Northrop Grumman awarded $37.5M for outer wing panels, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $37,484,783 ($37.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2013-11-13

End Date: 2017-11-30

Contract Duration: 1,478 days

Daily Burn Rate: $25.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OUTER WING PANEL

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32904

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $37.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: OUTER WING PANEL Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long contract duration of nearly 5 years suggests a sustained need for these components. 3. Firm Fixed Price contract type shifts cost risk to the contractor. 4. Contract awarded by the Department of Defense, indicating a defense-related procurement. 5. Performance concentrated in Florida, potentially impacting the local aerospace industry. 6. No small business set-aside, suggesting the prime contractor is a large business.

Value Assessment

Rating: fair

The total award of $37.5 million for outer wing panels represents a significant investment. Without specific benchmarks for these particular components or comparable sole-source procurements, it is difficult to definitively assess value for money. The firm fixed-price structure is generally favorable for cost control, but the lack of competition raises concerns about potential overpricing. Further analysis would require detailed cost breakdowns and comparisons to similar industry products or previous contracts for the same or equivalent parts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The specific justification for this approach is not provided in the data. Sole-source contracts can arise from unique capabilities, urgent needs, or a lack of viable alternatives. However, this significantly limits opportunities for price discovery and potentially leads to higher costs for the government compared to a competitive process.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the best possible price for these outer wing panels, as there was no market pressure to drive down costs.

Public Impact

The primary beneficiary is the Department of Defense, which receives critical components for its aircraft. The contract delivers essential outer wing panels, vital for aircraft functionality and safety. Geographic impact is concentrated in Florida, where the contractor is located and performance likely occurs. Workforce implications include employment for skilled labor in aerospace manufacturing within Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Long contract duration could mask inefficiencies if not closely monitored.
Sole-source awards require strong justification to ensure taxpayer value.

Positive Signals

Firm Fixed Price contract type provides cost certainty.
Award to an established contractor like Northrop Grumman suggests a level of trust and capability.
Concentration in Florida could support regional aerospace expertise and workforce.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft components. The market for specialized aerospace parts is often characterized by high barriers to entry, advanced technology requirements, and a limited number of qualified suppliers, which can sometimes lead to sole-source procurements. Spending in this area is critical for national defense capabilities. Comparable spending benchmarks would typically be found within other defense contracts for similar aircraft components or systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the prime contract was awarded directly to a large business, Northrop Grumman Systems Corporation. There is no information provided on subcontracting plans or actual subcontracting to small businesses. Without this data, it's difficult to assess the impact on the small business ecosystem, though typically large sole-source contracts may have limited direct opportunities for small business prime contractors.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract shifts some risk to the contractor, but government oversight is still crucial to monitor progress, quality, and adherence to contract terms. Transparency is limited by the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Component Manufacturing
Defense Aerospace Procurement
Northrop Grumman Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award limits price competition.
Lack of transparency in justification for sole-sourcing.
Potential for cost overruns if not adequately managed despite FFP.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. OUTER WING PANEL

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $37.5 million.

What is the period of performance?

Start: 2013-11-13. End: 2017-11-30.

What is Northrop Grumman's track record with similar sole-source defense contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in producing complex aerospace systems and components. They frequently engage in sole-source or limited-competition contracts due to the specialized nature of their work and their position as a primary supplier for many defense platforms. Analyzing their past performance on similar sole-source awards for critical aircraft components would involve reviewing contract histories for on-time delivery, adherence to budget (where applicable for fixed-price contracts), and quality metrics. Publicly available data often shows a pattern of large, long-term sole-source awards for established programs, reflecting their significant role in the defense industrial base. However, a detailed assessment would require access to specific performance reviews and cost data for those prior contracts.

How does the pricing of these outer wing panels compare to industry benchmarks or previous procurements?

Directly comparing the pricing of these specific outer wing panels to industry benchmarks is challenging without detailed cost breakdowns and access to proprietary pricing information. As a sole-source award, there was no competitive bidding process to establish a market-driven price. To assess value, one would need to compare the per-unit cost against similar components produced by other manufacturers (if available) or against Northrop Grumman's own historical pricing for these or equivalent parts on previous contracts. The firm fixed-price (FFP) nature means the contractor bears the risk of cost overruns, which can sometimes lead to higher initial pricing to account for contingencies. Without more granular data, a definitive value-for-money assessment based on price is difficult.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, the government has less leverage to negotiate the lowest possible price. Another risk is contractor performance; while Northrop Grumman is a reputable company, any sole-source award carries the inherent risk that the government is reliant on a single provider. This could lead to issues if the contractor faces production delays, quality control problems, or significant cost increases that are harder to challenge without alternative options. The long duration of the contract also presents a risk of price escalation over time, even within an FFP structure, if not managed carefully through contract clauses or oversight.

How effective is the firm fixed-price (FFP) contract type in managing costs for this procurement?

The Firm Fixed-Price (FFP) contract type is generally considered effective in managing costs for procurements where the scope of work is well-defined and risks can be reasonably anticipated. Under an FFP contract, the contractor assumes the responsibility for all costs incurred and the risk of any cost overruns. This incentivizes the contractor to control expenses and improve efficiency to maximize profit. For the government, it provides cost certainty, as the final price is fixed. However, for complex or long-duration contracts like this one, contractors may build in higher contingency reserves into their initial price to account for unforeseen risks, potentially leading to a higher baseline cost compared to other contract types if competition were present.

What are the historical spending patterns for outer wing panels or similar aircraft components by the Department of Defense?

Historical spending patterns for outer wing panels and similar aircraft components by the Department of Defense typically show significant and consistent investment due to the ongoing need for new aircraft production, maintenance, and upgrades. These procurements are often characterized by large dollar values and long-term contracts, frequently awarded to major aerospace manufacturers like Northrop Grumman. Spending can fluctuate based on defense budgets, specific program requirements (e.g., new aircraft development vs. sustainment), and geopolitical factors. Sole-source or limited-competition awards are common in this sector due to the specialized technology and high barriers to entry. Analyzing historical data would reveal trends in contract values, durations, and the prevalence of different contract types for component manufacturing.

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 AND STRUCTURAL COMPONENTS

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: $37,484,783

Exercised Options: $37,484,783

Current Obligation: $37,484,783

Subaward Activity

Number of Subawards: 334

Total Subaward Amount: $1,222,590,080

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