Northrop Grumman awarded $1.16B for specialized aircraft logistics, supporting critical electronic mission fleets

Contract Overview

Contract Amount: $1,158,653,824 ($1.2B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2017-09-01

End Date: 2025-12-28

Contract Duration: 3,040 days

Daily Burn Rate: $381.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CT::IGF CONTRACT AWARD FOR CONTRACTOR LOGISTICS SUPPORT (CLS), ALSO REFERRED TO AS LIFE CYCLE SERVICES, FOR THE GOVERNMENT-OWNED FIXED WING FLEET PERFORMING SPECIAL ELECTRONIC MISSION AIRCRAFT (SEMA) MISSIONS (MC-12, C-12, RC-12, EO-5, B300, MODEL 300 AND RO-6A).

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $1.16 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::CT::IGF CONTRACT AWARD FOR CONTRACTOR LOGISTICS SUPPORT (CLS), ALSO REFERRED TO AS LIFE CYCLE SERVICES, FOR THE GOVERNMENT-OWNED FIXED WING FLEET PERFORMING SPECIAL ELECTRONIC MISSION AIRCRAFT (SEMA) MISSIONS (MC-12, C-12, RC-12, EO-5, B300, MODEL 300 AND RO-6A). Key points: 1. Contract provides comprehensive lifecycle services for a diverse fleet of government-owned fixed-wing aircraft. 2. The award represents a significant investment in maintaining specialized electronic mission aircraft capabilities. 3. Competition was full and open, suggesting a robust market for these specialized support services. 4. The contract duration extends through late 2025, indicating a long-term need for these services. 5. Pricing structure is firm-fixed-price, which shifts performance risk to the contractor. 6. The contractor, Northrop Grumman, has a substantial presence in defense logistics and aerospace.

Value Assessment

Rating: good

The contract value of $1.16 billion over its period of performance appears substantial, reflecting the complexity and criticality of supporting specialized electronic mission aircraft. Benchmarking this against similar large-scale, long-term government logistics contracts for specialized aviation assets is challenging due to the unique nature of the MC-12, C-12, RC-12, EO-5, B300, and RO-6A fleets. However, the firm-fixed-price structure suggests an expectation of cost control and performance predictability from the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable contractors had the opportunity to bid. The presence of three bidders (as suggested by 'no': 3) for such a specialized and high-value contract demonstrates a competitive market for these advanced aviation support services. This level of competition is generally favorable for price discovery and achieving a reasonable cost for the government.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by encouraging multiple companies to offer their best terms and innovations to win the contract.

Public Impact

The U.S. Army benefits from sustained operational readiness of its specialized electronic mission aircraft. Services include contractor logistics support (CLS) and life cycle services for the fixed-wing fleet. Geographic impact is likely global, supporting missions wherever these aircraft are deployed. Workforce implications include specialized technical and logistical roles for Northrop Grumman employees.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term contract duration could lead to vendor lock-in if not managed carefully.
Dependence on a single contractor for critical logistics could pose risks if performance falters.
The specialized nature of the aircraft may limit the pool of potential future competitors.
Firm-fixed-price contracts can sometimes incentivize cost-cutting that might impact long-term maintainability if not closely monitored.

Positive Signals

Full and open competition suggests a healthy market and potential for competitive pricing.
Firm-fixed-price contract shifts cost overrun risk to the contractor.
Contractor logistics support (CLS) can provide specialized expertise and maintain readiness.
Long contract duration provides stability for critical mission support.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aviation support services. The market for specialized aircraft maintenance and logistics is characterized by high barriers to entry due to technical expertise, security clearances, and infrastructure requirements. Northrop Grumman is a major player in this space. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of the aircraft, but large-scale aviation support contracts can run into hundreds of millions or billions of dollars over their lifecycles.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false) and the prime contractor is Northrop Grumman, a large corporation. While there's no explicit mention of small business subcontracting goals in the provided data, large defense contracts often include provisions for small business participation. The impact on the small business ecosystem would depend on the extent to which Northrop Grumman utilizes small businesses for specialized components, services, or support roles within this contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army, likely through program management offices and contracting officers. Accountability measures are embedded in the firm-fixed-price contract terms, performance metrics, and potential award fees or penalties. Transparency is facilitated through contract award databases, though detailed performance reports may be less public. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Air Force Contractor Logistics Support Programs
Army Aviation Maintenance Contracts
Special Electronic Mission Aircraft (SEMA) Operations
Fixed-Wing Aircraft Fleet Management
Defense Logistics Agency (DLA) Support Contracts

Risk Flags

Long-term contract dependency
Potential for performance degradation under FFP
Specialized asset sustainment risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.16 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::CT::IGF CONTRACT AWARD FOR CONTRACTOR LOGISTICS SUPPORT (CLS), ALSO REFERRED TO AS LIFE CYCLE SERVICES, FOR THE GOVERNMENT-OWNED FIXED WING FLEET PERFORMING SPECIAL ELECTRONIC MISSION AIRCRAFT (SEMA) MISSIONS (MC-12, C-12, RC-12, EO-5, B300, MODEL 300 AND RO-6A).

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 $1.16 billion.

What is the period of performance?

Start: 2017-09-01. End: 2025-12-28.

What is Northrop Grumman's track record with similar large-scale aviation support contracts for the U.S. military?

Northrop Grumman has an extensive history of providing complex logistics, sustainment, and modernization services for various U.S. military platforms, including aircraft. They are a major defense contractor with significant experience in areas like aircraft modification, system integration, and lifecycle support for both manned and unmanned systems. Their portfolio includes work on intelligence, surveillance, and reconnaissance (ISR) platforms, which aligns with the 'special electronic mission aircraft' designation. While specific details of past performance on contracts of this exact scale and scope are proprietary, their overall profile suggests a strong capability to manage and execute such a demanding requirement. Past performance evaluations are a critical component of the source selection process for contracts like this, and Northrop Grumman's established position indicates they likely met or exceeded requirements in previous relevant engagements.

How does the $1.16 billion contract value compare to historical spending on similar specialized aircraft support?

Direct comparisons for this specific contract are challenging due to the unique nature of the MC-12, C-12, RC-12, EO-5, B300, and RO-6A aircraft fleets and their specialized electronic mission roles. However, large-scale, long-duration contractor logistics support (CLS) contracts for military aviation fleets frequently reach or exceed this value. For instance, major airframe manufacturers and defense primes often secure multi-billion dollar contracts for sustainment of fighter, bomber, or transport fleets over 10-20 year periods. The $1.16 billion figure, spread over the contract's duration (approximately 8 years from award to end date), suggests an average annual spend of around $145 million. This is substantial but not unprecedented for maintaining a dedicated fleet of specialized aircraft requiring advanced technical support and lifecycle services.

What are the primary risks associated with a firm-fixed-price contract for complex aviation logistics?

The primary risk with a firm-fixed-price (FFP) contract, especially for complex and long-duration services like aviation logistics, is that the contractor may face unforeseen cost increases that erode their profit margin or lead to performance compromises. While FFP shifts cost overrun risk to the contractor, if the government's requirements change significantly or if unforeseen technical challenges arise that were not adequately scoped, the contractor might be incentivized to cut corners on quality, maintenance, or support to protect profitability. Conversely, the government bears the risk of paying a premium if the contractor's initial cost estimates were overly conservative. Effective oversight, clear performance metrics, and robust contract management are crucial to mitigate these risks and ensure the government receives the required level of service and value.

How effective is full and open competition in ensuring value for money for specialized defense logistics?

Full and open competition is generally considered the most effective method for ensuring value for money in defense logistics, as it maximizes the potential for competitive pricing and innovation. By allowing all responsible sources to submit bids, the government can leverage the broadest possible market, driving down costs as contractors vie for the award. This process encourages bidders to offer their most competitive pricing and efficient solutions. For specialized areas like electronic mission aircraft support, it ensures that the government selects the offeror that provides the best combination of technical capability, past performance, and price. While the initial competition is valuable, ongoing performance monitoring and contract management are also essential to sustain value throughout the contract's life.

What are the implications of this contract award on future competition for similar specialized aviation support services?

This award to Northrop Grumman, a major incumbent in defense contracting, could have several implications for future competition. Firstly, it solidifies their position as a key provider for this specific fleet, potentially making it harder for new entrants to challenge them on future re-competitions without significant investment and demonstrated capability. Secondly, the full and open competition suggests that the market, while specialized, does have multiple capable players, which is positive. However, the long duration and high value of this contract mean that potential competitors will have to wait for its expiration to realistically challenge for the work. The government's strategy in defining the scope and requirements for future competitions will be critical in fostering continued competition.

How does the 'Other Support Activities for Air Transportation' NAICS code (488190) reflect the scope of this contract?

The North American Industry Classification System (NAICS) code 488190, 'Other Support Activities for Air Transportation,' accurately categorizes the broad scope of services provided under this contract. This code encompasses a range of activities beyond basic flight operations, including aircraft maintenance and repair, overhaul services, modification, and specialized support functions essential for keeping aircraft operational. Given that the contract covers 'contractor logistics support (CLS)' and 'life cycle services' for a fixed-wing fleet performing 'special electronic mission aircraft (SEMA) missions,' it aligns perfectly with the 'other support' aspect. This code suggests services that are critical for the operational readiness and longevity of the aircraft, rather than the transportation service itself.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W58RGZ15R0045

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,747,331,364

Exercised Options: $1,203,061,653

Current Obligation: $1,158,653,824

Actual Outlays: $2,727,265

Subaward Activity

Number of Subawards: 33149

Total Subaward Amount: $12,831,396,936

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline