DoD awards Northrop Grumman $10.8M for solenoid valves, with a long performance period extending to 2032

Contract Overview

Contract Amount: $10,853,626 ($10.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-03-05

End Date: 2032-06-29

Contract Duration: 3,038 days

Daily Burn Rate: $3.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8510478365!VALVE,SOLENOID

Place of Performance

Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $10.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 8510478365!VALVE,SOLENOID Key points: 1. Contract value appears reasonable given the extended performance period and specialized nature of the components. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. The long duration of the contract may introduce risks related to technological obsolescence or changing requirements. 4. Performance is within the Defense Logistics Agency's purview, supporting broader military readiness. 5. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, indicating a specialized industrial segment.

Value Assessment

Rating: good

The contract value of $10.8 million for solenoid valves, spread over a period of approximately 8 years, suggests a moderate annual expenditure. Benchmarking against similar specialized component procurements is challenging without more granular data on valve specifications and quantities. However, the firm fixed-price structure provides cost certainty for the government. The value seems aligned with the specialized nature of defense logistics and the long-term support required for aircraft components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The specific number of bidders is not provided, but the method of competition suggests a robust process aimed at achieving value for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down prices through market forces and ensures the government accesses the most capable suppliers at competitive rates.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, ensuring the availability of critical aircraft components. The contract delivers essential solenoid valves, vital for the operational readiness and maintenance of military aircraft. The geographic impact is national, supporting defense supply chains across the United States, with specific delivery likely to military installations. Workforce implications include supporting jobs in manufacturing, quality control, and logistics within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 8 years) increases the risk of technological obsolescence for the solenoid valves.
Reliance on a single large contractor for a critical component could pose supply chain risks if not managed proactively.
Potential for price increases in later years if not adequately locked in by the firm fixed-price terms.

Positive Signals

Firm fixed-price contract provides cost certainty and limits the government's exposure to cost overruns.
Full and open competition suggests a competitive environment that should yield favorable pricing.
Award to a well-established defense contractor like Northrop Grumman implies a high likelihood of meeting technical and performance requirements.

Sector Analysis

This contract operates within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is characterized by high technical barriers to entry, stringent quality requirements, and long product lifecycles. Spending in this area is driven by military readiness needs and the sustainment of aging aircraft fleets. Comparable spending benchmarks would typically involve other contracts for similar high-reliability components for military platforms.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary set-aside criterion for this specific contract. While Northrop Grumman is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Northrop Grumman's internal policies and the specific requirements of the Defense Logistics Agency regarding small business utilization.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Defense Logistics Agency (DLA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures are embedded within the firm fixed-price structure and delivery schedules. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics may not always be publicly disclosed. The Inspector General for the Department of Defense would have jurisdiction over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Solenoid Valve Procurement
Military Aircraft Sustainment
Aerospace Component Supply

Risk Flags

Long contract duration may lead to technological obsolescence.
Potential supply chain risks associated with reliance on specialized components.
Need for ongoing quality assurance due to critical application.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 8510478365!VALVE,SOLENOID

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $10.9 million.

What is the period of performance?

Start: 2024-03-05. End: 2032-06-29.

What is the historical spending trend for solenoid valves by the Defense Logistics Agency?

Analyzing historical spending trends for solenoid valves by the Defense Logistics Agency (DLA) requires access to detailed procurement data over multiple fiscal years. Without specific historical data for this particular component type, a general trend can be inferred from broader DLA spending patterns on aircraft parts. DLA's overall budget fluctuates based on geopolitical events, operational tempo, and modernization programs. Spending on sustainment parts like solenoid valves tends to be relatively stable but can increase during periods of heightened military activity or when older aircraft fleets are kept in service longer. A comprehensive analysis would involve querying procurement databases for similar NSNs (National Stock Numbers) or PSCs (Product Service Codes) over the past 5-10 years to identify average annual spending, identify major suppliers, and note any significant spikes or dips that might correlate with specific defense initiatives or global events.

How does the unit cost of these solenoid valves compare to commercial off-the-shelf (COTS) equivalents?

Directly comparing the unit cost of these solenoid valves to Commercial Off-The-Shelf (COTS) equivalents is challenging without knowing the exact specifications, required certifications (e.g., military-grade, AS9100), and quantity ordered. Defense-grade components often incorporate enhanced reliability, durability, and performance under extreme conditions, which inherently increases their cost compared to standard COTS parts. Furthermore, the firm fixed-price nature of this contract, coupled with the full and open competition, suggests the government sought competitive bids. However, the specialized nature of military components, including stringent testing and quality assurance protocols, typically results in a higher unit price than COTS alternatives. A precise comparison would necessitate obtaining detailed technical specifications for the awarded valves and then sourcing comparable COTS parts with similar performance envelopes and certifications, which is often not feasible for highly specialized military applications.

What are the key performance indicators (KPIs) used to evaluate Northrop Grumman's performance on this contract?

Key Performance Indicators (KPIs) for this contract, while not explicitly detailed in the provided data, would typically revolve around adherence to delivery schedules, quality of the solenoid valves supplied, and compliance with technical specifications. For a firm fixed-price contract with a long duration, critical KPIs would include on-time delivery rates, defect rates (e.g., parts per million defective), warranty claim frequency, and successful completion of any required testing or certification processes. The Defense Logistics Agency (DLA) likely has established metrics for evaluating supplier performance, potentially including metrics related to responsiveness, technical support, and overall contract management. Northrop Grumman's performance history on similar contracts, including past performance evaluations, would also serve as an indirect KPI for assessing their capability to meet the requirements of this new award.

What is the potential impact of technological advancements on the long-term value of this solenoid valve contract?

Technological advancements pose a significant risk to the long-term value of this solenoid valve contract, given its duration extending to June 2032. Solenoid valve technology is continually evolving, with potential improvements in efficiency, size, weight, power consumption, and smart capabilities (e.g., integrated sensors or communication). If newer, more advanced, or more cost-effective valve technologies emerge that offer superior performance or reduced lifecycle costs, the valves procured under this contract could become technologically outdated. This could lead to increased maintenance costs, reduced operational effectiveness, or a need for early contract termination and re-competition. The government's strategy to mitigate this risk might involve contract clauses allowing for upgrades or modifications, or a proactive approach to monitoring technological trends and potentially renegotiating terms if significant advancements occur.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code influence the competitive landscape for this contract?

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) code signifies a specialized segment within the broader aerospace industry. This classification suggests that the companies competing for this contract possess specific expertise and manufacturing capabilities tailored to aircraft components, which often require adherence to rigorous quality standards (like AS9100) and complex production processes. The competitive landscape within this NAICS code is likely characterized by a mix of established large defense contractors and specialized small to medium-sized manufacturers. Full and open competition, as indicated for this contract, means that both types of firms could potentially bid, but the technical requirements and scale of production might favor larger, more experienced players like Northrop Grumman. The presence of specialized manufacturers ensures a degree of competition, but the barriers to entry (capital investment, certifications, technical know-how) can limit the number of truly viable bidders for highly specific components.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: HARDWARE AND ABRASIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 500 N DOUGLAS ST, EL SEGUNDO, CA, 90245

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,853,626

Exercised Options: $10,853,626

Current Obligation: $10,853,626

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $2,629,070

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPE4AX24D9408

IDV Type: IDC

Timeline