Northrop Grumman awarded $41.4M contract for SAWS requirements, with delivery expected by late 2025

Contract Overview

Contract Amount: $41,440,680 ($41.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-17

End Date: 2025-12-31

Contract Duration: 1,232 days

Daily Burn Rate: $33.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RFP 003 REQUIREMENTS FOR SAWS

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $41.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: RFP 003 REQUIREMENTS FOR SAWS Key points: 1. Contract value of $41.4 million represents a significant investment in ammunition manufacturing. 2. Full and open competition suggests a robust market for these specialized defense goods. 3. The firm-fixed-price structure aims to control costs and provide predictability. 4. Delivery order award indicates a need for immediate or phased supply of ammunition. 5. Contract duration of over three years suggests a sustained demand for the specified items. 6. The North American Industry Classification System (NAICS) code 332993 points to a specific niche within metal fabrication.

Value Assessment

Rating: good

The contract value of $41.4 million for ammunition manufacturing appears reasonable given the duration and the nature of defense procurement. Benchmarking against similar contracts for specialized ammunition would provide a more precise value-for-money assessment. The firm-fixed-price contract type suggests an effort to manage cost overruns, which is a positive indicator for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bidders suggests a competitive environment, though further details on the bidding process and the specific capabilities of each bidder would be needed to fully assess the strength of the competition. This level of competition generally supports price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging innovation among defense contractors.

Public Impact

The Department of the Army is the primary beneficiary, securing essential ammunition supplies. This contract supports the production and delivery of ammunition (except small arms). The contract is based in Virginia, potentially impacting the local economy and workforce. It ensures the readiness and operational capability of military forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Geopolitical factors could influence demand and pricing of raw materials.
Technological obsolescence of ammunition types over the contract's lifespan.

Positive Signals

Established contractor with a track record in defense systems.
Firm-fixed-price contract provides cost certainty.
Full and open competition suggests market availability and potential for competitive pricing.
Long-term contract duration indicates sustained need and potential for economies of scale.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The NAICS code 332993, 'Ammunition (except Small Arms) Manufacturing,' signifies a specialized segment of the broader metal fabrication industry. The defense sector is characterized by long procurement cycles, stringent quality requirements, and significant government oversight. Spending in this area is often driven by national security needs and geopolitical events.

Small Business Impact

The data indicates that small business participation was not a primary set-aside criterion for this contract (sb: false). While Northrop Grumman is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. Further analysis would be needed to determine the extent of small business subcontracting and its impact on the small business ecosystem within this specific defense supply chain.

Oversight & Accountability

The contract is managed by the Department of the Army, implying oversight through established military procurement processes. As a firm-fixed-price contract, there are defined deliverables and payment terms, which aids accountability. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not be publicly detailed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
Ordnance and Explosives Manufacturing Contracts
Northrop Grumman Defense Contracts
Army Combat Support Systems

Risk Flags

Potential for supply chain vulnerabilities
Dependence on specific raw material availability
Risk of cost overruns if not managed effectively by contractor
Geopolitical factors influencing demand and supply

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. RFP 003 REQUIREMENTS FOR 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 $41.4 million.

What is the period of performance?

Start: 2022-08-17. End: 2025-12-31.

What is Northrop Grumman's historical performance on similar defense contracts, particularly regarding on-time delivery and quality standards?

Northrop Grumman is a major defense contractor with extensive experience in producing complex systems and components for the U.S. military. While specific performance data for this exact contract is not yet available due to its recent award, the company has a long history of fulfilling large-scale defense contracts. Historically, their performance has varied across different programs, with some facing delays or cost overruns, while others have been executed successfully. For ammunition contracts, adherence to strict quality control and delivery schedules is paramount. Government contract databases and performance reports (like CPARS - Contractor Performance Assessment Reporting System) would provide more granular insights into their past performance on similar, though not identical, contracts. Given their size and experience, they are generally considered capable of meeting the requirements, but ongoing monitoring of this specific contract's execution will be crucial.

How does the awarded amount of $41.4 million compare to the estimated value or previous contract awards for similar ammunition requirements?

Without specific details on the exact type and quantity of ammunition being procured under RFP 003, a direct comparison of the $41.4 million award is challenging. However, the duration of the contract (ending December 31, 2025) suggests a multi-year supply. Ammunition costs can vary significantly based on type (e.g., artillery shells, mortar rounds, specialized munitions), quantity, and manufacturing complexity. If this contract covers a broad range of 'Ammunition (except Small Arms)' as indicated by the NAICS code, $41.4 million over approximately three years might represent a moderate investment. To provide a precise benchmark, one would need to identify comparable contracts for similar quantities and types of ammunition awarded around the same period, considering factors like inflation and market demand. The 'br' value of 33637, if representing a bid or benchmark price, would be a key data point for internal analysis.

What are the primary risks associated with this contract, and what mitigation strategies are likely in place?

Key risks for this contract include potential supply chain disruptions for raw materials (metals, propellants), manufacturing complexities leading to quality control issues, and the possibility of geopolitical events impacting demand or material availability. There's also a risk of technological obsolescence if the ammunition types procured become outdated. Mitigation strategies likely include robust supplier vetting and diversification, stringent quality assurance protocols throughout the manufacturing process, contingency planning for material sourcing, and close collaboration between Northrop Grumman and the Department of the Army to monitor evolving requirements and potential threats. The firm-fixed-price nature of the contract also incentivizes the contractor to manage costs and risks effectively to maintain profitability.

How does the 'full and open competition' with two bidders impact the government's ability to secure the best possible price and value?

Full and open competition is designed to maximize the number of potential bidders, thereby fostering a competitive environment that ideally leads to better pricing and value for the government. In this case, having two bidders suggests that the market is not monopolistic, and there is at least some level of competition. However, the effectiveness of this competition depends on factors not detailed here, such as the specific requirements of the RFP, the technical capabilities and pricing strategies of the two bidders, and whether other potential bidders chose not to participate for strategic reasons. If the requirements were highly specialized or the number of capable suppliers is inherently limited, two bidders might represent a near-maximum achievable competition. The government's negotiation strategy and evaluation criteria would also play a crucial role in leveraging this competition to secure optimal value.

What is the significance of the contract type (Delivery Order, Firm Fixed Price) in terms of cost control and contractor accountability?

The contract is an 'Award: DELIVERY ORDER' under a larger indefinite-delivery/indefinite-quantity (IDIQ) or similar contract vehicle, indicating a specific order placed for goods or services. The 'Firm Fixed Price' (FFP) pricing structure is significant because it places the primary risk of cost overruns on the contractor (Northrop Grumman). Under an FFP contract, the government agrees to pay a set price regardless of the contractor's actual costs. This incentivizes the contractor to manage their expenses efficiently and control production costs to ensure profitability. It provides the government with cost certainty, making budgeting more predictable. For accountability, the contractor is obligated to deliver the specified ammunition at the agreed-upon price, and failure to do so can result in penalties or breach of contract.

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: $41,440,680

Exercised Options: $41,440,680

Current Obligation: $41,440,680

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