contract's duration (1828 days) impact its overall value proposition?

The contract duration of 1828 days (approximately 5 years) provides a long-term commitment for essential aircraft structural component repair services. This duration offers stability for both the government, ensuring continued support for its assets, and the contractor, allowing for resource planning and investment. From a value perspective, a longer duration can sometimes lead to better pricing if negotiated effectively, as it reduces the administrative burden and transaction costs associated with frequent re-competition. However, for a sole-source contract, a long duration amplifies the risks of cost escalation and reduced flexibility if the government's needs or market conditions change significantly.

What is the significance of the Product/Service Code (PSC) '336411' and 'A1C' in understanding this contract?

The PSC code '336411' typically relates to 'Aircraft Manufacturing,' while 'A1C' falls under 'Other Aircraft Equipment.' In the context of this contract, which is for 'MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS,' these codes suggest the contract covers the maintenance and repair of structural components for aircraft and related equipment. '336411' might indicate the original manufacturing base or type of aircraft involved, while 'A1C' points to a broader category of associated equipment. Together, they signify a focus on the physical integrity and operational readiness of aircraft structures and their constituent parts, rather than, for example, avionics or propulsion systems.

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: FIRM FIXED PRICE (J)

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: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline