Navy Aviation contract awarded to Northrop Grumman for $25.6M, with no competition

Contract Overview

Contract Amount: $25,682,462 ($25.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2010-07-30

End Date: 2013-07-30

Contract Duration: 1,096 days

Daily Burn Rate: $23.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NAVY AVIATION

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $25.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NAVY AVIATION Key points: 1. Value for money is questionable due to the lack of competition and fixed-price nature. 2. Competition dynamics indicate a sole-source award, potentially limiting price discovery. 3. Risk indicators include the absence of competitive bidding and a fixed-price contract. 4. Performance context is for aircraft parts, a critical but potentially commoditized area. 5. Sector positioning is within Defense Logistics Agency's support for naval aviation. 6. The contract duration of three years suggests a need for sustained supply.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without competitive benchmarks. As a sole-source award, there's no direct comparison to other bids. The fixed-price nature provides cost certainty for the government but may not reflect the lowest possible price achievable through competition. Given the lack of competitive pressure, the pricing may not be optimized for 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 was solicited. The absence of a competitive bidding process limits the government's ability to explore various pricing structures and potentially secure a more advantageous deal. This approach is typically used when only one responsible source can fulfill the requirement.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition. Without multiple bids, there is less assurance that the price reflects the best possible value or that innovative cost-saving solutions were explored.

Public Impact

The U.S. Navy benefits from the continued supply of essential aircraft parts. Services delivered include the manufacturing and supply of components for naval aviation. Geographic impact is primarily within New York, where the contractor is located. Workforce implications include employment at Northrop Grumman's New York facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing.
Sole-source awards can reduce market pressure for innovation and cost efficiency.
Reliance on a single contractor for critical parts could pose supply chain risks.

Positive Signals

Northrop Grumman is a well-established defense contractor with a track record.
Fixed-price contract provides cost predictability for the government.
The award supports critical naval aviation readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such components is substantial, driven by military and commercial aviation needs. This specific award represents a portion of the Defense Logistics Agency's broader spending on maintaining naval aviation readiness, contributing to the overall ecosystem of defense suppliers.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large prime contractor like Northrop Grumman suggests a focus on established capabilities rather than fostering small business participation through this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial regulations. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Aviation Maintenance
Aircraft Parts Manufacturing
Defense Logistics Support
Northrop Grumman Contracts
Sole-Source Defense 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 $25.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. NAVY AVIATION

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 $25.7 million.

What is the period of performance?

Start: 2010-07-30. End: 2013-07-30.

What is Northrop Grumman's track record with the Department of Defense for similar contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of supplying complex systems and components to the Department of Defense across various branches, including the Navy. They have a significant portfolio of contracts related to aircraft manufacturing, maintenance, and parts supply. While this specific contract is for aircraft parts, Northrop Grumman's broader experience encompasses large-scale defense programs. Analyzing their past performance on similar sole-source or competitively awarded contracts for aircraft components would provide further insight into their reliability and pricing consistency. However, without access to detailed performance reviews or specific historical data for this contract type, a comprehensive assessment remains limited.

How does the $25.6 million value compare to similar aircraft parts contracts awarded by the Navy or DLA?

Benchmarking the $25.6 million value of this contract against similar aircraft parts contracts is challenging without more specific details on the types of parts, quantities, and contract duration. However, given that this is a sole-source award for a period of three years, the total value appears moderate for a large defense contractor like Northrop Grumman. Contracts for specialized or high-demand aircraft components can range from hundreds of thousands to tens of millions of dollars, depending on complexity and volume. The lack of competition makes direct value comparison difficult, as competitive bids often drive prices down. To provide a more accurate comparison, one would need to analyze the unit costs of specific parts procured under this contract against market rates or prices from other similar, competitively awarded contracts for comparable components.

What are the primary risks associated with a sole-source award for critical aircraft parts?

The primary risks associated with a sole-source award for critical aircraft parts include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and increased vulnerability in the supply chain. Without competition, the government may not secure the best possible price or terms. Furthermore, relying on a single supplier for essential components can create dependencies and risks if that supplier faces production issues, financial instability, or geopolitical challenges. The lack of alternative sources also limits the government's leverage in negotiations and contract management, potentially leading to higher long-term costs and reduced flexibility.

How effective is the fixed-price contract type in ensuring value for money in this context?

A Firm Fixed Price (FFP) contract type aims to provide cost certainty for the government by establishing a set price for the goods or services. In this context, it means the government knows the total cost upfront, which is beneficial for budgeting. However, the effectiveness of FFP in ensuring value for money is diminished when the contract is sole-source. While the government is protected from cost overruns by the contractor, the initial price may not be the most competitive. The contractor bears the risk of cost overruns, but without competition, they have less incentive to minimize costs beyond what is necessary to fulfill the contract. Therefore, while FFP offers cost predictability, the 'value' aspect is heavily dependent on how the initial price was determined, which is compromised in a sole-source scenario.

What are the historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS code 336413) by the Department of Defense are substantial and fluctuate based on defense priorities, fleet readiness needs, and modernization programs. The DoD consistently invests billions annually in this category to support its vast inventory of aircraft across the Air Force, Navy, Army, and Marine Corps. Spending is influenced by factors such as the age of aircraft fleets, the introduction of new platforms, and the sustainment requirements for existing ones. Contracts can range from routine maintenance parts to highly specialized components for advanced systems. Analyzing historical data reveals trends in demand for specific types of parts, the prevalence of sole-source versus competitive awards within this sector, and the key contractors dominating the market.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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 (UEI: 967356127)

Address: 600 GRUMMAN RD WEST, BETHPAGE, NY, 03

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $51,364,924

Exercised Options: $51,364,924

Current Obligation: $25,682,462

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038306G068B

IDV Type: IDC

Timeline