DoD awards $160M contract for ammunition, with Northrop Grumman as prime, to support SAWS

Contract Overview

Contract Amount: $160,257,662 ($160.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-07-12

End Date: 2025-08-31

Contract Duration: 415 days

Daily Burn Rate: $386.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCURE AMMUNITION TO SUPPORT SAWS

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $160.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PROCURE AMMUNITION TO SUPPORT SAWS Key points: 1. Contract value of $160.2M for ammunition manufacturing suggests significant demand for specialized ordnance. 2. The contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle, indicating ongoing needs. 3. Northrop Grumman's selection as prime contractor points to established capabilities in defense manufacturing. 4. The firm-fixed-price contract type shifts cost risk to the contractor, potentially incentivizing efficiency. 5. Ammunition procurement is critical for military readiness and operational sustainment. 6. The contract duration of 415 days aligns with typical delivery timelines for such specialized goods.

Value Assessment

Rating: good

The contract value of $160.2 million for ammunition manufacturing appears reasonable given the specialized nature of the goods and the prime contractor's established role in defense. Benchmarking against similar large-scale ammunition procurements would provide further context, but the firm-fixed-price structure suggests an effort to control costs. The delivery order mechanism within a potential IDIQ framework allows for flexibility in meeting evolving demand.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a competitive environment, though the specific number of bidders can vary significantly for defense contracts. Full and open competition generally promotes price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a wider range of suppliers to offer their best pricing and innovative solutions, potentially leading to cost savings and higher quality products.

Public Impact

The Department of Defense benefits from a reliable supply of ammunition to maintain operational readiness. This contract supports the production of specialized ammunition (NAICS 332993) essential for various military platforms. The primary geographic impact is likely within the United States, where manufacturing and distribution facilities are located. The contract supports jobs within the defense manufacturing sector, particularly at Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Reliance on a single prime contractor for a critical defense commodity.
Fluctuations in raw material costs could impact long-term affordability if not adequately managed.

Positive Signals

Firm-fixed-price contract structure incentivizes cost control by the contractor.
Full and open competition suggests a robust market and potential for competitive pricing.
Northrop Grumman's established presence in defense manufacturing indicates technical expertise and reliability.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of ammunition. The market for defense-related ordnance is characterized by high barriers to entry, stringent quality requirements, and significant government investment. Comparable spending benchmarks would involve analyzing other large-scale contracts for similar munitions or defense systems awarded by the DoD.

Small Business Impact

The data indicates that small business participation (sb) is false for this contract. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that the prime contractor, Northrop Grumman, is likely responsible for fulfilling the entire requirement, and opportunities for small businesses may be limited unless they are direct subcontractors to the prime. Further analysis of subcontracting reports would be needed to assess the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army, with potential involvement from the Defense Contract Management Agency (DCMA) for quality assurance and delivery monitoring. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Northrop Grumman Defense Contracts
Ordnance Manufacturing
Military Readiness Support
Defense Supply Chain Management

Risk Flags

Potential for supply chain vulnerabilities
Reliance on prime contractor's production capacity
Volatility in raw material costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $160.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PROCURE AMMUNITION TO SUPPORT SAWS

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 $160.3 million.

What is the period of performance?

Start: 2024-07-12. End: 2025-08-31.

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

Northrop Grumman has a long-standing history of producing complex defense systems, including munitions. While specific details on past ammunition contracts of this exact scale and type are not provided in this data snippet, the company is a major defense contractor with extensive experience in aerospace and defense manufacturing. Their portfolio often includes advanced weapon systems and related components. Analyzing their past performance on similar government contracts, including any reported issues or successes, would provide a more comprehensive understanding of their capabilities and reliability in fulfilling this current requirement. Publicly available contract databases and company reports can offer insights into their historical performance metrics and any significant awards or challenges.

How does the $160.2 million contract value compare to historical spending on similar ammunition types?

The $160.2 million contract value represents a significant investment in ammunition. To benchmark this against historical spending, one would need to analyze past procurements of similar ammunition categories (e.g., by specific caliber, explosive type, or intended platform) by the Department of the Army or other branches of the DoD. Factors such as inflation, technological advancements, and geopolitical demand influence year-over-year spending. A comparison would involve identifying contracts with similar Product Service Codes (PSCs) or NAICS codes over the last 5-10 years. For instance, if historical contracts for comparable ordnance averaged $100 million, this $160.2 million award might indicate increased demand, higher unit costs due to inflation, or a larger quantity of items being procured. Without access to a broader historical dataset, it is difficult to definitively state whether this value is high or low relative to past trends.

What are the primary risks associated with this ammunition procurement contract?

Key risks associated with this ammunition procurement contract include potential supply chain disruptions, which could delay delivery and impact military readiness. The reliance on a single prime contractor, Northrop Grumman, presents a risk if unforeseen issues arise with their production capabilities or financial stability. Furthermore, fluctuations in the cost of raw materials essential for ammunition manufacturing (e.g., metals, propellants) could lead to cost overruns if not adequately managed through the firm-fixed-price contract. Geopolitical events could also impact the availability of certain materials or increase demand, potentially straining production capacity. Finally, ensuring consistent quality and adherence to strict safety standards throughout the manufacturing process is a perpetual risk in ordnance production.

How effective is the firm-fixed-price contract type in managing costs for ammunition?

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for ammunition procurement because it shifts the majority of the financial risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to deliver the specified goods at the agreed-upon price, regardless of their actual costs incurred. This incentivizes the contractor, Northrop Grumman in this case, to manage their resources efficiently, control production costs, and minimize waste to maximize their profit margin. For the government, this provides cost certainty, making budgeting more predictable. However, if the contractor significantly underestimates costs or faces unexpected challenges, they bear the loss, which could potentially lead to quality compromises if not closely monitored. The effectiveness also depends on the accuracy of the initial cost estimates and the contractor's ability to execute the production plan.

What is the significance of the 'Ammunition (except Small Arms) Manufacturing' NAICS code (332993)?

The North American Industry Classification System (NAICS) code 332993, 'Ammunition (except Small Arms) Manufacturing,' specifically categorizes establishments primarily engaged in manufacturing ammunition and related components, excluding small arms ammunition. This includes artillery shells, bombs, grenades, rockets, missiles, and related fuzes and components. For this contract, it signifies that the procurement is for larger caliber ordnance rather than bullets or cartridges for small firearms. This classification is crucial for understanding the scope of the contract, identifying relevant industry players, and benchmarking spending against similar specialized defense manufacturing activities. It helps analysts and policymakers understand the specific segment of the defense industrial base being supported by this $160.2 million award.

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: $160,257,662

Exercised Options: $160,257,662

Current Obligation: $160,257,662

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $143,687,455

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