DoD awards $13.3M delivery order to Northrop Grumman for tactical units, continuing a sole-source trend

Contract Overview

Contract Amount: $13,335,812 ($13.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2025-07-23

End Date: 2030-01-31

Contract Duration: 1,653 days

Daily Burn Rate: $8.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIRD 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 $13.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THIRD DELIVERY ORDER FOR THE PURCHASE OF TACTICAL UNITS Key points: 1. This award represents a continuation of previous sole-source procurements for tactical units. 2. The contract's fixed-price nature provides cost certainty for the government. 3. The duration of the contract extends over five years, indicating a long-term need. 4. The specific nature of 'tactical units' suggests a critical defense capability. 5. The absence of competition raises questions about potential cost efficiencies. 6. The award is managed by the Department of the Army within the DoD. 7. The product code suggests ammunition manufacturing, a specialized defense sector.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging without detailed cost breakdowns or comparisons to similar tactical unit procurements. However, the absence of competition inherently limits the government's ability to secure the best possible price. The fixed-price contract type offers predictability, but the overall value proposition is weakened by the lack of competitive pressure to drive down costs. Further analysis would require understanding the specific technical requirements and market availability of these tactical units.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, 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 typically result in higher prices and reduced innovation compared to fully competed contracts. The lack of multiple bidders means the government did not benefit from price discovery through market competition.

Taxpayer Impact: Taxpayers may be paying a premium for these tactical units due to the absence of competitive bidding. Without a competitive process, there is less assurance that the price reflects the lowest reasonable cost for the required goods.

Public Impact

The U.S. Army benefits from the acquisition of critical tactical units necessary for its operations. These units likely support military readiness and national defense objectives. The contract's performance is expected to occur primarily within the United States, given the manufacturing location. The award supports jobs within Northrop Grumman's defense manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Long contract duration without competitive re-evaluation could lead to entrenched pricing.
Specific details on the 'tactical units' are not publicly available, hindering performance assessment.
Potential for cost overruns if market prices for components fluctuate significantly.

Positive Signals

Award to an established defense contractor with a track record in the sector.
Fixed-price contract provides cost certainty for the government.
Clear delivery schedule with defined end date.
Contract supports critical defense capabilities for the U.S. Army.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically related to ammunition and tactical equipment. The market for such specialized defense goods is often characterized by a limited number of qualified suppliers due to high barriers to entry, including technological expertise, security clearances, and established relationships with government agencies. Spending in this area is driven by national security requirements and geopolitical factors. Comparable spending benchmarks would typically involve other large-scale defense procurements for similar equipment or ammunition types.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on the prime's capabilities. Without explicit small business subcontracting goals, the direct impact on the small business ecosystem for this specific award is likely minimal, though Northrop Grumman may engage small businesses indirectly through its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded within the fixed-price contract terms, requiring delivery of specified tactical units by a certain date. Transparency is limited due to the sole-source nature of the award and the proprietary details of the tactical units. The Inspector General for the Department of Defense may have jurisdiction for audits and investigations if fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Ammunition Procurement
Northrop Grumman Defense Contracts
Army Tactical Equipment Acquisition
Sole-Source Defense Procurements

Risk Flags

Sole-source award lacks competitive justification.
Limited public information on the specific 'tactical units' procured.
Potential for price inflation due to lack of competition.
Long contract duration without re-competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THIRD 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 $13.3 million.

What is the period of performance?

Start: 2025-07-23. End: 2030-01-31.

What is the specific nature and function of the 'tactical units' being procured?

The provided data does not specify the exact nature or function of the 'tactical units.' The Product Service Code (PSC) '332993' relates to Ammunition (except Small Arms) Manufacturing. Therefore, it is highly probable that these 'tactical units' are components or specialized types of ammunition, or related equipment integral to their deployment or function. Without further details from the contract announcement or associated documentation, the precise capabilities and intended use remain undisclosed to the public. This lack of specificity is common for sensitive defense procurements where operational security is a concern.

What is the historical spending pattern for similar tactical units with Northrop Grumman?

Historical spending data for similar tactical units with Northrop Grumman is not directly available in the provided snippet. However, the fact that this is a 'THIRD DELIVERY ORDER' suggests a prior contractual relationship and potentially previous awards for the same or similar items. To ascertain historical spending patterns, one would need to access contract databases (like FPDS or SAM.gov) and search for previous delivery orders or contract modifications issued to Northrop Grumman under the same or related contract vehicles for 'tactical units' or ammunition manufacturing. Analyzing these past awards would reveal the total value, duration, and competitive nature of previous procurements, providing context for the current $13.3 million award.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. The specific justification for this sole-source determination is not included in the snippet. Common reasons for sole-source awards in defense contracting include: the unique capability of a single contractor, urgent and compelling needs where competition is impractical, or when only one responsible source exists. For instance, if Northrop Grumman possesses proprietary technology or specialized manufacturing processes essential for these specific tactical units, and no other company can meet the requirement, a sole-source award might be justified. A formal Justification and Approval (J&A) document would typically be required and made public, detailing the rationale.

How does the $13.3 million award compare to the total contract value or previous awards?

This $13.3 million represents the value of a single delivery order, not necessarily the total contract value. The data indicates this is the 'THIRD DELIVERY ORDER,' implying there may have been previous orders under the same contract vehicle, and potentially future orders. To understand the total value, one would need to examine the base contract and all associated delivery orders. Comparing this $13.3 million to previous orders would reveal if the value is increasing, decreasing, or stable over time. Without data on the base contract ceiling or prior delivery orders, it's difficult to assess if this award is typical, higher, or lower than previous procurements.

What are the potential risks associated with a sole-source contract for ammunition manufacturing?

Sole-source contracts for ammunition manufacturing carry several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a competitive bidding process. There's also a risk of reduced innovation, as the sole contractor may have less incentive to invest in process improvements or new technologies. Furthermore, over-reliance on a single supplier can create supply chain vulnerabilities; if the contractor faces production issues, delays, or financial instability, it could significantly disrupt the supply of critical defense materiel. Ensuring adequate oversight and performance monitoring becomes even more crucial in sole-source situations to mitigate these risks.

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: $13,335,812

Exercised Options: $13,335,812

Current Obligation: $13,335,812

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $2,751,332

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