Northrop Grumman awarded $120M for 155mm ammunition, highlighting defense manufacturing capacity
Contract Overview
Contract Amount: $119,925,056 ($119.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2023-01-30
End Date: 2024-05-24
Contract Duration: 480 days
Daily Burn Rate: $249.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: RFP 07 FOR 155MM AMMO
Place of Performance
Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $119.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: RFP 07 FOR 155MM AMMO Key points: 1. Contract value of $119.9M represents significant investment in critical munitions. 2. Sole awardee suggests specialized capabilities or intense competition for this specific requirement. 3. Fixed-price contract type shifts cost risk to the contractor. 4. Delivery order structure indicates a call against an existing or new framework agreement. 5. Contract duration of 480 days suggests a focused production or delivery period. 6. Ammunition manufacturing is a key component of national defense readiness.
Value Assessment
Rating: good
The contract value of approximately $120 million for 155mm ammunition appears reasonable given the strategic importance and manufacturing complexity of such munitions. Benchmarking against similar large-scale ammunition procurements would provide further context, but the firm fixed-price structure suggests the government has negotiated a defined cost. The award to a single entity, Northrop Grumman, implies either a highly specialized production capability or a competitive process that resulted in a best-value determination for this specific requirement.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of two bids suggests a focused competition for this specific requirement. While the exact number of bidders is not detailed, full and open competition generally promotes price discovery and allows the government to select the most advantageous offer based on a combination of price and other factors.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices and potentially leading to better value. It ensures that the government is not limited to a single source, which could lead to inflated costs.
Public Impact
The primary beneficiaries are the Department of Defense and its operational units requiring 155mm ammunition for artillery systems. This contract ensures the continued supply of critical munitions essential for military operations and readiness. The geographic impact is primarily within the United States, supporting domestic defense industrial base capabilities. The contract supports jobs in advanced manufacturing, engineering, and logistics within Northrop Grumman's operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for supply chain disruptions impacting delivery timelines.
- Reliance on a single contractor could create future dependency.
- Geopolitical factors could influence raw material availability and cost.
Positive Signals
- Firm fixed-price contract provides cost certainty.
- Award to established defense contractor suggests proven manufacturing capabilities.
- Competition, even if limited to two bidders, indicates market interest.
- Ensures supply of a critical munition for national defense.
Sector Analysis
The defense sector, specifically munitions manufacturing, is a critical component of national security. This contract falls within the broader industrial base supporting military readiness. The market for large-caliber ammunition is characterized by high barriers to entry due to specialized equipment, stringent quality control, and long production lead times. Spending in this area is often driven by geopolitical events and strategic defense planning, with major contractors like Northrop Grumman playing a vital role.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Northrop Grumman, a large prime contractor, is likely to manage subcontracting opportunities. Analysis of their subcontracting plan would be necessary to determine the extent to which small businesses will participate in fulfilling this contract, potentially impacting the small business ecosystem within the defense supply chain.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers. Northrop Grumman's internal quality assurance and compliance departments are also responsible for ensuring adherence to contract terms. Transparency is facilitated through contract award databases, though detailed performance metrics and specific oversight activities are typically not publicly disclosed. Inspector General involvement would be triggered by allegations of fraud, waste, or abuse.
Related Government Programs
- Artillery Ammunition Procurement
- Department of Defense Munitions Contracts
- Northrop Grumman Defense Contracts
- Large Caliber Ammunition Manufacturing
Risk Flags
- Potential for sole-source dependency in future procurements if competition narrows.
- Supply chain vulnerability for critical raw materials.
- Production capacity limitations impacting rapid scaling.
Tags
defense, department-of-defense, department-of-the-army, ammunition, northrop-grumman, firm-fixed-price, full-and-open-competition, delivery-order, manufacturing, virginia, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $119.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. RFP 07 FOR 155MM AMMO
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 $119.9 million.
What is the period of performance?
Start: 2023-01-30. End: 2024-05-24.
What is the historical spending trend for 155mm ammunition by the Department of Defense?
Historical spending on 155mm ammunition by the Department of Defense has fluctuated based on operational tempo, strategic priorities, and inventory levels. In recent years, there has been a renewed focus on replenishing stocks and increasing production capacity due to global security challenges. For example, prior to this $120 million award, the DoD may have awarded multiple contracts for similar quantities or different types of 155mm rounds over several fiscal years. Analyzing annual defense budgets and specific appropriations for munitions would reveal trends, showing periods of high demand during active conflicts and lower demand during peacetime. The current award suggests a significant investment aimed at bolstering long-term supply.
How does the unit cost of this 155mm ammunition compare to previous procurements or industry benchmarks?
Determining the precise unit cost requires dividing the total contract value ($119,925,056.25) by the quantity of ammunition procured, which is not explicitly provided in the data. However, if we assume a typical quantity for such a large award, the unit cost could be estimated. For context, historical data suggests that 155mm artillery shells can range from several hundred to over a thousand dollars per round, depending on the specific type (e.g., standard, extended range, precision-guided) and the terms of the contract. Without the quantity, a direct comparison is difficult. If this contract is for a standard round, its unit price would need to be benchmarked against similar firm-fixed-price contracts awarded under full and open competition to assess value for money. Variations in cost can be attributed to manufacturing efficiency, raw material prices, and the competitive landscape at the time of award.
What are the specific risks associated with relying on Northrop Grumman for this critical munition?
The primary risk associated with relying on a single contractor like Northrop Grumman for a critical munition is the potential for supply chain disruptions. If Northrop Grumman faces production issues, labor strikes, raw material shortages, or unforeseen facility problems, the entire supply of 155mm ammunition could be jeopardized, impacting military readiness. Furthermore, long-term reliance on a sole provider can reduce competitive pressure, potentially leading to higher prices in future procurements if the government needs to secure additional supplies. There's also a strategic risk if the contractor's business priorities shift away from this specific product line. Mitigation strategies often involve maintaining strategic industrial base capabilities, fostering competition among multiple suppliers where feasible, and robust contract management.
What is the expected performance standard or quality assurance process for this ammunition?
Ammunition procured by the Department of Defense is subject to rigorous performance standards and quality assurance processes to ensure reliability and effectiveness on the battlefield. This contract likely incorporates specific technical data packages (TDPs) and performance specifications that Northrop Grumman must meet. Quality assurance would involve multiple stages, including raw material inspection, in-process manufacturing checks, and final product testing. The Department of the Army would likely have government quality assurance representatives (GQARs) overseeing production and conducting acceptance testing. Compliance with military standards (e.g., MIL-STD) and specific contract clauses related to quality and defect reporting would be mandatory. Failure to meet these standards could result in rejection of the product and potential penalties for the contractor.
How does this contract contribute to the overall readiness and strategic goals of the Department of the Army?
This $120 million contract for 155mm ammunition directly contributes to the Department of the Army's readiness by ensuring an adequate supply of a fundamental weapon system component. The 155mm howitzer is a cornerstone of ground force firepower, and its effectiveness is directly tied to the availability of reliable ammunition. Procuring this quantity helps replenish stocks, support training exercises, and provide a buffer for potential operational deployments. Strategically, it reinforces the defense industrial base, signaling commitment to domestic manufacturing capabilities for critical munitions. This investment supports the Army's ability to project power and maintain deterrence in a complex global security environment.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 415 CONSTITUTION RD BLDG 229, RADFORD, VA, 24141
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: $119,925,056
Exercised Options: $119,925,056
Current Obligation: $119,925,056
Subaward Activity
Number of Subawards: 3
Total Subaward Amount: $97,202,250
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NOT OBTAINED - WAIVED
Parent Contract
Parent Award PIID: W52P1J22D0006
IDV Type: IDC
Timeline
Start Date: 2023-01-30
Current End Date: 2024-05-24
Potential End Date: 2024-05-24 12:05:00
Last Modified: 2023-09-21
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