DoD's $66.4M aircraft component contract awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $66,382,992 ($66.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2018-06-11

End Date: 2021-03-08

Contract Duration: 1,001 days

Daily Burn Rate: $66.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PAM,AIRCRAFT,MATERI

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $66.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PAM,AIRCRAFT,MATERI Key points: 1. The contract awarded to Northrop Grumman Systems Corporation for aircraft components represents a significant investment in defense logistics. 2. The absence of a competitive bidding process raises questions about potential cost efficiencies and value for money. 3. The fixed-price contract type suggests a degree of cost certainty for the government, but the lack of competition limits benchmarking. 4. The duration of the contract (1001 days) indicates a long-term need for these specific aircraft components. 5. The primary sector impacted is Defense, specifically focusing on aeronautical and nautical systems. 6. The contract's value, while substantial, needs to be assessed against market rates for similar components to determine true value. 7. The sole-source nature of this award warrants scrutiny regarding the justification for not seeking competitive bids.

Value Assessment

Rating: questionable

The contract value of $66.4 million for aircraft components is substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or compare it to similar contracts awarded through open competition. The fixed-price nature provides some cost certainty, but the lack of competition prevents an assessment of whether the government received the best possible value. Further analysis would be needed to determine if the price is reasonable in the absence of competitive offers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one bidder, Northrop Grumman Systems Corporation, was considered. The justification for this approach is not provided in the data. Sole-source awards typically occur when a specific capability is only available from a single source, or in cases of urgent need. The lack of competition means there was no opportunity for price discovery through a bidding war, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the lowest possible cost for these aircraft components.

Public Impact

The primary beneficiaries are the Department of Defense and its operational readiness, ensuring the availability of critical aircraft components. The services delivered involve the manufacturing and supply of specialized aircraft components, essential for maintaining airworthiness. The geographic impact is primarily within the United States, supporting defense logistics and potentially related manufacturing supply chains. Workforce implications may include employment at Northrop Grumman and its subcontractors involved in the production of these components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce transparency in pricing.
Potential for reduced innovation due to absence of competitive pressure.
Dependence on a single contractor for critical components.

Positive Signals

Award to an established defense contractor with a track record.
Fixed-price contract provides cost certainty.
Ensures supply of critical aircraft components for defense needs.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft components. The North American Industry Classification System (NAICS) code 334511 covers Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. This sector is characterized by high technological requirements, significant R&D investment, and often involves long-term government contracts. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar complex aircraft systems and components within the DoD.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. However, as a large sole-source award to a major defense contractor, there is potential for subcontracting opportunities to flow down to small businesses within Northrop Grumman's supply chain, though this is not explicitly detailed in the provided information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations, managed by the Defense Logistics Agency. Accountability measures are inherent in the contract terms, particularly the fixed-price structure. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Aircraft Parts and Components
Defense Logistics Support
Aeronautical Systems Manufacturing
Navigation and Guidance Systems
Military Aircraft Maintenance and Repair

Risk Flags

Sole-source award lacks competitive justification.
Potential for above-market pricing due to lack of competition.
Limited transparency in cost and pricing structure.
Dependency on a single supplier for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PAM,AIRCRAFT,MATERI

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 $66.4 million.

What is the period of performance?

Start: 2018-06-11. End: 2021-03-08.

What is the historical spending pattern for this specific type of aircraft component with Northrop Grumman Systems Corporation?

Analyzing historical spending patterns for this specific type of aircraft component with Northrop Grumman Systems Corporation requires access to detailed contract databases beyond the provided summary. Typically, one would look for prior contracts awarded to this vendor for similar items, noting their value, duration, and whether they were competitively bid or sole-source. Significant year-over-year increases or decreases, or a consistent pattern of sole-source awards for the same components, could indicate trends in pricing, demand, or market dynamics. Without this historical data, it's challenging to contextualize the current $66.4 million award effectively and assess if it represents an escalation or a standard procurement.

What specific justification was provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded as 'sole-source.' However, the specific justification for this determination is not included. Generally, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. Other justifications might include follow-on work to a previously competed contract where only the original contractor possesses the necessary technical knowledge or proprietary data. Without the official justification document, it is impossible to verify the validity of the sole-source award and assess if it was appropriate.

How does the price of this contract compare to similar aircraft components procured competitively by the DoD?

Directly comparing the price of this $66.4 million sole-source contract to similar aircraft components procured competitively by the DoD is challenging without specific benchmark data. The absence of competition means there was no market-driven price discovery. To perform such a comparison, one would need to identify contracts for comparable components (e.g., similar function, complexity, material, and quantity) that were awarded through full and open competition. Analyzing the price per unit or total contract value relative to the scope of work in those competitive contracts would provide a basis for assessing value for money. Given the sole-source nature, there is a risk that this contract's pricing may be higher than what could have been achieved through competition.

What are the potential risks associated with relying on a single contractor for these critical aircraft components?

Relying on a single contractor, Northrop Grumman Systems Corporation in this case, for critical aircraft components presents several potential risks. Firstly, there's a risk of supply chain disruption if the contractor experiences production issues, financial instability, or labor disputes. Secondly, the lack of competition can lead to price escalation over time, as the government has limited leverage to negotiate better terms. Thirdly, it can stifle innovation, as the contractor may have less incentive to invest in improving product design or manufacturing processes without competitive pressure. Lastly, it creates a dependency, making it difficult and potentially costly to switch to an alternative supplier in the future if needed.

What is the track record of Northrop Grumman Systems Corporation in delivering similar defense contracts, particularly sole-source awards?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of delivering complex systems and components to the U.S. military. Their track record generally includes successful execution of large-scale contracts. However, assessing their performance specifically on similar sole-source awards requires a detailed review of past contracts. While they possess significant technical capabilities, sole-source awards, by their nature, offer less public data on performance relative to competitive benchmarks. Evaluating their past performance would involve examining contract close-out data, any reported issues or disputes, and their overall reputation within the defense acquisition community for reliability and quality, especially in non-competitive scenarios.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 600 GRUMMAN RD WEST, BETHPAGE, NY, 11714

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

Financial Breakdown

Contract Ceiling: $66,382,992

Exercised Options: $66,382,992

Current Obligation: $66,382,992

Subaward Activity

Number of Subawards: 41

Total Subaward Amount: $4,383,689,493

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPM4AX12D9401

IDV Type: IDC

Timeline