DoD's $76.6M Exhaust Pipe Contract Awarded to Northrop Grumman Raises Questions on Competition and Value
Contract Overview
Contract Amount: $76,591,506 ($76.6M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2011-09-16
End Date: 2020-09-23
Contract Duration: 3,295 days
Daily Burn Rate: $23.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: EXHAUST PIPE
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20171
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $76.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: EXHAUST PIPE Key points: 1. Significant spending on a single component highlights potential for cost savings through competitive bidding. 2. Northrop Grumman's sole award suggests limited market competition or strategic sourcing. 3. The long contract duration (2011-2020) may indicate a lack of recent market price discovery. 4. Lack of small business participation warrants further investigation into supply chain diversity.
Value Assessment
Rating: questionable
The contract's total value of $76.6 million for exhaust pipes appears high, especially given the lack of competitive bidding. Without comparable contract data or a clear justification for the sole-source award, assessing its pricing fairness against market benchmarks is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was awarded on a sole-source basis, meaning it was not competed. This significantly limits price discovery and potentially leads to higher costs for taxpayers. The absence of competition raises concerns about whether the government obtained the best possible price.
Taxpayer Impact: The sole-source nature of this large contract likely resulted in a higher price than could have been achieved through a competitive process, impacting taxpayer funds.
Public Impact
Taxpayers may have overpaid due to the lack of competitive bidding on this substantial contract. The long-term award to a single vendor could stifle innovation and prevent smaller businesses from entering the market. Dependence on a single supplier for critical aircraft parts poses a potential supply chain risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Long contract duration
- No small business participation
Positive Signals
- Definitive contract provides clear terms
- Firm fixed price mitigates cost overrun risk
Sector Analysis
The aerospace and defense sector often involves complex, high-value components. While specialized parts can command higher prices, the absence of competition for exhaust pipes, a seemingly standard component, is unusual and warrants scrutiny against industry benchmarks.
Small Business Impact
The contract data indicates no small business participation (sb: false). This suggests that the supply chain for these exhaust pipes is dominated by larger corporations, potentially limiting opportunities for small businesses and reducing overall market competition.
Oversight & Accountability
The sole-source nature of this contract raises questions about the effectiveness of the procurement process and whether adequate market research was conducted. Further oversight is needed to ensure competitive practices are prioritized for future awards.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Sole-source award raises concerns about price fairness.
- Lack of competition limits market efficiency.
- Long contract duration may indicate outdated pricing.
- No small business participation limits economic opportunity.
- Potential for overpayment due to non-competitive award.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, va, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $76.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. EXHAUST PIPE
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 $76.6 million.
What is the period of performance?
Start: 2011-09-16. End: 2020-09-23.
What was the justification for awarding this contract on a sole-source basis instead of seeking competitive bids?
The justification for a sole-source award typically involves circumstances where only one responsible source can provide the required supplies or services. This could be due to proprietary technology, unique capabilities, or urgent and compelling needs. Without specific documentation from the Department of Defense, it's impossible to definitively state the reason, but it warrants investigation to ensure it was a valid exception to full and open competition.
How does the $76.6 million cost compare to industry standards for similar exhaust pipe contracts, especially considering the lack of competition?
Benchmarking this contract's cost is challenging without access to proprietary pricing data or comparable sole-source awards. However, the absence of competition inherently suggests a higher likelihood of inflated pricing compared to what could be achieved through a competitive process. A thorough cost analysis and review of market research would be necessary to determine if the price was fair and reasonable.
What are the potential risks associated with a long-term, sole-source contract for critical aircraft parts like exhaust pipes?
The primary risks include potential overpayment due to lack of price competition, reduced incentive for the contractor to innovate or improve efficiency, and vulnerability in the supply chain if the sole source faces production issues or goes out of business. Furthermore, it can create barriers to entry for other potential suppliers, limiting future competition and potentially increasing long-term costs.
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: 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
Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $76,591,506
Exercised Options: $76,591,506
Current Obligation: $76,591,506
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-09-16
Current End Date: 2020-09-23
Potential End Date: 2020-09-23 00:00:00
Last Modified: 2025-10-28
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