Northrop Grumman Awarded $1.49B for Precision Guidance Kits, Lacking Competition
Contract Overview
Contract Amount: $1,490,942,765 ($1.5B)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2013-08-30
End Date: 2025-12-01
Contract Duration: 4,476 days
Daily Burn Rate: $333.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: TO AWARD PRODUCTION EFFORT FOR THE PRECISION GUIDANCE KIT (PGK)TO INCLUDE ARMY, MARINES, FMS QUANTITIES, FFP, BASE WITH 2 OPTIONS INCLUDING SPECIAL LICENSE RIGHTS (TDP).
Place of Performance
Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442
Plain-Language Summary
Department of Defense obligated $1.49 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: TO AWARD PRODUCTION EFFORT FOR THE PRECISION GUIDANCE KIT (PGK)TO INCLUDE ARMY, MARINES, FMS QUANTITIES, FFP, BASE WITH 2 OPTIONS INCLUDING SPECIAL LICENSE RIGHTS (TDP). Key points: 1. Significant contract value of $1.49 billion for PGK production. 2. Sole-source award to Northrop Grumman raises competition concerns. 3. Long contract duration (2013-2025) suggests ongoing program needs. 4. Focus on small arms ammunition manufacturing sector.
Value Assessment
Rating: questionable
The contract value of $1.49 billion is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to potential alternatives or previous iterations.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Northrop Grumman Systems Corporation. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The absence of competition on a contract of this magnitude means taxpayers may be paying a premium for the Precision Guidance Kits.
Public Impact
Ensures continued supply of critical guidance kits for military operations. Potential for higher costs due to lack of competitive pricing. Supports a major defense contractor's production capabilities. Impacts readiness for Army and Marine Corps units relying on PGK.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- High contract value
Positive Signals
- Ensures production continuity
- Supports critical defense capability
Sector Analysis
This contract falls within the Small Arms Ammunition Manufacturing sector, specifically for precision guidance kits. The $1.49 billion award is a significant sum within this niche, highlighting the importance of this component.
Small Business Impact
The data indicates this contract was not awarded to small businesses (sb: false). Therefore, there is no direct benefit to small businesses from this specific award, and potential opportunities for subcontracting are not detailed.
Oversight & Accountability
The contract was awarded by the Department of Defense through the Defense Contract Management Agency. Oversight would focus on production quality, delivery schedules, and adherence to contract terms, especially given the sole-source nature.
Related Government Programs
- Small Arms Ammunition Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award lacks competition
- Potential for inflated pricing
- Limited transparency in price negotiation
- No small business participation indicated
Tags
small-arms-ammunition-manufacturing, department-of-defense, mn, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.49 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. TO AWARD PRODUCTION EFFORT FOR THE PRECISION GUIDANCE KIT (PGK)TO INCLUDE ARMY, MARINES, FMS QUANTITIES, FFP, BASE WITH 2 OPTIONS INCLUDING SPECIAL LICENSE RIGHTS (TDP).
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 $1.49 billion.
What is the period of performance?
Start: 2013-08-30. End: 2025-12-01.
What is the justification for the sole-source award of the Precision Guidance Kit production contract?
The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Without further documentation, the specific rationale for awarding this $1.49 billion contract to Northrop Grumman without competition remains unclear and warrants investigation.
What are the long-term cost implications of awarding this contract without competition?
Awarding a contract of this magnitude without competition can lead to higher costs over its lifespan. The lack of competitive pressure may allow the contractor to maintain higher profit margins than if multiple bids were considered. This could result in a significant long-term financial burden on the government and taxpayers.
How does the lack of competition impact the government's ability to ensure the most effective and innovative solution for the PGK?
Sole-source awards limit the government's exposure to alternative technologies, innovative approaches, and potentially more cost-effective solutions that other manufacturers might offer. This can stifle innovation and prevent the adoption of advancements that could improve the PGK's performance or reduce its lifecycle costs.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W15QKN12R0065
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 4700 NATHAN LN N, MINNEAPOLIS, MN, 55442
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,490,944,652
Exercised Options: $1,490,942,765
Current Obligation: $1,490,942,765
Actual Outlays: $31,959,466
Subaward Activity
Number of Subawards: 641
Total Subaward Amount: $890,780,023
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2013-08-30
Current End Date: 2025-12-01
Potential End Date: 2025-12-01 00:00:00
Last Modified: 2025-10-09
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