DoD awards $17.6M to Northrop Grumman for tactical units, a sole-source delivery order

Contract Overview

Contract Amount: $17,564,211 ($17.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2025-03-11

End Date: 2028-10-31

Contract Duration: 1,330 days

Daily Burn Rate: $13.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SECOND DELIVERY ORDER FOR THE PURCHASE OF TACTICAL UNITS.

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $17.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SECOND DELIVERY ORDER FOR THE PURCHASE OF TACTICAL UNITS. Key points: 1. This contract represents a sole-source award, raising questions about potential cost efficiencies and market competition. 2. The duration of over three years suggests a sustained need for these tactical units. 3. The fixed-price contract type aims to control costs, but the absence of competition limits benchmarking. 4. The award falls under ammunition manufacturing, a critical but often specialized defense sector. 5. The geographic location of performance in Minnesota may have implications for regional economic impact.

Value Assessment

Rating: questionable

Without competitive bids, it is difficult to definitively assess the value for money. The $17.6 million award for tactical units lacks a clear benchmark against similar, competitively procured items. The fixed-price nature provides some cost certainty, but the sole-source aspect means taxpayers may not be receiving the best possible price. Further analysis would require understanding the specific technical requirements and the availability of alternative solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and can potentially lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through a competitive bidding environment, potentially resulting in a higher overall expenditure for these tactical units.

Public Impact

The Department of the Army will receive tactical units essential for its operations. The contract supports national defense capabilities by procuring specialized equipment. The performance location in Minnesota may provide economic benefits to the region through employment and local supply chains. The delivery of these units is crucial for maintaining military readiness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in government spending.
Dependence on a single contractor can create supply chain risks.

Positive Signals

Fixed-price contract type helps to cap costs.
The award supports a critical defense capability.
Long-term contract duration indicates a stable demand.

Sector Analysis

The defense industry, particularly the segment focused on ammunition and tactical equipment manufacturing, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant R&D investment. Northrop Grumman is a major player in this sector. This contract fits within the broader landscape of defense procurement, where sole-source awards are sometimes necessary for highly specialized or proprietary systems. Benchmarking spending in this niche requires access to classified or proprietary cost data, making public comparisons challenging.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the likely specialized requirements for tactical units, it is improbable that significant subcontracting opportunities for small businesses will be mandated or readily available, unless Northrop Grumman proactively seeks them for specific components or services.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the fixed-price contract terms, which aim to limit cost overruns. Transparency is limited due to the sole-source nature and the classification of defense-related procurements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Tactical Vehicle Procurement
Ammunition Manufacturing Contracts
Defense Systems Integration
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Limited transparency in procurement justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SECOND DELIVERY ORDER FOR THE PURCHASE OF 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 $17.6 million.

What is the period of performance?

Start: 2025-03-11. End: 2028-10-31.

What specific tactical units are being procured under this contract, and what are their intended uses?

The provided data indicates the contract is for 'TACTICAL UNITS' and falls under NAICS code 332993 (Ammunition (except Small Arms) Manufacturing). However, the specific type of tactical units is not detailed in the public award notice. These could range from components for larger weapon systems, specialized electronic warfare units, or other critical battlefield equipment. The intended uses are likely related to enhancing the operational capabilities and readiness of Department of the Army forces. Without more granular information, the precise nature and application of these 'tactical units' remain unspecified in the public record.

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

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. This can occur due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when a previous contract was awarded competitively and the follow-on work is only available from the original contractor. For this specific contract, the justification for the sole-source award is not publicly detailed. It is possible that Northrop Grumman possesses unique intellectual property, specialized manufacturing processes, or that the tactical units are integral to a system only they can supply, making competition impractical or impossible within the required timeframe.

How does the $17.6 million cost compare to similar tactical unit procurements, either from Northrop Grumman or other vendors?

Directly comparing the $17.6 million cost is challenging without knowing the exact specifications of the 'tactical units' and their quantities. Publicly available data on similar, competitively procured tactical units from other vendors or even from Northrop Grumman is scarce, especially given the sole-source nature of this award. Defense procurement costs are highly variable based on technology, complexity, and quantity. In the absence of competitive benchmarks, it's difficult to ascertain if this price represents good value. A thorough analysis would require access to detailed technical specifications and potentially classified cost data to establish a reliable comparison.

What is Northrop Grumman's track record with the Department of Defense, particularly in manufacturing ammunition or tactical equipment?

Northrop Grumman Systems Corporation is a major defense contractor with a long and extensive history of supplying a wide array of products and services to the Department of Defense and other government agencies. They have a significant presence in aerospace, defense, and information systems. While their portfolio is broad, they are known to be involved in various aspects of defense manufacturing, including electronic systems, aerospace components, and potentially specialized munitions or related equipment. Their track record with the DoD is generally extensive, marked by numerous large-scale contracts across different defense domains. Specific performance metrics for this particular type of tactical unit procurement would require a deeper dive into contract performance history.

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

The primary risks associated with sole-source awards for critical defense equipment include a lack of price competition, which can lead to higher costs for taxpayers. There's also a reduced incentive for the contractor to innovate or improve efficiency once market pressure is removed. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the contractor experiences production issues, delays, or financial instability, it could significantly impact military readiness. Finally, sole-source awards can sometimes raise concerns about fairness and transparency in the procurement process, even when justified.

What is the historical spending trend for similar tactical units or ammunition manufacturing by the Department of the Army?

Analyzing historical spending trends for 'tactical units' specifically is difficult due to the broad and often classified nature of defense procurement categories. The Department of the Army, and the DoD overall, spends billions annually on a vast array of equipment, including munitions and specialized systems. NAICS code 332993, 'Ammunition (except Small Arms) Manufacturing,' encompasses a range of products. Historical data from the Federal Procurement Data System (FPDS) shows significant spending within this NAICS code by the DoD over the years, often involving large contracts with major defense primes. However, isolating spending trends for a specific, undefined 'tactical unit' within this broad category, especially when awarded sole-source, requires detailed analysis of specific contract actions and program budgets, which are not readily available in aggregated public datasets.

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: $17,564,211

Exercised Options: $17,564,211

Current Obligation: $17,564,211

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $5,200,238

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