Northrop Grumman awarded $12.3M for MPT-SD Cartridges, highlighting ammunition manufacturing needs

Contract Overview

Contract Amount: $12,324,662 ($12.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-30

End Date: 2026-12-31

Contract Duration: 975 days

Daily Burn Rate: $12.6K/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: 20MM M940 JOINT URGENT OPERATIONAL NEEDS STATEMENT (JUONS) MULTIPURPOSE TRACER-SELF DESTRUCT (MPT-SD) CARTRIDGES, DODIC: AC34, NSN: 1305-01-668-9908.

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $12.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 20MM M940 JOINT URGENT OPERATIONAL NEEDS STATEMENT (JUONS) MULTIPURPOSE TRACER-SELF DESTRUCT (MPT-SD) CARTRIDGES, DODIC: AC34, NSN: 1305-01-668-9908. Key points: 1. Contract value of $12.3 million for specialized ammunition. 2. Awarded to Northrop Grumman Systems Corporation, a major defense contractor. 3. Procurement falls under 'Ammunition (except Small Arms) Manufacturing' NAICS code. 4. Contract type is Fixed Price with Economic Price Adjustment, managing cost fluctuations. 5. Delivery order signifies a specific need within a larger framework. 6. Duration of 975 days indicates a medium-term supply requirement. 7. The contract is for Joint Urgent Operational Needs Statement (JUONS) items.

Value Assessment

Rating: good

The contract value of $12.3 million for MPT-SD cartridges appears reasonable given the specialized nature of the ammunition and the supplier. Benchmarking against similar urgent operational needs procurements for advanced munitions suggests this pricing is within expected ranges. The fixed-price with economic price adjustment structure aims to balance cost control with market volatility for raw materials and production.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, specific circumstances led to the exclusion of certain potential bidders. The exact reasons for exclusion are not detailed here, but this approach suggests a need for specialized capabilities or existing relationships that narrowed the competitive field. The limited competition may impact price discovery compared to a truly open bid.

Taxpayer Impact: While not fully open, the exclusion of sources process aims to ensure best value is still achieved. Taxpayers benefit from specialized capabilities being met, though a broader competition could potentially yield lower prices.

Public Impact

The Department of the Army benefits from the acquisition of critical MPT-SD cartridges. These cartridges are essential for supporting joint urgent operational needs, enhancing soldier capabilities. The contract supports the defense industrial base, specifically in ammunition manufacturing. Workforce implications are likely within Northrop Grumman's manufacturing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could potentially lead to higher prices than a fully open bid.
Economic price adjustment clauses introduce potential for cost increases over the contract duration.
Urgent Operational Needs Statements can sometimes bypass standard procurement timelines, potentially impacting thoroughness.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests reliability and established production capabilities.
The contract addresses a specific, urgent operational requirement, ensuring critical materiel is supplied.
Fixed-price elements provide some cost certainty for the government.

Sector Analysis

This contract falls within the defense sector, specifically the manufacturing of specialized ammunition. The market for such munitions is dominated by a few large defense contractors with the necessary expertise and security clearances. Spending in this sub-sector is driven by military readiness requirements and technological advancements in ordnance. Comparable spending benchmarks would typically involve other urgent operational needs procurements for advanced munitions.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of the product and the prime contractor, subcontracting opportunities for small businesses may exist within Northrop Grumman's supply chain, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting command and potentially the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the fixed-price contract structure, with performance tied to delivery and quality specifications. Transparency is facilitated through contract databases, though specific details of the 'exclusion of sources' justification would require further inquiry.

Related Government Programs

Department of Defense Ammunition Procurements
Joint Urgent Operational Needs Statements (JUONS)
Northrop Grumman Defense Contracts
Ammunition Manufacturing Contracts

Risk Flags

Limited Competition Justification
Economic Price Adjustment Monitoring
Urgent Operational Needs Procurement Scrutiny

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 20MM M940 JOINT URGENT OPERATIONAL NEEDS STATEMENT (JUONS) MULTIPURPOSE TRACER-SELF DESTRUCT (MPT-SD) CARTRIDGES, DODIC: AC34, NSN: 1305-01-668-9908.

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 $12.3 million.

What is the period of performance?

Start: 2024-04-30. End: 2026-12-31.

What is the specific operational advantage provided by the MPT-SD cartridges?

The Multipurpose Tracer-Self Destruct (MPT-SD) cartridge is designed to provide enhanced capabilities for various platforms. The 'tracer' function allows for visual tracking of the projectile's trajectory, aiding in target engagement and assessment. The 'self-destruct' feature is crucial for safety and operational flexibility, particularly in training environments or when unintended collateral damage is a concern, as it neutralizes the munition after a set period or distance. These features collectively aim to improve accuracy, reduce training risks, and ensure mission effectiveness in diverse operational scenarios.

How does the 'Full and Open Competition After Exclusion of Sources' process typically work, and what are its implications?

This procurement method begins with an intent to compete fully but allows for the exclusion of specific sources based on defined criteria, such as unique capabilities, proprietary technology, or urgent needs where only certain vendors can respond in time. The process requires justification for excluding potential bidders. While it aims to ensure the best solution is found, the exclusion of sources inherently limits the breadth of competition. This can mean fewer price points are considered, potentially leading to higher costs for the government compared to a truly open competition where all qualified vendors can participate without restriction. It suggests that the government identified specific requirements that only a limited number of contractors could meet.

What is the historical spending pattern for similar ammunition types by the Department of the Army?

Historical spending on ammunition by the Department of the Army is substantial and fluctuates based on operational tempo, modernization efforts, and inventory management strategies. Procurements for specialized munitions like the MPT-SD cartridges are often driven by urgent operational needs, which can lead to higher per-unit costs due to expedited production and limited competition. While specific historical data for MPT-SD cartridges is not provided, the Army consistently invests billions annually in various classes of ammunition, ranging from small arms to artillery and specialized munitions. Trends indicate a focus on advanced capabilities, including smart munitions and those with enhanced safety features, aligning with the MPT-SD's characteristics.

What are the potential risks associated with the Economic Price Adjustment (EPA) clause in this contract?

The Economic Price Adjustment (EPA) clause in this fixed-price contract allows for adjustments to the contract price based on fluctuations in specified economic factors, typically labor and material costs. The primary risk for the government is that these adjustments could lead to a higher final contract price than initially anticipated if costs rise significantly. While EPA clauses are intended to protect contractors from unforeseen cost increases and ensure supply continuity, they can introduce cost uncertainty for the buyer. Effective management of an EPA clause involves careful monitoring of the specified indices and ensuring that any price adjustments are justified and within the agreed-upon parameters.

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

Northrop Grumman Systems Corporation is a major global defense contractor with an extensive track record of delivering complex systems and munitions to the U.S. military and allied nations. They have consistently secured large-value contracts for a wide array of defense products, including advanced munitions, aerospace systems, and electronic warfare capabilities. Their experience encompasses managing large-scale production, adhering to stringent quality standards, and fulfilling urgent operational requirements. While specific details on MPT-SD cartridge production history with Northrop Grumman are not provided here, their overall profile suggests a strong capability to execute this type of contract successfully.

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: $12,324,662

Exercised Options: $12,324,662

Current Obligation: $12,324,662

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $55,970

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