Northrop Grumman awarded $19.16M contract for PCA, FAT, and tactical units by the Department of the Army

Contract Overview

Contract Amount: $19,156,757 ($19.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-02-28

End Date: 2027-04-30

Contract Duration: 1,157 days

Daily Burn Rate: $16.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FIRST DELIVER ORDER FOR THE PURCHASE OF PCA, FAT AND TACTICAL UNITS.

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $19.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: FIRST DELIVER ORDER FOR THE PURCHASE OF PCA, FAT AND TACTICAL UNITS. Key points: 1. Contract awarded for specialized military equipment, indicating a need for advanced tactical capabilities. 2. The award to Northrop Grumman, a major defense contractor, suggests a reliance on established industry players for critical defense systems. 3. The fixed-price contract type aims to control costs, but the lack of competition raises concerns about optimal pricing. 4. The duration of the contract (nearly 4 years) suggests a long-term requirement for these units. 5. The specific nature of the equipment (PCA, FAT, tactical units) points to a niche but important segment of defense procurement. 6. The contract is a delivery order, implying it's part of a larger, potentially pre-existing agreement or indefinite-delivery contract.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the PCA, FAT, and tactical units. However, given the $19.16 million price tag for a nearly four-year delivery period, the cost appears substantial. As a sole-source award, there's an inherent risk that the pricing may not reflect the most competitive market rates. Further analysis would require comparing the unit costs of similar equipment procured through competitive means or examining the contractor's historical pricing for comparable systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or when urgency dictates a rapid award. The lack of competition means that the Department of the Army did not benefit from the price discovery and innovation that typically arises from a competitive bidding process. This can potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the government secured the best possible price for these critical defense assets.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel who will utilize the PCA, FAT, and tactical units. The contract delivers specialized equipment essential for military operations, enhancing tactical capabilities. The geographic impact is primarily within the Department of the Army's operational theaters, though the manufacturing location is noted as Minnesota. Workforce implications include potential employment at Northrop Grumman and its subcontractors, particularly in areas related to defense manufacturing and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Sole-source awards can limit opportunities for emerging or smaller defense contractors.
The specific nature of the equipment might indicate a reliance on a single supplier, posing a long-term risk if that supplier faces production issues.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests a high likelihood of meeting technical specifications and delivery timelines.
The firm fixed-price contract type provides cost certainty for the government, assuming the scope of work remains unchanged.
The contract duration indicates a sustained commitment to equipping forces with these specific units.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of specialized military equipment. The market for such components is often characterized by high barriers to entry due to technological complexity, stringent quality requirements, and established relationships with government agencies. Spending in this area is driven by national security priorities and the need to maintain a technological edge. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar defense systems or components.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Furthermore, the contractor, Northrop Grumman Systems Corporation, is a large defense prime. While large prime contractors are often required to subcontract a portion of their work to small businesses, the absence of a specific set-aside on this delivery order means that opportunities for small businesses are not guaranteed and would depend on Northrop Grumman's internal subcontracting plans. This could limit direct opportunities for small businesses to compete for this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a delivery order, it is likely governed by the terms of a larger contract or basic ordering agreement, which would have its own oversight mechanisms. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Department of the Army Procurement
Defense Ammunition Manufacturing
Northrop Grumman Defense Contracts
Tactical Equipment Procurement
Military Unit Procurement

Risk Flags

Sole-source award raises concerns about price competitiveness.
Lack of competition may limit innovation and alternative solutions.
Potential for vendor lock-in due to specialized equipment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. FIRST DELIVER ORDER FOR THE PURCHASE OF PCA, FAT AND TACTICAL UNITS.

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $19.2 million.

What is the period of performance?

Start: 2024-02-28. End: 2027-04-30.

What are PCA and FAT units, and what is their specific function within the Department of the Army?

PCA likely refers to 'Personnel Carrying Apparatus' or a similar protective gear, while FAT could stand for 'Forward Area Targeting' systems or related equipment. These units are specialized components designed to enhance soldier protection, situational awareness, and operational effectiveness in tactical environments. PCA might involve advanced body armor or environmental protection systems, crucial for soldier survivability. FAT systems could encompass advanced sensors, communication relays, or targeting pods that improve the ability to identify and engage threats accurately. Their specific function is to equip soldiers with critical capabilities for modern warfare, directly impacting mission success and personnel safety. Without more detailed specifications from the contract announcement, the exact nature remains inferred from common defense terminology.

Why was this contract awarded on a sole-source basis instead of being competed?

The sole-source award suggests that the Department of the Army determined that Northrop Grumman Systems Corporation was the only responsible source capable of providing the required PCA, FAT, and tactical units. This could be due to proprietary technology, unique manufacturing capabilities, existing integration with current systems, or urgent national security needs where the time required for a competitive procurement would be detrimental. Justification for sole-source awards typically requires rigorous documentation demonstrating why competition is not feasible or advantageous. The government may have concluded that the risks and delays associated with a competitive process outweighed the potential benefits in this specific instance, possibly due to the specialized nature of the equipment or the contractor's established role in supplying similar systems.

How does the $19.16 million value compare to similar procurements for tactical equipment?

Direct comparison of the $19.16 million value is difficult without knowing the exact quantity and specifications of the PCA, FAT, and tactical units. However, for context, major defense systems and specialized equipment can range from millions to billions of dollars. If this award represents a significant quantity of advanced tactical gear or a critical component for a larger system, the price could be considered reasonable within the defense sector. Conversely, if it's for a smaller number of units or less complex items, it might be on the higher side, especially given the sole-source nature. Benchmarking would require identifying contracts for comparable items (e.g., advanced targeting systems, specialized protective gear) awarded competitively to assess unit costs and overall value for money.

What are the potential risks associated with a sole-source award for defense equipment?

The primary risk of a sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Another risk is reduced innovation, as there is less incentive for the sole provider to develop more cost-effective or technologically superior solutions. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch suppliers in the future. There's also a risk if the sole-source provider experiences production issues, financial instability, or decides to discontinue the product line, as there are no immediate alternatives readily available. This can impact program continuity and operational readiness.

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

Northrop Grumman Systems Corporation is a major defense contractor with a long history of supplying a wide array of systems and components to the Department of Defense. They are known for their work in areas such as aerospace, defense electronics, and information systems. While specific details on their production of PCA, FAT, and tactical units are not provided in this award notice, the company has a substantial portfolio of contracts for advanced military hardware. Their track record generally includes delivering complex systems, though like any large contractor, they may have faced challenges with specific programs. The Department of Defense likely awarded this contract based on Northrop Grumman's demonstrated capabilities and past performance in related defense manufacturing areas.

What are the implications of this contract for future spending on similar tactical units?

This contract suggests a continued or emerging requirement for these specific types of tactical units within the Army. If the units prove effective and meet operational needs, it could lead to follow-on orders or similar contracts for replenishment or upgrades. The sole-source nature might indicate a strategic decision to rely on Northrop Grumman for this particular capability, potentially shaping future procurement strategies in this niche. However, if the Army seeks to introduce competition or explore alternative solutions in the future, this award might serve as a baseline for comparison. Future spending will likely depend on evolving military requirements, technological advancements, and budget allocations for defense modernization.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

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

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: $19,156,757

Exercised Options: $19,156,757

Current Obligation: $19,156,757

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $3,087,216

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Parent Contract

Parent Award PIID: W15QKN24D0013

IDV Type: IDC

Timeline