Air Force awards $362.7M contract for aircraft structural component repair to Northrop Grumman

Contract Overview

Contract Amount: $31,050,743 ($31.1M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2005-12-21

End Date: 2012-12-31

Contract Duration: 2,567 days

Daily Burn Rate: $12.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200604!000049!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD56 ! !20051221!20061231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!HORNETT WAY !EL SEGUNDO !CA!90245!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000010839002!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !NOT DISCERNABLE !811219!E! !5!B!S! ! ! !99990909!B!D!N!N!Z!D!N!U!1!001!N!1A!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 $31.1 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200604!000049!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD56 ! !20051221!20061231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!HORNETT WAY !EL SEGUNDO !CA!90245!55156!037!06!PALMDALE !LOS … Key points: 1. Contract awarded for sustainment of critical aircraft structural components. 2. Significant portion of contract value allocated to repair and maintenance services. 3. Sole-source award raises questions about competition and potential cost efficiencies. 4. Long contract duration suggests a need for sustained support for aging aircraft fleets. 5. Geographic concentration of contractor facilities in California. 6. Contract type (Cost Plus Fixed Fee) may allow for cost overruns.

Value Assessment

Rating: fair

The contract value of $362.7 million over approximately 7 years represents a substantial investment in aircraft sustainment. Benchmarking this against similar repair contracts for structural components is challenging without more specific service details. However, the Cost Plus Fixed Fee (CPFF) contract type, while common for complex repairs, can sometimes lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. The lack of competition in this sole-source award also limits the ability to assess pricing against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Systems Corporation, was solicited. This approach is typically used when only one source is capable of meeting the government's needs, often due to proprietary technology, unique capabilities, or urgent requirements. The absence of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This limits the government's ability to ensure it received the best possible value.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without competing the requirement, there is less assurance that the price reflects the lowest achievable cost for these critical aircraft repair services.

Public Impact

The primary beneficiaries are the U.S. Air Force units relying on the structural integrity of their aircraft. Services delivered include the maintenance and repair of aircraft structural components, ensuring airworthiness and operational readiness. The geographic impact is primarily centered around the contractor's facilities in Palmdale, California, and the Air Force bases that utilize these services. Workforce implications include employment for skilled technicians and engineers at Northrop Grumman's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can incentivize higher costs if not rigorously managed.
Long duration may indicate potential for scope creep or evolving requirements.
Lack of detailed performance metrics in the provided data makes assessing efficiency difficult.

Positive Signals

Contract awarded to an established defense contractor with experience in aircraft manufacturing and sustainment.
Focus on repair and maintenance addresses critical operational needs for the Air Force.
Contract duration suggests a stable, long-term relationship for essential services.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and repair. The market for aircraft maintenance, repair, and overhaul (MRO) is substantial, driven by the need to keep aging fleets operational. Major defense contractors like Northrop Grumman play a significant role in this market, often holding long-term sustainment contracts for major weapon systems. Comparable spending benchmarks would typically be found within the broader MRO services category for military aircraft, though specific structural repair costs are highly specialized.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Northrop Grumman actively engages small businesses for subcontracting opportunities. Further investigation into subcontracting goals would be needed to assess the full impact.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. The Inspector General of the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, but detailed performance reports and cost audits are typically internal or subject to specific disclosure agreements.

Related Government Programs

Aircraft Structural Repair Services
Aerospace Component Maintenance
Defense Contractor Sustainment Programs
Air Force Logistics Command Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.1 million to NORTHROP GRUMMAN SYSTEMS CORP. 200604!000049!5700!FA8102!OC-ALC/LAD !F3365799D0028 !A!N! !N!SD56 ! !20051221!20061231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!HORNETT WAY !EL SEGUNDO !CA!90245!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000010839002!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !000 !NOT DISCERNABLE !811219!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 $31.1 million.

What is the period of performance?

Start: 2005-12-21. End: 2012-12-31.

What is Northrop Grumman's track record with similar sole-source aircraft repair contracts for the Department of Defense?

Northrop Grumman Systems Corporation has a long history of supporting U.S. military aircraft, including extensive work on structural components and sustainment programs. While specific data on all sole-source repair contracts is not publicly detailed, the company is a major defense contractor with significant experience in managing complex, long-term agreements. Their track record often involves large-scale production and sustainment for platforms like the B-2 bomber and various fighter aircraft. Past performance reviews and contract histories within DoD databases would provide a more granular view of their success rates, cost performance, and adherence to schedules on similar sole-source engagements. However, the nature of sole-source awards means direct comparisons of pricing and efficiency against competitive bids are inherently limited.

How does the Cost Plus Fixed Fee (CPFF) contract type typically perform in terms of cost control for aircraft structural repairs compared to other contract types?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This contract type is often used when the scope of work is not precisely defined or involves significant uncertainty, such as complex repairs or research and development. While the fixed fee provides some incentive for the contractor to control costs (as it doesn't increase with higher costs), it generally offers less cost control for the government compared to fixed-price contracts. If costs escalate beyond initial estimates, the government still pays the actual costs incurred. For aircraft structural repairs, where unforeseen issues can arise, CPFF can be appropriate, but it requires robust government oversight to scrutinize costs and ensure efficiency. Fixed-price incentive fee contracts or firm-fixed-price contracts, if feasible, might offer better cost predictability.

What are the specific types of aircraft structural components this contract covers, and what is the estimated criticality of these components?

The provided data indicates the contract covers 'MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS' and falls under the Product Service Code (PSC) '811219' (Aircraft Structural Components). While the specific types of components are not detailed, 'structural components' generally refer to the airframe, wings, fuselage, tail sections, and other load-bearing elements critical to flight safety and aircraft integrity. The criticality is inherently high, as failures in structural components can lead to catastrophic loss of the aircraft. The Air Force's reliance on this contract suggests these components are essential for maintaining the operational readiness and safety of specific aircraft platforms, likely those within the Air Force's inventory that require specialized repair capabilities.

What is the historical spending trend for aircraft structural component repair within the Department of the Air Force over the last five years?

Analyzing historical spending trends for specific categories like 'Aircraft Structural Component Repair' requires access to comprehensive federal procurement data over multiple years. While this single contract represents a significant award, it is one data point. Broader trends would involve aggregating spending across all contracts categorized under relevant PSCs (like 811219) and potentially related categories (e.g., aircraft component repair, airframe repair) awarded by the Department of the Air Force. Generally, spending on aircraft sustainment, including repairs, tends to be substantial and relatively stable, driven by the operational tempo and the aging nature of many military aircraft fleets. Factors like modernization programs, budget allocations, and geopolitical events can influence year-over-year spending fluctuations. A detailed analysis would require querying procurement databases for cumulative spending in these categories over the specified period.

What are the potential risks associated with a sole-source award for critical aircraft sustainment services?

The primary risk of a sole-source award for critical aircraft sustainment services is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or improve efficiency. Without competing the requirement, the government may not be obtaining the best possible value for its expenditure. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single provider, potentially limiting future flexibility or access to alternative solutions. Furthermore, if the sole-source provider experiences financial difficulties or operational issues, it could severely disrupt critical sustainment operations, impacting national security. Ensuring robust contract management, performance monitoring, and clear exit strategies are crucial mitigation measures.

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

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline