DoD awards $13.2M for practice cartridges to Northrop Grumman, highlighting ammunition manufacturing needs

Contract Overview

Contract Amount: $13,193,972 ($13.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-30

End Date: 2026-01-31

Contract Duration: 641 days

Daily Burn Rate: $20.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: DELIVERY ORDER AWARD OF LW30 XM950 PRACTICE CARTRIDGES

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $13.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DELIVERY ORDER AWARD OF LW30 XM950 PRACTICE CARTRIDGES Key points: 1. Contract value of $13.2 million for practice cartridges indicates a significant investment in training munitions. 2. The award to Northrop Grumman, a major defense contractor, suggests a reliance on established industry players for critical supplies. 3. The contract duration of 641 days points to a sustained need for these training materials. 4. The fixed-price with economic price adjustment structure aims to manage cost fluctuations over the contract period. 5. This contract falls within the Ammunition (except Small Arms) Manufacturing sector, crucial for military readiness.

Value Assessment

Rating: good

The contract value of $13.2 million for practice cartridges appears reasonable given the supplier and the nature of the goods. Benchmarking against similar ammunition procurements would provide a more precise value-for-money assessment. The economic price adjustment clause, while standard for long-term contracts, warrants monitoring to ensure costs remain aligned with market trends.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were excluded. The presence of two bidders suggests a degree of competition, but the exclusion of other potential sources may limit price discovery and potentially increase costs for the government.

Taxpayer Impact: The limited competition may mean taxpayers are not receiving the lowest possible price due to fewer bidders vying for the contract.

Public Impact

Military personnel will benefit from access to essential training ammunition, enhancing combat readiness. The services delivered include the provision of practice cartridges, vital for realistic training scenarios. The geographic impact is primarily within the Department of Defense's training infrastructure, with potential distribution across various military installations. Workforce implications may include continued employment in ammunition manufacturing and logistics roles within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to higher prices than a fully open bid.
Economic price adjustment clauses can expose the government to unforeseen cost increases.
Reliance on a single awardee for a critical training supply could pose supply chain risks.

Positive Signals

Award to a reputable contractor like Northrop Grumman suggests a focus on quality and reliability.
The fixed-price component provides some cost certainty.
The contract duration indicates a stable supply chain for training needs.

Sector Analysis

This contract operates within the defense manufacturing sector, specifically focusing on ammunition production. The market for military training munitions is typically dominated by a few large defense contractors. Spending in this area is directly tied to military readiness requirements and training cycles. Comparable spending benchmarks would involve analyzing other contracts for similar types of ammunition and training supplies across different military branches.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific award, as the contract was not set aside for small businesses and the prime contractor is a large corporation. Subcontracting opportunities for small businesses may exist within Northrop Grumman's supply chain, but this is not explicitly detailed in the award information. The impact on the small business ecosystem is likely indirect, depending on whether Northrop Grumman engages small businesses for components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract structure, with performance tied to delivery schedules and specifications. Transparency is provided through contract award databases, though detailed performance metrics are often not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Military Training and Simulation Equipment
Defense Industrial Base Manufacturing
Northrop Grumman Defense Contracts

Risk Flags

Limited Competition
Economic Price Adjustment Clause
Potential Supply Chain Vulnerability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DELIVERY ORDER AWARD OF LW30 XM950 PRACTICE CARTRIDGES

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 $13.2 million.

What is the period of performance?

Start: 2024-04-30. End: 2026-01-31.

What is Northrop Grumman's track record with similar ammunition contracts?

Northrop Grumman Systems Corporation has a long history of supplying defense products and services to the U.S. military, including various types of munitions and related components. While specific details on their past performance with practice cartridges are not provided in this award notice, the company is a major defense contractor with extensive experience in manufacturing and logistics. Their involvement in numerous large-scale defense programs suggests a capacity to manage complex contracts and meet stringent quality requirements. A deeper dive into historical contract data and performance reviews would be necessary to fully assess their track record specifically for practice ammunition.

How does the $13.2 million value compare to similar practice cartridge procurements?

The $13.2 million contract value for practice cartridges is a significant sum, indicating a substantial quantity or specialized nature of the ammunition. To benchmark this value effectively, one would need to compare it against recent awards for similar types of practice cartridges (e.g., by caliber, material, or intended use) issued by the Department of Defense or other military branches. Factors such as the number of bidders, contract duration, and specific technical requirements also influence pricing. Without access to a broader dataset of comparable contracts, it is difficult to definitively state whether this represents excellent, fair, or concerning value for money. However, the presence of two bidders suggests some level of market pricing was considered.

What are the primary risks associated with this contract?

The primary risks associated with this contract include potential supply chain disruptions, as is common with defense procurements. Given that it's a fixed-price contract with economic price adjustment, there's a risk of cost overruns if raw material prices or labor costs escalate significantly beyond projections, although the EPA clause is designed to mitigate this. Another risk is the potential for performance issues or delays from the contractor, Northrop Grumman, which could impact military training schedules. The limited competition also presents a risk of not achieving the most cost-effective pricing for taxpayers.

How effective is the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' approach for this type of procurement?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' approach aims to balance the benefits of competition with specific government needs or justifications for excluding certain sources. In this case, it suggests that while multiple potential suppliers were considered, specific reasons led to the exclusion of some. This method can be effective if the exclusions are well-justified and the remaining pool of bidders still provides adequate competition. However, it inherently limits the breadth of competition compared to truly full and open competition, potentially impacting price discovery and innovation. The effectiveness hinges on the validity of the exclusions and the competitiveness among the remaining bidders.

What are the historical spending patterns for practice cartridges by the Department of the Army?

Historical spending patterns for practice cartridges by the Department of the Army would likely show consistent procurement to support ongoing training requirements across various military branches. Spending levels can fluctuate based on global security postures, training modernization initiatives, and budget allocations. Analyzing past years' data would reveal trends in contract values, awardees, and types of practice ammunition procured. This specific $13.2 million award needs to be viewed within the context of these broader historical expenditures to understand its significance and whether it represents an increase, decrease, or stable level of investment in training munitions.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

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: $13,193,972

Exercised Options: $13,193,972

Current Obligation: $13,193,972

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $3,526,035

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W519TC24D0007

IDV Type: IDC

Timeline