DoD's $232M aircraft manufacturing contract awarded to Northrop Grumman Systems Corp. for a 5-year effort

Contract Overview

Contract Amount: $232,183,256 ($232.2M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2007-01-01

End Date: 2012-07-30

Contract Duration: 2,037 days

Daily Burn Rate: $114.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROVIDE FOR THE CY 2007 EFFORT. TAS::97 0100::TAS

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $232.2 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: PROVIDE FOR THE CY 2007 EFFORT. TAS::97 0100::TAS Key points: 1. The contract's value of over $232 million for a 5-year period suggests a significant investment in aircraft manufacturing capabilities. 2. Awarded to a single, large defense contractor, this contract may indicate limited competition and potential for higher costs. 3. The firm-fixed-price contract type aims to transfer some risk to the contractor, but the long duration could still present cost escalation challenges. 4. Performance context is limited without specific delivery schedules or milestones, making a full assessment of value difficult. 5. This contract falls within the broader Defense sector, specifically supporting aircraft manufacturing, a critical component of national security. 6. The absence of small business involvement raises questions about opportunities for smaller players in this significant defense procurement.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific details on the aircraft type, quantity, and technological sophistication. However, a $232 million award over five years for aircraft manufacturing is substantial. Comparing it to similar sole-source or limited-competition contracts for specialized aircraft components or systems would be necessary to assess if the pricing is reasonable. The firm-fixed-price structure provides some cost certainty, but the long duration could still lead to cost overruns if not managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one contractor possesses the necessary technical expertise, facilities, or security clearances for a specific requirement. The lack of competition means that pricing was likely negotiated directly with Northrop Grumman Systems Corp. without the benefit of competitive bids, which can sometimes lead to less favorable pricing for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to drive down prices, potentially resulting in higher costs for taxpayers.

Public Impact

The primary beneficiaries are the Department of Defense and potentially its operational units requiring the manufactured aircraft or components. The contract delivers critical aircraft manufacturing services, essential for maintaining and modernizing military aviation assets. The geographic impact is primarily centered around Northrop Grumman's facilities in California, where the work is being performed. This contract supports a highly skilled workforce in the aerospace and defense industry, particularly in specialized manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Long contract duration increases risk of cost escalation.
Limited transparency due to sole-source nature.
No small business set-aside noted, potentially excluding smaller innovative firms.

Positive Signals

Firm-fixed-price contract type provides cost certainty.
Award to a major defense contractor suggests capability and experience.
Contract supports critical national defense needs.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Aircraft manufacturing is a core component of this sector, involving complex engineering, specialized materials, and stringent quality control. This contract likely fits into the broader ecosystem of military aircraft production and sustainment, where spending is often driven by national security priorities and technological advancements. Comparable spending benchmarks would typically involve other large-scale aircraft production contracts within the DoD or allied nations.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there an indication of subcontracting goals for small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate directly. This could mean that the significant federal investment is not being leveraged to foster growth or innovation within the small business defense industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the contract's performance clauses and delivery schedules. Transparency may be limited due to the sole-source nature, but contract awards and basic details are usually publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Procurement, Air Force
Combat Vehicles
Missiles, Rockets, and Space Systems
Aircraft Components and Equipment
Defense Industrial Base

Risk Flags

Sole-source award
Long contract duration
Lack of competition
Potential for cost overruns
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $232.2 million to NORTHROP GRUMMAN SYSTEMS CORP. PROVIDE FOR THE CY 2007 EFFORT. TAS::97 0100::TAS

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 $232.2 million.

What is the period of performance?

Start: 2007-01-01. End: 2012-07-30.

What specific aircraft or aircraft components are being manufactured under this contract?

The provided data does not specify the exact aircraft or components being manufactured. The North American Industry Classification System (NAICS) code 336411, 'Aircraft Manufacturing,' is broad and encompasses the production of complete aircraft, as well as their engines, propellers, and parts. Without further details, it's impossible to determine if this contract is for new aircraft platforms, upgrades, or critical components for existing fleets. This lack of specificity hinders a precise understanding of the contract's technological scope and strategic importance.

How does the $232 million value compare to similar sole-source aircraft manufacturing contracts?

Direct comparison of the $232 million value to similar sole-source contracts is difficult without knowing the specific nature of the aircraft or components. However, for major defense platforms or complex systems, this figure represents a significant investment over a five-year period. Sole-source awards often occur for highly specialized or technologically advanced systems where only one contractor can meet the requirements. To assess value, one would need to compare it against other sole-source contracts for comparable defense articles, considering factors like technological maturity, production volume, and contract duration. Generally, sole-source contracts are scrutinized more closely for price reasonableness due to the absence of competitive pressure.

What are the primary risks associated with a sole-source, firm-fixed-price contract of this duration?

The primary risks with this contract structure include potential overpricing due to the lack of competition, as the government cannot leverage bids to ensure the best value. While firm-fixed-price (FFP) aims to cap costs for the government, the long duration (2037 days, approximately 5.6 years) increases the risk of cost escalation for the contractor, which could lead to contract modifications or disputes if not managed proactively. Contractor performance risk also exists; if Northrop Grumman faces production issues, delays, or quality problems, it could impact the DoD's operational readiness. The government's leverage to influence cost or schedule is reduced in a sole-source scenario.

What is the historical spending pattern for aircraft manufacturing by the Department of the Air Force?

Historical spending by the Department of the Air Force on aircraft manufacturing has been substantial and cyclical, driven by modernization programs, new platform development, and sustainment of existing fleets. Major programs like fighter jets, bombers, transport aircraft, and specialized reconnaissance platforms represent significant portions of the Air Force's budget. Spending often fluctuates based on geopolitical events, technological advancements, and congressional appropriations. The NAICS code 336411 captures a broad range of activities, so historical data would need to be filtered to isolate comparable manufacturing efforts to understand trends and identify potential outliers in spending patterns.

What is Northrop Grumman Systems Corp.'s track record in fulfilling large defense manufacturing contracts?

Northrop Grumman Systems Corp. has a long and extensive track record of fulfilling large and complex defense manufacturing contracts for the U.S. military and international partners. They are a major prime contractor for numerous critical programs, including stealth bombers (B-2), fighter jets (F-35 propulsion systems), and various unmanned aerial systems. Their history generally indicates a strong capability in advanced manufacturing, systems integration, and program management. However, like any large contractor, they have faced scrutiny and challenges on specific programs regarding cost, schedule, and performance, which are typical in the defense industry's high-stakes environment.

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: 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

Financial Breakdown

Contract Ceiling: $232,183,256

Exercised Options: $232,183,256

Current Obligation: $232,183,256

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline