Army awards $7.9M for 20M M55A2 TP cartridges to Northrop Grumman, competition limited by exclusion of sources
Contract Overview
Contract Amount: $7,886,799 ($7.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2024-04-30
End Date: 2026-09-30
Contract Duration: 883 days
Daily Burn Rate: $8.9K/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: 20MM M55A2 TARGET PRACTICE (TP) CARTRIDGES, DODIC: AC18, NSN: 1305-01-662-4268
Place of Performance
Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442
Plain-Language Summary
Department of Defense obligated $7.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 20MM M55A2 TARGET PRACTICE (TP) CARTRIDGES, DODIC: AC18, NSN: 1305-01-662-4268 Key points: 1. Spending on ammunition manufacturing is a consistent defense need. 2. Northrop Grumman is a major defense contractor, indicating established capabilities. 3. The contract's fixed-price with economic price adjustment (FPEPA) structure carries inflation risk. 4. Ammunition manufacturing falls under the broader industrial base sector.
Value Assessment
Rating: good
The price of $7.9M for 20 million cartridges equates to approximately $0.40 per round. This appears competitive given the specialized nature of military-grade ammunition and potential manufacturing complexities.
Cost Per Unit: $0.40
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This suggests that while competition was sought, specific sources were excluded, potentially limiting the breadth of price discovery and innovation.
Taxpayer Impact: Taxpayer funds are being used for essential military training ammunition. The limited competition may result in a higher price than if all potential sources were included.
Public Impact
Ensures availability of training ammunition for Army personnel. Supports defense industrial base capabilities in ammunition manufacturing. Potential for price fluctuations due to economic price adjustment clause. Limited competition raises questions about optimal value for taxpayer dollars.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition methodology
- Economic price adjustment clause introduces cost uncertainty
- No small business participation noted
Positive Signals
- Addresses a critical training requirement
- Utilizes a large, established defense contractor
- Fixed-price element provides some cost control
Sector Analysis
This contract falls within the Ammunition (except Small Arms) Manufacturing sector, classified under NAICS code 332993. Defense spending in this area is crucial for maintaining military readiness and operational capabilities.
Small Business Impact
The data indicates no small business participation in this contract award. This is common for large-scale defense procurements awarded to major prime contractors, but it represents a missed opportunity for small business engagement.
Oversight & Accountability
The award is a delivery order under a larger contract, suggesting a framework for ongoing procurement. Oversight would focus on adherence to contract terms, quality control, and managing the economic price adjustment.
Related Government Programs
- Ammunition (except Small Arms) Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Limited competition may lead to suboptimal pricing.
- Economic price adjustment introduces cost escalation risk.
- Lack of small business involvement.
- Dependence on a single large contractor for this specific item.
Tags
ammunition-except-small-arms-manufacturi, department-of-defense, mn, delivery-order, 1m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $7.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 20MM M55A2 TARGET PRACTICE (TP) CARTRIDGES, DODIC: AC18, NSN: 1305-01-662-4268
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 $7.9 million.
What is the period of performance?
Start: 2024-04-30. End: 2026-09-30.
What was the justification for excluding specific sources in the competition?
The justification for excluding sources is not provided in the data. Typically, such exclusions might be based on proprietary technology, specific security requirements, or prior performance issues. Understanding this rationale is key to assessing the fairness and effectiveness of the competition process and its impact on final pricing.
How will the economic price adjustment clause impact the final cost?
The economic price adjustment (EPA) clause allows for modifications to the contract price based on fluctuations in specified economic factors, such as labor or material costs. This introduces uncertainty, as the final cost could exceed the initial $7.9M estimate if these factors increase significantly over the contract period.
What is the strategic importance of securing this specific ammunition type?
M55A2 Target Practice (TP) cartridges are vital for realistic and cost-effective training of military personnel. Ensuring a steady supply of such ammunition is critical for maintaining combat readiness and proficiency across various weapon systems, directly impacting the effectiveness of training programs.
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: $7,886,799
Exercised Options: $7,886,799
Current Obligation: $7,886,799
Subaward Activity
Number of Subawards: 3
Total Subaward Amount: $1,356,160
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
Start Date: 2024-04-30
Current End Date: 2026-09-30
Potential End Date: 2026-09-30 12:09:00
Last Modified: 2025-12-23
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