DoD awards $246M+ for aircraft parts, with Northrop Grumman as sole source

Contract Overview

Contract Amount: $246,428,549 ($246.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-12-29

End Date: 2025-07-01

Contract Duration: 1,645 days

Daily Burn Rate: $149.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PIPE, EXHAUST AND PIPE, EXHAUST

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $246.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PIPE, EXHAUST AND PIPE, EXHAUST Key points: 1. Significant contract value suggests critical role in maintaining defense aviation capabilities. 2. Sole-source award raises questions about potential for inflated pricing and limited innovation. 3. Long contract duration indicates a sustained need for these specialized aircraft components. 4. Focus on aircraft parts manufacturing highlights a key segment of the defense industrial base. 5. Geographic concentration in California may point to specific operational or logistical hubs.

Value Assessment

Rating: questionable

The contract's value of over $246 million for aircraft parts is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The pricing structure (firm fixed price) offers some cost certainty, but the lack of competition prevents a direct comparison with market rates or alternative suppliers. This sole-source award warrants further scrutiny to ensure fair pricing and prevent potential overspending.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was considered. This approach bypasses the typical competitive process, which usually involves multiple bidders vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, national security imperatives), they limit price discovery and can reduce the incentive for the contractor to offer the most competitive pricing.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competition. Without competing bids, there is less assurance that the government is securing the best possible price for these essential aircraft parts.

Public Impact

The Department of Defense benefits from the continued supply of critical aircraft parts, ensuring operational readiness of its aviation fleet. Northrop Grumman Systems Corporation, as the sole awardee, will likely see significant revenue and potentially maintain or expand its workforce. The contract supports the aerospace manufacturing sector, particularly in California, contributing to the regional economy. End-users are military personnel who rely on well-maintained aircraft for national security missions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of competition may stifle innovation in parts manufacturing or sourcing.
Long-term contract could lead to complacency in cost management.
Dependence on a single supplier poses a supply chain risk.

Positive Signals

Firm fixed price contract provides cost predictability for the government.
Northrop Grumman is an established defense contractor with a track record in aerospace.
Contract ensures continued availability of critical components for defense assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is characterized by high technical requirements, stringent quality control, and often, long production cycles. Given the specialized nature of military aircraft, spending in this area is critical for maintaining national defense capabilities. Comparable spending benchmarks would typically involve analyzing other large sole-source or competitively awarded contracts for similar aircraft component manufacturing and sustainment.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Northrop Grumman voluntarily engages them for subcontracting. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. Given it's a sole-source award, scrutiny may be heightened to ensure fair and reasonable pricing. Accountability measures would include performance monitoring against contract terms and delivery schedules. Transparency is limited by the non-competitive nature, but contract award details are typically available through federal procurement databases.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics
Aerospace Sustainment
Northrop Grumman Contracts
Sole Source Procurements

Risk Flags

Sole Source Award
Lack of Competition
Potential for Overpricing
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $246.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PIPE, EXHAUST AND PIPE, EXHAUST

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 $246.4 million.

What is the period of performance?

Start: 2020-12-29. End: 2025-07-01.

What is Northrop Grumman's track record with the Defense Logistics Agency and similar contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience supplying various components and systems to the Department of Defense, including the Defense Logistics Agency (DLA). The DLA relies on contractors like Northrop Grumman for sustainment and logistics support of military equipment. Analyzing historical contract data for Northrop Grumman with the DLA reveals a pattern of significant awards, often in complex systems and component manufacturing. While specific performance metrics for this particular contract are not detailed here, the company's long-standing relationship with the DoD suggests a capacity to meet demanding requirements. However, the scale and duration of past contracts, including sole-source awards, warrant continued review to ensure consistent value and performance.

How does the $246M value compare to similar aircraft parts contracts awarded competitively?

Direct comparison of this $246M sole-source award to competitively bid contracts for similar aircraft parts is challenging without specific product details. However, large-value contracts for specialized aerospace components can range widely. Competitively awarded contracts often result in lower unit prices due to market forces. If this contract were competed, it's plausible that multiple bidders could have offered alternative solutions or pricing structures, potentially leading to savings for the government. The absence of competition here means the government is relying on Northrop Grumman's proposed pricing without the validation of market alternatives, making it difficult to definitively state if it represents optimal value compared to a competitive scenario.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude include potential overpricing, reduced incentive for innovation, and supply chain vulnerability. Without competitive pressure, the contractor may not be incentivized to offer the lowest possible price, leading to higher costs for taxpayers. The lack of alternative suppliers limits the government's options if performance issues arise or if the contractor faces production challenges. Furthermore, relying on a single source for critical aircraft parts can create a significant risk if that supplier experiences disruptions, potentially impacting military readiness. Robust oversight and negotiation are crucial to mitigate these risks.

What is the historical spending pattern for aircraft parts by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) historically spends billions of dollars annually on aviation parts and related services to support the U.S. military's aircraft fleet. Spending patterns are influenced by factors such as the operational tempo of military branches, the age of aircraft requiring maintenance, and modernization programs. The DLA procures a vast array of components, from basic hardware to highly specialized systems. While specific figures fluctuate year-to-year, the consistent need for sustainment ensures that aircraft parts remain a significant category of DLA expenditure. This contract represents a portion of that ongoing, substantial investment in aviation readiness.

Are there specific aircraft platforms or systems this contract is likely supporting?

Given that Northrop Grumman Systems Corporation is a major manufacturer of various defense systems, and the contract is for 'PIPE, EXHAUST AND PIPE, EXHAUST' and related parts, it is plausible this contract supports platforms where such components are critical. This could include a wide range of military aircraft, such as fighter jets, bombers, transport planes, or helicopters. Northrop Grumman is known for its work on programs like the B-2 bomber, F-35 (as a partner), and various unmanned aerial systems. The specific nature of 'exhaust pipes' suggests components related to engine systems, which are fundamental to all aircraft operations. Without more granular data, pinpointing exact platforms is speculative, but it undoubtedly supports key aviation assets.

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

Solicitation ID: SPRTA120R0100

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 6401 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135

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

Financial Breakdown

Contract Ceiling: $246,428,549

Exercised Options: $246,428,549

Current Obligation: $246,428,549

Subaward Activity

Number of Subawards: 61

Total Subaward Amount: $506,493,559

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRTA119D0001

IDV Type: IDC

Timeline