DoD Awards Northrop Grumman $362.7M for Gas Turbine Engines, Exceeding Initial Estimate

Contract Overview

Contract Amount: $29,843,613 ($29.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2004-12-21

End Date: 2010-06-30

Contract Duration: 2,017 days

Daily Burn Rate: $14.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200505!000178!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD50 ! !20041221!20051231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000017684182!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !5!B!S! ! ! !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 $29.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200505!000178!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD50 ! !20041221!20051231!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 raises questions about competition and price discovery. 3. Potential for cost overruns given the Cost Plus Award Fee structure. 4. Defense sector spending on aircraft manufacturing is substantial.

Value Assessment

Rating: questionable

The award of $362.7 million for gas turbines and jet engines appears high compared to the initial estimated value of $298.4 million. The Cost Plus Award Fee (CPAF) contract type can lead to higher final costs than fixed-price contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This limits price discovery and may result in higher costs for the government.

Taxpayer Impact: The lack of competition for this large contract raises concerns about taxpayer value and the potential for inflated prices.

Public Impact

Taxpayers may be overpaying due to the absence of competitive bidding. The long duration of the contract (awarded 2004, ending 2010) suggests a critical, long-term need. Reliance on a single contractor for essential aircraft components could pose a supply chain risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

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

Positive Signals

Essential defense procurement
Contractor has relevant expertise

Sector Analysis

This contract falls within the Defense sector, specifically Aircraft Manufacturing. Spending in this area is critical for national security, but often involves high costs and complex technologies.

Small Business Impact

No information is provided regarding small business participation in this contract. Large sole-source awards often have limited direct involvement from small businesses.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential waste, fraud, or abuse.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award limits competition.
Cost Plus Award Fee (CPAF) can lead to higher costs.
Contract value significantly exceeded initial estimate.
Lack of transparency regarding pricing justification.
Potential for contractor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.8 million to NORTHROP GRUMMAN SYSTEMS CORP. 200505!000178!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD50 ! !20041221!20051231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000017684182!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $29.8 million.

What is the period of performance?

Start: 2004-12-21. End: 2010-06-30.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternatives. Without further details, it's difficult to assess if competitive strategies were adequately explored. This lack of competition is a primary driver of potential cost inefficiencies and reduced taxpayer value.

How does the final cost compare to the initial estimate, and what factors contributed to any variance, especially given the CPAF structure?

The final cost of the contract is crucial for assessing value. The Cost Plus Award Fee (CPAF) structure incentivizes performance but can also lead to costs exceeding initial estimates if not managed tightly. Analyzing the variance requires examining the award fee criteria, performance metrics, and any unforeseen technical or logistical challenges encountered during contract execution.

What are the long-term implications of relying on a single contractor for such critical aircraft engine components for national security?

Long-term reliance on a single contractor can create strategic vulnerabilities, including supply chain disruptions, price escalation, and reduced innovation. It also limits the government's leverage in future negotiations. Diversifying the supplier base or fostering competition through contract restructuring could mitigate these risks and ensure greater resilience.

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: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline