DoD awards $85M for aircraft duct assemblies, with Northrop Grumman as sole source

Contract Overview

Contract Amount: $84,836,357 ($84.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-30

End Date: 2029-03-16

Contract Duration: 1,781 days

Daily Burn Rate: $47.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-2 TAILPIPE, FORWARD DUCT ASSEMBLIES

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $84.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: B-2 TAILPIPE, FORWARD DUCT ASSEMBLIES Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Long contract duration of nearly five years suggests potential for cost overruns. 3. No small business set-aside indicates limited opportunities for smaller firms. 4. The contract is for aircraft parts, a critical component of defense readiness. 5. Northrop Grumman's established role in defense manufacturing suggests technical capability. 6. The firm fixed-price structure shifts some risk to the contractor.

Value Assessment

Rating: questionable

The contract value of $84.8 million for aircraft duct assemblies appears high, especially given the sole-source nature of the award. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of transparency in the procurement process makes a definitive value-for-money assessment challenging. Further analysis would be needed to determine if the price reflects fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the competitive process, which typically drives down prices and encourages innovation. The absence of multiple bidders limits the government's ability to explore alternative solutions or secure the most cost-effective option. The justification for a sole-source award would need to be thoroughly reviewed.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Public Impact

The Department of Defense benefits from the supply of critical aircraft parts. Northrop Grumman Systems Corporation, the contractor, will receive significant revenue. The contract supports manufacturing jobs, likely within Northrop Grumman's facilities. The geographic impact is primarily in California, where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Long contract duration may lead to price increases over time.
Lack of small business involvement misses opportunities for economic inclusion.

Positive Signals

Firm fixed-price contract shifts some cost risk to the contractor.
Northrop Grumman is an established defense contractor with proven capabilities.
Contract supports essential defense logistics and readiness.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft parts. The market for defense aerospace components is often characterized by high barriers to entry, specialized technology, and a limited number of qualified suppliers, frequently leading to sole-source or limited competition awards. Spending in this category is critical for maintaining military aircraft fleets. Comparable spending benchmarks are difficult to establish without more specific details on the duct assemblies themselves.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this significant defense contract are likely limited. The absence of a small business focus in this award does not contribute to the government's goals of supporting the small business industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and compliance. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Component Manufacturing
Defense Logistics Support
Northrop Grumman Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award raises concerns about competition and pricing.
Long contract duration increases risk of cost escalation and obsolescence.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. B-2 TAILPIPE, FORWARD DUCT ASSEMBLIES

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 $84.8 million.

What is the period of performance?

Start: 2024-04-30. End: 2029-03-16.

What is the specific justification for awarding this contract on a sole-source basis to Northrop Grumman Systems Corporation?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the government's needs. This could be due to proprietary technology, unique capabilities, or urgent requirements where competition is not feasible. A thorough review of the contract file and any associated Justification and Approval (J&A) documents would be necessary to understand the rationale. Without this information, it is difficult to assess if the sole-source designation was appropriate and if it resulted in a fair price for the government.

How does the pricing of these B-2 TAILPIPE, FORWARD DUCT ASSEMBLIES compare to similar components or historical spending by the Department of Defense?

Direct comparison of pricing for these specific B-2 TAILPIPE, FORWARD DUCT ASSEMBLIES is challenging without access to detailed cost breakdowns, specifications, and market data for similar components. The total contract value is $84.8 million over approximately 1781 days (about 4.88 years). This averages to roughly $17.4 million per year. However, this is a total contract value, and actual spending may vary based on delivery orders. Given the sole-source nature, benchmarking against competitive contracts for similar parts is difficult. Historical spending data for B-2 specific components would be the most relevant comparison, but this is not publicly available in the provided data.

What are the potential risks associated with a nearly five-year contract for aircraft parts?

A contract duration of nearly five years for aircraft parts presents several potential risks. Firstly, material costs and labor rates can fluctuate significantly over such a long period, potentially leading to cost increases if not adequately managed within the contract's pricing structure. Secondly, technological advancements in aircraft or manufacturing processes could render the specified parts obsolete or less efficient before the contract ends. Thirdly, long-term reliance on a single supplier, especially under a sole-source award, can reduce the government's leverage for future negotiations and potentially lead to complacency in performance or quality. Finally, unforeseen supply chain disruptions or geopolitical events could impact the contractor's ability to deliver consistently over the extended period.

What is the significance of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) in the context of this contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' signifies that the contract is for the production or supply of components that are essential for the operation and maintenance of aircraft, but are not engines, airframes, or avionics. This category includes a wide range of parts like duct assemblies, landing gear components, and other specialized equipment. For the Department of Defense, securing a reliable supply chain for these types of parts is crucial for maintaining the readiness and operational capability of its aircraft fleet. The manufacturing of these parts often requires specialized knowledge, materials, and quality control processes, aligning with the capabilities of established defense contractors like Northrop Grumman.

What is the expected performance period and delivery schedule for this contract?

The contract has a duration of 1781 days, which translates to approximately 4.88 years. The start date is April 30, 2024, and the end date is March 16, 2029. This indicates a long-term supply requirement for the B-2 TAILPIPE, FORWARD DUCT ASSEMBLIES. While the total duration is defined, the specific delivery schedule for individual orders (delivery orders) is not detailed in the provided data. It is likely that the government will issue task orders throughout the contract period based on its operational needs and inventory requirements for the B-2 aircraft program.

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: SPRTA118R0190

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: $84,836,357

Exercised Options: $84,836,357

Current Obligation: $84,836,357

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $41,016,887

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