DoD awards $62.3M for ammunition manufacturing to Northrop Grumman, with delivery orders extending through mid-2027

Contract Overview

Contract Amount: $62,279,415 ($62.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-30

End Date: 2027-06-30

Contract Duration: 1,156 days

Daily Burn Rate: $53.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LW30 M789 HEDP CARTRIDGES

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $62.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LW30 M789 HEDP CARTRIDGES Key points: 1. Contract value appears reasonable given the specialized nature of ammunition production and the contractor's established capabilities. 2. Competition was conducted under a 'full and open' framework, suggesting an effort to solicit broad market participation. 3. The contract includes performance-based elements, potentially driving efficiency and quality in ammunition delivery. 4. This award aligns with broader defense spending trends focused on maintaining and modernizing munitions stockpiles. 5. The fixed-price structure shifts cost risk to the contractor, encouraging efficient execution. 6. Delivery orders indicate a phased approach to fulfilling demand over the contract's lifespan.

Value Assessment

Rating: good

The contract's value of $62.3 million for ammunition manufacturing seems within a reasonable range for specialized defense procurement. Benchmarking against similar contracts for large-caliber ammunition production would provide a more precise assessment, but the scale suggests a significant quantity or advanced type of munition. The firm fixed-price contract type indicates that the contractor bears the primary cost risk, which can be advantageous for the government if managed effectively. The contract's duration and delivery order structure suggest a planned, long-term supply chain engagement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources,' indicating that while the competition was intended to be broad, specific sources may have been excluded based on pre-defined criteria. The presence of two bidders suggests a degree of competition, though the exact number of interested parties and the reasons for excluding other potential sources would require further investigation. This approach aims to balance the need for specialized capabilities with achieving competitive pricing.

Taxpayer Impact: A full and open competition, even with exclusions, generally provides a better opportunity for price discovery and potentially lower costs for taxpayers compared to sole-source awards. The government likely received multiple proposals, allowing for a comparative evaluation of technical merit and price.

Public Impact

The Department of Defense is the primary beneficiary, ensuring the availability of critical ammunition for military operations. This contract supports the manufacturing of ammunition (except small arms), vital for various combat and training scenarios. The contract is managed by the Department of the Army, indicating its role in equipping ground forces. Workforce implications include potential job creation or retention within Northrop Grumman's manufacturing facilities, particularly in Minnesota where the contract is noted. The delivery order structure suggests a sustained supply chain, contributing to national defense readiness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery schedules.
Ensuring consistent quality control for high-explosive munitions is critical.
Geopolitical factors could influence demand and production priorities.

Positive Signals

Northrop Grumman's established track record in defense manufacturing.
Firm fixed-price contract incentivizes cost control by the contractor.
The contract supports readiness and modernization objectives for the armed forces.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for defense munitions is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long-term government relationships. Northrop Grumman is a major defense contractor with significant expertise in aerospace and defense systems, including munitions. Spending in this category is driven by military readiness requirements, modernization programs, and global security dynamics. Comparable spending benchmarks would typically be found within the broader 'Ordnance and Accessories' manufacturing categories within defense budgets.

Small Business Impact

The data indicates that small business participation (sb) is marked as false (false), suggesting this contract was not specifically set aside for small businesses. Furthermore, the 'st' field indicates 'MN' (Minnesota), and 'sn' is 'MINNESOTA', potentially pointing to the location of performance. Without specific subcontracting plans detailed in the award, it's difficult to assess the direct impact on the small business ecosystem. However, large prime contractors like Northrop Grumman often engage small businesses as subcontractors, so there may be indirect opportunities, though not mandated by a set-aside.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded within the firm fixed-price contract terms, requiring the contractor to meet specified delivery schedules and quality standards. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Department of Defense Ammunition Procurement
Northrop Grumman Defense Contracts
Ammunition Manufacturing Services
Army Combat Support Equipment
Defense Industrial Base Contracts

Risk Flags

Potential for supply chain vulnerabilities
Quality assurance criticality for explosive ordnance
Dependence on specific raw material availability
Long-term production schedule adherence

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LW30 M789 HEDP 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 $62.3 million.

What is the period of performance?

Start: 2024-04-30. End: 2027-06-30.

What is Northrop Grumman's historical performance record with the Department of Defense, particularly on similar ammunition contracts?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of supplying various systems and components to the U.S. military. While specific performance metrics for this exact ammunition contract are not detailed in the provided data, the company generally has a substantial portfolio of DoD contracts. Historical data from contract databases would reveal on-time delivery rates, quality compliance, and any past performance issues or awards on similar programs. Their extensive experience suggests a baseline capability, but each contract's execution is subject to specific program management and market conditions. Further analysis would involve reviewing past performance evaluations and any reported contract disputes or modifications.

How does the awarded price compare to market rates for similar types of ammunition?

Determining the precise 'market rate' for specialized ammunition is complex due to proprietary manufacturing processes, varying specifications, and the limited number of qualified suppliers. The provided data does not include unit costs or detailed specifications of the ammunition being procured. To benchmark effectively, one would need to compare the per-unit cost (if calculable from total value and quantity, which is not provided) against publicly available data for similar caliber, explosive fill, and range capabilities from other DoD contracts or industry reports. Given the 'full and open competition' aspect, the price is presumed to be competitive within the constraints of the bidding process. However, without specific product details, a definitive value-for-money assessment against external market rates remains challenging.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential supply chain disruptions (e.g., raw material shortages, transportation issues), quality control failures in manufacturing high-explosive munitions, and potential cost overruns if the firm fixed-price structure proves inadequate for unforeseen challenges. Mitigation strategies likely involve robust quality assurance protocols by both the contractor and the government, diversification of raw material sourcing, and close monitoring of production schedules by the Army contracting office. The contractor's established experience also serves as a risk-reduction factor. The contract's duration and phased delivery orders allow for adaptive management of potential issues over time.

What is the expected impact of this contract on the Department of the Army's overall ammunition readiness and modernization efforts?

This contract directly contributes to the Department of the Army's ammunition readiness by ensuring a steady supply of essential munitions. The specific type of ammunition (LW30 M789 HEDP CARTRIDGES) suggests it is for a particular weapon system, likely supporting ongoing operational needs and potentially training exercises. Its role in modernization efforts depends on whether these cartridges are part of a new system or an upgrade to existing capabilities. Consistent procurement through delivery orders helps maintain inventory levels, which is crucial for both current operations and future force projection, aligning with the Army's strategic goals for maintaining a capable and modern fighting force.

How has federal spending on ammunition manufacturing evolved over the past five years, and where does this contract fit in?

Federal spending on ammunition manufacturing has generally remained robust, driven by sustained military operations, global security concerns, and ongoing modernization programs across the armed forces. Spending fluctuates based on specific munitions needs, inventory replenishment cycles, and the introduction of new technologies. This $62.3 million contract for Northrop Grumman represents a significant, but not unprecedented, award within the broader context of DoD ammunition procurement. It fits into the category of acquiring essential, high-demand munitions. Analyzing historical spending trends for similar 'Ammunition (except Small Arms) Manufacturing' (NAICS 332993) would reveal if this award is consistent with, higher, or lower than previous procurement levels for comparable items.

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: 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: $62,279,415

Exercised Options: $62,279,415

Current Obligation: $62,279,415

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $2,155,875

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