DoD awards Northrop Grumman $45.6M for Aircraft Manufacturing Services, raising cost concerns

Contract Overview

Contract Amount: $45,584,164 ($45.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2003-12-24

End Date: 2009-09-30

Contract Duration: 2,107 days

Daily Burn Rate: $21.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200405!000127!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD39 ! !20031224!20041231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000007420000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !336413!E! !5!B!S! ! ! !99990909!B! ! !N!Z!C!U!R!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 $45.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200405!000127!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD39 ! !20031224!20041231!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 of $45.6 million for aircraft manufacturing services. 2. Sole-source award to Northrop Grumman Systems Corp. limits competitive pricing. 3. Potential for cost overruns due to Cost Plus Award Fee contract type. 4. Services fall under Aircraft Manufacturing sector, with potential for broader defense implications.

Value Assessment

Rating: questionable

The contract's Cost Plus Award Fee structure, coupled with a lack of competition, raises concerns about potential cost escalation and value for money. Benchmarking against similar sole-source contracts for specialized aircraft services is difficult but likely shows a premium.

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 significantly limits price discovery and may result in higher costs for the government compared to a competitively bid contract.

Taxpayer Impact: The lack of competition and potentially higher costs associated with a sole-source, cost-plus contract could lead to inefficient use of taxpayer funds.

Public Impact

Taxpayers may be paying a premium for aircraft manufacturing services due to the sole-source award. The extended duration and cost-plus nature of the contract warrant close monitoring for efficiency. Lack of transparency in pricing due to limited competition could obscure true service costs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Award Fee contract type
Potential for cost overruns
Limited transparency in pricing

Positive Signals

Experienced contractor (Northrop Grumman)
Specific technical requirements met
Contract supports critical defense capabilities

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically for systems engineering services related to aircraft equipment. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant reliance on specialized contractors.

Small Business Impact

The contract was awarded to a large corporation, Northrop Grumman Systems Corp. There is no indication of subcontracting opportunities for small businesses within the provided data, suggesting limited direct small business participation.

Oversight & Accountability

The sole-source nature of this award necessitates robust oversight from the Department of Defense to ensure cost control and performance standards are met. Regular audits and performance reviews are crucial for accountability.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award limits competition and price discovery.
Cost Plus Award Fee structure increases risk of cost overruns.
Lack of transparency in pricing due to sole-source nature.
Potential for contractor to prioritize fee achievement over cost efficiency.
Long contract duration (initial award 2003-12-24 to 2004-12-31, but data shows end date 2009-09-30) increases exposure to cost fluctuations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.6 million to NORTHROP GRUMMAN SYSTEMS CORP. 200405!000127!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD39 ! !20031224!20041231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000007420000!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $45.6 million.

What is the period of performance?

Start: 2003-12-24. End: 2009-09-30.

What specific factors justified the sole-source award, and were alternatives thoroughly explored?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without detailed documentation, it's difficult to assess if alternatives were truly explored. Agencies must demonstrate why only one source can fulfill the requirement to justify bypassing full and open competition, which is crucial for ensuring fair pricing and maximizing taxpayer value.

How will the Cost Plus Award Fee structure be managed to prevent excessive costs and ensure contractor performance?

Managing a Cost Plus Award Fee (CPAF) contract requires stringent oversight. The government must clearly define performance metrics and award fee criteria. Regular performance evaluations against these criteria are essential to control costs and incentivize the contractor to achieve specific objectives efficiently, preventing cost overruns and ensuring value.

What is the projected total cost, considering potential award fees and contract modifications over its full duration?

Projecting the total cost of a CPAF contract is challenging due to the variable nature of award fees and potential modifications. The initial award amount is a baseline. Actual costs will depend on Northrop Grumman's performance against defined metrics and any subsequent contract adjustments. Comprehensive tracking and analysis are needed to understand the final expenditure.

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: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline