DoD's $422M Northrop Grumman Contract for Contractor Logistics Support Faces Scrutiny
Contract Overview
Contract Amount: $422,215,073 ($422.2M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2016-10-28
End Date: 2020-09-27
Contract Duration: 1,430 days
Daily Burn Rate: $295.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: HUNTER FY2017-2018 CONTRACTOR LOGISTICS SUPPORT
Place of Performance
Location: SIERRA VISTA, COCHISE County, ARIZONA, 85635
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $422.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: HUNTER FY2017-2018 CONTRACTOR LOGISTICS SUPPORT Key points: 1. Significant contract value of over $422 million awarded to a single large corporation. 2. Lack of competition raises concerns about potential overpricing and reduced value for taxpayers. 3. Contract duration of 1430 days (nearly 4 years) indicates a long-term commitment. 4. The sector is Aircraft Manufacturing, suggesting specialized and potentially high-cost services.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes it difficult to assess value. Without competitive bids, it's hard to benchmark pricing against similar services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and may lead to higher costs for the government as there is no competitive pressure to offer the best price.
Taxpayer Impact: The absence of competition suggests that taxpayers may be paying more than necessary for these logistics support services.
Public Impact
Taxpayers may be overpaying for contractor logistics support due to a lack of competitive bidding. The Department of Defense relies on this contractor for critical aircraft manufacturing support. Long-term contracts without competition can stifle innovation and lead to vendor lock-in.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- High contract value
Positive Signals
- Definitive contract award
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, specifically for contractor logistics support. Spending benchmarks in this area are highly variable, but significant sums are typical for major defense platforms.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large defense contractor. There is no indication that small businesses were involved or had an opportunity to compete for this specific contract.
Oversight & Accountability
The 'NOT COMPETED' status warrants further oversight to ensure the government received fair pricing and that a sole-source award was justified. Accountability for the lack of competition is crucial.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition raises concerns about fair pricing.
- Cost-plus contract type increases government financial risk.
- Sole-source award may not represent best value.
- Long contract duration without competition.
- No indication of small business participation.
Tags
aircraft-manufacturing, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $422.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. HUNTER FY2017-2018 CONTRACTOR LOGISTICS SUPPORT
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 $422.2 million.
What is the period of performance?
Start: 2016-10-28. End: 2020-09-27.
What was the justification for not competing this significant contract, and were alternative solutions explored?
The justification for not competing this $422 million contract is not provided in the data. Typically, sole-source awards are made when only one responsible source can provide the required supplies or services. However, without further details, it's unclear if alternatives like competitive bidding with different contract types or phased procurements were considered.
How does the cost-plus-fixed-fee structure impact the risk of cost overruns and contractor performance?
Cost-plus-fixed-fee contracts shift much of the financial risk to the government. While the contractor has an incentive to control costs to achieve their fixed fee, the government bears the risk of cost overruns. This structure can sometimes lead to less aggressive cost management compared to fixed-price contracts, especially when competition is absent.
What is the long-term strategic implication of awarding such a large, non-competed contract for aircraft manufacturing logistics support?
Awarding a large, non-competed contract can create a long-term dependency on a single provider, potentially limiting future flexibility and access to competitive pricing. It may also reduce opportunities for other capable companies, including small businesses, to enter the market or innovate within this support area.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W58RGZ15R0059
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 4067 ENTERPRISE WAY, SIERRA VISTA, AZ, 85635
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $754,741,168
Exercised Options: $578,160,156
Current Obligation: $422,215,073
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-10-28
Current End Date: 2020-09-27
Potential End Date: 2020-09-27 12:09:00
Last Modified: 2024-08-27
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