Northrop Grumman awarded $1.31B contract for 155mm NSA ammunition, with delivery through December 2024

Contract Overview

Contract Amount: $130,839,000 ($130.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-17

End Date: 2024-12-31

Contract Duration: 867 days

Daily Burn Rate: $150.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SAWS RFP 004 REQUIREMENT FOR 155MM NSA

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $130.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SAWS RFP 004 REQUIREMENT FOR 155MM NSA Key points: 1. Contract value of $1.31 billion indicates significant investment in critical defense materiel. 2. Full and open competition suggests a robust bidding process, potentially leading to better pricing. 3. The contract's duration of over two years allows for sustained production and delivery. 4. Fixed-price contract type shifts cost risk to the contractor, providing budget predictability. 5. This award aligns with broader defense spending trends focused on munitions and readiness. 6. The North American Industry Classification System (NAICS) code 332993 points to specialized manufacturing capabilities.

Value Assessment

Rating: good

The contract value of $1.31 billion for 155mm NSA ammunition appears substantial, reflecting the scale of defense procurement. Benchmarking against similar large-scale ammunition contracts would be necessary for a precise value-for-money assessment. However, the firm fixed-price structure generally indicates a commitment to cost control by the government, assuming the initial pricing was competitive. The award to a single contractor, Northrop Grumman, suggests they were the most competitive bidder under the established criteria.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a competitive environment, though the exact number of bidders can influence price discovery. A higher number of bidders typically leads to more aggressive pricing as companies vie for the contract. The specifics of the evaluation criteria would determine how effectively competition translated into value.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to offer their best pricing, potentially reducing the overall cost to the government.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring 155mm ammunition for artillery systems. The contract ensures the supply of critical ammunition, supporting military readiness and operational capabilities. The geographic impact is primarily within the United States, where Northrop Grumman's manufacturing facilities are located, and potentially at deployment sites globally. Workforce implications include job creation and retention within the defense manufacturing sector, particularly at Northrop Grumman's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for single-source reliance if future needs arise, limiting future competition.
Dependence on a single contractor for a critical munition could pose supply chain risks.
The fixed-price nature, while offering budget certainty, might limit incentives for contractor innovation if not carefully managed.

Positive Signals

Award under full and open competition suggests a competitive process that likely yielded favorable pricing.
The firm fixed-price contract type transfers cost overrun risks to the contractor.
Long-term contract provides production stability and ensures a consistent supply of essential munitions.
Northrop Grumman's established presence in defense manufacturing indicates a high likelihood of successful execution.

Sector Analysis

The defense industry, particularly the munitions manufacturing sector, is characterized by high barriers to entry due to specialized technology, stringent quality control, and significant capital investment. This contract falls within the broader defense industrial base, focusing on the production of artillery ammunition. Spending in this area is often driven by geopolitical factors, military modernization efforts, and readiness requirements. Comparable spending benchmarks would involve analyzing other large-scale contracts for similar munitions or defense equipment procurement.

Small Business Impact

The provided data indicates that small business participation (sb: false) and small business set-asides (ss: false) were not explicitly utilized for this prime contract. This suggests the contract was awarded directly to Northrop Grumman without specific provisions for small business set-asides. However, Northrop Grumman, as a large defense contractor, is likely to engage small businesses as subcontractors to fulfill parts of this large contract, contributing to the small business ecosystem indirectly. Further analysis of subcontracting plans would be needed to quantify this impact.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army contracting officers and program managers, with potential involvement from the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods. Transparency is facilitated through contract award databases like FPDS. Inspector General (IG) jurisdiction may be invoked if allegations of fraud, waste, or abuse arise.

Related Government Programs

Department of Defense Ammunition Procurement
Artillery Systems and Munitions
Northrop Grumman Defense Contracts
Large-Scale Defense Manufacturing Contracts
Fixed-Price Defense Contracts

Risk Flags

Potential for supply chain vulnerabilities
Reliance on a single prime contractor
Long-term production schedule risks

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $130.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SAWS RFP 004 REQUIREMENT FOR 155MM NSA

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 $130.8 million.

What is the period of performance?

Start: 2022-08-17. End: 2024-12-31.

What is Northrop Grumman's track record with similar large-scale defense manufacturing contracts, particularly for munitions?

Northrop Grumman Systems Corporation has a long and extensive history as a major defense contractor, involved in a wide array of complex programs across aerospace, defense, and information systems. Their experience includes the manufacturing and supply of various munitions and ordnance. While specific details on past 155mm NSA ammunition contracts are not provided here, the company's overall profile suggests a strong capability in managing large, technically demanding production contracts. Their track record typically involves meeting stringent performance specifications, delivery schedules, and quality standards required by the Department of Defense. Past performance evaluations, often a key component of contract awards, would likely have been reviewed during the solicitation process for this $1.31 billion award.

How does the $1.31 billion contract value compare to historical spending on 155mm NSA ammunition?

To accurately compare the $1.31 billion contract value to historical spending on 155mm NSA ammunition, one would need access to historical procurement data for this specific munition type. This would involve analyzing contract awards over several fiscal years from the Department of Defense, specifically the Army, for similar quantities and specifications. Factors such as inflation, changes in production costs, technological upgrades, and shifts in global demand or geopolitical tensions can significantly influence contract values over time. Without direct historical data for this specific item, it's challenging to definitively state whether this award represents an increase, decrease, or is in line with past spending trends. However, the substantial value suggests a significant procurement effort, potentially driven by current operational needs or strategic stock replenishment.

What are the primary risk indicators associated with this contract, considering its size and duration?

Key risk indicators for this $1.31 billion contract include potential supply chain disruptions, given the scale and duration (ending Dec 2024). Reliance on a single contractor, Northrop Grumman, for such a critical munition could pose a risk if unforeseen production issues arise or if geopolitical events impact raw material availability. The firm fixed-price nature, while beneficial for budget certainty, can sometimes disincentivize contractors from investing in process improvements or innovations beyond contractually required specifications, potentially leading to less cost-efficiency over the long term if not managed proactively. Furthermore, the long lead times inherent in munition manufacturing present a risk of obsolescence if military requirements evolve rapidly, although 155mm ammunition is a relatively standard caliber.

How effective is the 'full and open competition' strategy likely to be in ensuring program effectiveness for this ammunition contract?

The 'full and open competition' strategy is generally effective in promoting program effectiveness by fostering a competitive environment that encourages bidders to offer the most capable and cost-efficient solutions. For this 155mm NSA ammunition contract, it means that multiple manufacturers had the opportunity to bid, theoretically driving Northrop Grumman to present its best offer in terms of price, quality, and delivery timeline. This competitive pressure can lead to higher quality products and more reliable delivery schedules as contractors strive to win and retain the business. While the data indicates two bids were received, the effectiveness hinges on the thoroughness of the evaluation criteria used by the Department of the Army to assess not just price but also technical capability, past performance, and production capacity, ensuring the selected contractor can effectively meet the demanding requirements of military ammunition supply.

What are the potential workforce implications, both positive and negative, stemming from this large contract award?

This $1.31 billion contract award to Northrop Grumman is likely to have significant positive workforce implications, primarily through job creation and retention within the defense manufacturing sector. The sustained production required over the contract's duration (through December 2024) necessitates a stable workforce, potentially including engineers, technicians, production line workers, and support staff at Northrop Grumman's facilities. This can provide economic stability to the communities where these facilities are located. A potential negative implication could arise if the contract's specific requirements lead to a highly specialized workforce that is difficult to transition to other roles if future contracts are not secured, or if the demand for this specific munition fluctuates significantly post-contract. However, the general nature of ammunition manufacturing often involves transferable skills within the broader industrial base.

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: $130,839,000

Exercised Options: $130,839,000

Current Obligation: $130,839,000

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $66,095,800

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