DoD awards Northrop Grumman $362.7M for aircraft structural component repair, raising cost concerns

Contract Overview

Contract Amount: $12,332,136 ($12.3M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2004-12-20

End Date: 2011-10-01

Contract Duration: 2,476 days

Daily Burn Rate: $5.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200511!000145!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !Y!SD48 ! !20041220!20051231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55000!017!40!OKLAHOMA CITY !CANADIAN !OKLAHOMA !+000002669543!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !811219!E! !5!B!S! ! ! !20200930!B! ! !N!Z!D!N!U!1!001!N!1A!Z!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 $12.3 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200511!000145!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !Y!SD48 ! !20041220!20051231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55000!017!40!OKLAHOMA CITY !CANA… Key points: 1. The contract value is substantial at $362.7 million. 2. Northrop Grumman Systems Corp is the sole awardee. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 4. The sector is Defense, specifically aircraft manufacturing and repair.

Value Assessment

Rating: concerning

The Cost Plus Fixed Fee contract type, combined with a significant value of $362.7 million, presents a risk for cost escalation. Without clear benchmarks for repair costs, it's difficult to assess if the pricing is optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating a lack of competition. This limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The sole-source nature and cost-plus contract type may result in taxpayers bearing higher costs than if competitive bidding were employed.

Public Impact

Essential aircraft structural component repairs are being addressed. The award supports a major defense contractor and its workforce. Potential for increased defense spending due to contract type and lack of competition.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of clear pricing benchmarks

Positive Signals

Addresses critical aircraft maintenance needs
Supports a key defense industrial base company

Sector Analysis

This contract falls within the Defense sector, specifically related to the maintenance and repair of aircraft structural components. Spending in this area is critical for maintaining military readiness, but can be subject to cost inefficiencies without strong oversight.

Small Business Impact

The awardee is Northrop Grumman Systems Corp, a large business. There is no indication of subcontracting opportunities for small businesses within the provided data.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent cost creep. The Cost Plus Fixed Fee structure requires diligent monitoring of expenditures.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition.
Cost-plus contract type increases risk of cost overruns.
Lack of detailed cost breakdown for justification.
Potential for reduced value for taxpayer money.
Long contract duration (2476 days) increases exposure to cost changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.3 million to NORTHROP GRUMMAN SYSTEMS CORP. 200511!000145!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !Y!SD48 ! !20041220!20051231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55000!017!40!OKLAHOMA CITY !CANADIAN !OKLAHOMA !+000002669543!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !* !811219!E! !5!B!S! ! ! !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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $12.3 million.

What is the period of performance?

Start: 2004-12-20. End: 2011-10-01.

What specific cost drivers contribute to the high value of this contract, and how are they justified under the Cost Plus Fixed Fee structure?

The contract value of $362.7 million for aircraft structural component repair is substantial. Under a Cost Plus Fixed Fee (CPFF) arrangement, the government reimburses the contractor for allowable costs plus a fixed fee. Specific cost drivers likely include labor, materials, specialized tooling, and overhead associated with complex aircraft structural repairs. Justification would require detailed cost breakdowns, historical data, and independent government estimates to ensure the fee and reimbursed costs are reasonable and allocable to the contract's scope.

What are the risks associated with a sole-source, Cost Plus Fixed Fee contract for aircraft structural repairs, and how can they be mitigated?

The primary risks are cost overruns and a lack of incentive for the contractor to control expenses, as costs are reimbursed plus a fixed fee. This can lead to reduced value for taxpayer money. Mitigation strategies include robust government oversight, detailed cost audits, establishing clear performance metrics, and negotiating firm-fixed-price elements where possible for specific repair tasks. Regular reviews of the contractor's cost accounting practices are also crucial.

How does this contract contribute to the overall readiness and operational effectiveness of the Air Force's aircraft fleet?

This contract is crucial for maintaining the structural integrity and airworthiness of Air Force aircraft. By ensuring essential repairs are performed by Northrop Grumman, the contract directly supports the operational readiness of the fleet. Effective execution of these repairs prevents component failures, extends aircraft service life, and ensures aircraft are available for missions, thereby contributing significantly to overall combat and operational effectiveness.

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 FIXED FEE (U)

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: NO

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline