DoD awards $8.9M for aircraft parts, with Northrop Grumman as prime contractor through 2037

Contract Overview

Contract Amount: $8,906,551 ($8.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2025-01-15

End Date: 2037-03-10

Contract Duration: 4,437 days

Daily Burn Rate: $2.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8511117401!COVER,ACCESS,AIRCRA

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $8.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 8511117401!COVER,ACCESS,AIRCRA Key points: 1. Contract value represents a significant long-term commitment for aircraft component supply. 2. Sole-source award to Northrop Grumman suggests a reliance on specialized capabilities or existing platforms. 3. Long contract duration (over 12 years) may pose risks related to technological obsolescence and price escalation. 4. The contract is categorized under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicating a focus on specialized components. 5. Fixed-price contract type aims to transfer some cost risk to the contractor, but long-term fixed prices can be challenging. 6. The award is a delivery order under a larger contract, implying a phased approach to procurement.

Value Assessment

Rating: fair

The contract value of $8.9 million over its full term appears moderate for specialized aircraft parts. Benchmarking against similar long-term supply contracts for defense components is difficult without more specific details on the parts and their criticality. The fixed-price nature suggests an attempt at cost control, but the extended duration could lead to price increases if market conditions change significantly or if the initial pricing did not fully account for future inflation and technological shifts. Further analysis would require understanding the specific components being procured and their market availability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that multiple bidders were likely solicited. However, the data shows this is a 'delivery order,' which often implies it's part of a larger, pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract. The specific competition details for this delivery order itself are not provided, but the initial IDIQ award would have undergone a competitive process. The number of bidders for the original IDIQ and the specific terms of this delivery order would determine the extent of price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. However, the long-term nature of this award means that the initial competitive pricing will be locked in for an extended period, potentially missing out on future cost savings if market conditions become more favorable.

Public Impact

The Department of Defense (DoD) is the primary beneficiary, ensuring the continued availability of critical aircraft parts. Services delivered include the supply of 'Other Aircraft Parts and Auxiliary Equipment,' essential for maintaining airworthiness. The geographic impact is primarily linked to the contractor's operations in California, where the award is registered. Workforce implications include sustained employment for manufacturing and logistics personnel at Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term fixed-price contracts can become disadvantageous if material costs or labor rates increase significantly over the contract's lifespan.
Reliance on a single contractor for over a decade raises concerns about potential supply chain disruptions if the contractor faces financial or operational issues.
Technological advancements in aircraft could render the procured parts obsolete before the contract end date, necessitating costly modifications or replacements.
The 'full and open competition' designation for the initial award does not guarantee competitive pricing for every subsequent delivery order if the market for these specific parts is limited.

Positive Signals

The fixed-price contract type shifts some cost overrun risk to the contractor, providing budget certainty for the government.
Awarding to an established contractor like Northrop Grumman suggests a high likelihood of meeting performance requirements due to their experience and infrastructure.
The long duration indicates a stable, predictable supply chain for critical components, reducing the risk of operational downtime for the DoD.
Delivery orders allow for phased procurement, potentially aligning spending with actual needs and budget availability over time.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to stringent quality standards, complex manufacturing processes, and proprietary technology. Spending in this area is driven by the need to maintain aging fleets and support new aircraft programs. Comparable spending benchmarks would typically involve analyzing other long-term supply agreements for similar defense-related components, considering factors like volume, complexity, and technological sophistication.

Small Business Impact

The data indicates that small business participation is not a primary focus for this specific award, as the prime contractor is Northrop Grumman Systems Corporation, a large business, and the 'sb' (small business) flag is false. There is no explicit mention of small business set-asides. Subcontracting opportunities for small businesses may exist within Northrop Grumman's supply chain, but this is not detailed in the provided information. The impact on the small business ecosystem is likely indirect, depending on whether Northrop Grumman utilizes small businesses for any part of the fulfillment.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, likely involving the Defense Contract Management Agency (DCMA) for performance monitoring. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is facilitated through contract databases like FPDS, where basic award information is published. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Manufacturing
Defense Logistics Support
Military Aircraft Procurement
Air Force Parts Supply Chain
Navy Aviation Sustainment

Risk Flags

Long-term contract duration
Fixed-price risk
Potential for technological obsolescence
Reliance on a single large contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 8511117401!COVER,ACCESS,AIRCRA

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 $8.9 million.

What is the period of performance?

Start: 2025-01-15. End: 2037-03-10.

What is the specific nature of the 'Other Aircraft Parts and Auxiliary Equipment' being procured under this contract?

The provided data categorizes the contract under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad category encompasses a wide range of components beyond engines and airframes, such as landing gear, avionics components, electrical systems, hydraulic parts, and various specialized hardware. Without further details from the contract statement of work, it is difficult to pinpoint the exact items. However, the long-term nature and significant value suggest these are critical, potentially custom-manufactured or long-lead-time items essential for the operational readiness and sustainment of specific DoD aircraft platforms.

How does the $8.9 million contract value compare to similar long-term aircraft parts supply contracts within the DoD?

Benchmarking the $8.9 million value requires context regarding the specific types of parts, quantities, and the duration of the contract (over 12 years). For highly specialized or custom-manufactured components, this value might be considered moderate. However, if the parts are more standardized or if the quantities are relatively low, it could represent a higher per-unit cost. Long-term supply agreements for critical defense systems can range from millions to billions of dollars. To provide a precise comparison, one would need to analyze contracts with similar scope, complexity, and contractor capabilities within the defense aerospace sector, considering factors like inflation adjustments and the criticality of the components.

What are the potential risks associated with a fixed-price contract lasting until 2037?

A fixed-price contract extending over 15 years presents several risks. Firstly, the contractor may face significant cost increases due to inflation in material, labor, and overhead costs, potentially eroding profit margins or leading to requests for equitable adjustments if not adequately accounted for. Secondly, technological obsolescence is a major concern; aircraft technology evolves rapidly, and the parts procured under this contract might become outdated or incompatible with future upgrades before the contract expires. Thirdly, market dynamics can shift, potentially making the fixed price uncompetitive compared to future market rates. The government bears the risk if the initial price was too high or if unforeseen market changes make the price disadvantageous over time, despite the fixed-price structure.

Given the 'full and open competition' designation, why is Northrop Grumman the sole awardee for this delivery order?

The 'full and open competition' designation typically applies to the initial award of a contract vehicle, such as an IDIQ contract. This means that the original solicitation allowed any responsible source to submit an offer. However, subsequent delivery orders placed under that IDIQ contract may be awarded based on different criteria, potentially to a single awardee if the IDIQ was structured as a single-award IDIQ, or if specific requirements of the delivery order (e.g., technical expertise, existing infrastructure, specific part compatibility) lead to a sole-source justification for that particular order, even if the overarching IDIQ was competed broadly. Alternatively, if it was a multiple-award IDIQ, Northrop Grumman may have been the most advantageous offeror for this specific delivery order based on factors like price, technical approach, or past performance.

What is Northrop Grumman's track record with the Defense Logistics Agency (DLA) and similar aircraft parts contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience supplying various systems and components to the Department of Defense, including the Defense Logistics Agency. They have a long history of producing complex aerospace and defense products. While specific details on their performance for this exact contract vehicle are not provided, their overall track record includes numerous large-scale contracts for aircraft, electronics, and logistical support. DLA relies on contractors like Northrop Grumman for sustainment and readiness of military assets. Performance history on similar long-term supply contracts would be a key factor in their selection, likely indicating a demonstrated ability to meet quality, delivery, and technical requirements.

How does this contract align with broader trends in defense spending on aircraft sustainment and parts?

This contract aligns with the ongoing trend of defense spending focused on maintaining and modernizing existing military fleets, particularly aircraft. As many military aircraft age, the demand for spare parts, maintenance, and upgrades increases significantly. Defense agencies like the DLA play a crucial role in ensuring the continuous supply of these components to support operational readiness. Contracts for parts manufacturing and sustainment are a substantial portion of the defense budget. The long duration of this award suggests a strategic commitment to ensuring the availability of these specific parts for the foreseeable future, reflecting the long service lives of military aircraft and the complexities of their supply chains.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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: $8,906,551

Exercised Options: $8,906,551

Current Obligation: $8,906,551

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $641,562

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