DoD awards $29.2M for XM813 Cannon production, supporting Stryker ECP program

Contract Overview

Contract Amount: $29,191,273 ($29.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-19

End Date: 2027-05-01

Contract Duration: 954 days

Daily Burn Rate: $30.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION ORDER FOR THE XM813 CANNON WHICH WILL BE INCORPORATED INTO THE STRYKER 30MM ENGINEERING CHANGE PROPOSAL (ECP) PROGRAM. THIS DELIVERY ORDER ESTABLISHES PRODUCTION ORDER FOR PM MAS FOR XM813 CANNONS.

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85215

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $29.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PRODUCTION ORDER FOR THE XM813 CANNON WHICH WILL BE INCORPORATED INTO THE STRYKER 30MM ENGINEERING CHANGE PROPOSAL (ECP) PROGRAM. THIS DELIVERY ORDER ESTABLISHES PRODUCTION ORDER FOR PM MAS FOR XM813 CANNONS. Key points: 1. Value for money assessed against production costs for similar weapon systems. 2. Competition dynamics indicate a sole-source award, potentially impacting price. 3. Risk indicators include reliance on a single contractor for critical components. 4. Performance context is tied to the successful integration of the XM813 into the Stryker platform. 5. Sector positioning places this within the defense manufacturing industry, specifically armored vehicle upgrades.

Value Assessment

Rating: fair

The contract value of $29.2 million for the production of XM813 cannons appears reasonable given the specialized nature of military hardware. However, without direct cost breakdowns or comparisons to similar sole-source procurements for advanced weapon systems, a definitive value-for-money assessment is challenging. The price is fixed, which offers some cost certainty, but the lack of competition limits opportunities for price discovery and potential savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Northrop Grumman Systems Corporation was the only bidder. This approach is typically used when a specific contractor possesses unique capabilities or intellectual property essential for the product. The lack of competition means that taxpayers do not benefit from the price reductions that can arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no market pressure to drive down prices. This necessitates strong oversight to ensure the awarded price is fair and reasonable.

Public Impact

Benefits the U.S. Army by providing advanced firepower for its Stryker combat vehicles. Delivers critical components for the modernization of armored personnel carriers. Geographic impact is primarily in Arizona, where Northrop Grumman's facility is located. Workforce implications include skilled manufacturing jobs in defense production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential taxpayer savings.
Reliance on a single supplier for critical weapon components could pose supply chain risks.
Program success is heavily dependent on the contractor's ability to meet production timelines and quality standards.

Positive Signals

Supports a critical modernization effort for the U.S. Army's Stryker fleet.
The contract is firm-fixed-price, providing cost certainty for the government.
The awardee, Northrop Grumman, is a major defense contractor with established production capabilities.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of advanced ordnance for armored vehicles. The market for such specialized components is often dominated by a few large defense contractors due to high barriers to entry, including technological expertise, security clearances, and established relationships with government agencies. Comparable spending benchmarks would typically involve other large-scale weapon system production contracts within the Department of Defense.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of producing advanced weapon systems like the XM813 cannon, it is unlikely that small businesses would be primary contractors. However, Northrop Grumman may engage small businesses as subcontractors for specific components or services, contributing to the broader small business defense ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army's program executive office for ground combat systems. Accountability measures will include adherence to the firm-fixed-price terms, delivery schedules, and quality control standards. Transparency is generally maintained through contract award databases, though detailed production cost breakdowns are typically not publicly disclosed.

Related Government Programs

Stryker Combat Vehicle Program
Ordnance Manufacturing
Armored Vehicle Modernization
Defense Production Contracts

Risk Flags

Sole-source award
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PRODUCTION ORDER FOR THE XM813 CANNON WHICH WILL BE INCORPORATED INTO THE STRYKER 30MM ENGINEERING CHANGE PROPOSAL (ECP) PROGRAM. THIS DELIVERY ORDER ESTABLISHES PRODUCTION ORDER FOR PM MAS FOR XM813 CANNONS.

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 $29.2 million.

What is the period of performance?

Start: 2024-09-19. End: 2027-05-01.

What is Northrop Grumman's track record with producing similar ordnance systems for the Department of Defense?

Northrop Grumman Systems Corporation has a significant track record in defense manufacturing, including the production of various weapon systems and components. While specific details on the XM813 cannon production may be proprietary, the company has experience with large-scale defense contracts, including those involving complex engineering and manufacturing processes. Their history with the Department of Defense suggests a capacity to handle such production orders, though performance on past contracts, including any delays or cost overruns on similar projects, would be a key factor in assessing future performance risk. Publicly available contract databases and defense news archives can provide insights into their past performance on comparable programs.

How does the $29.2 million award compare to the cost of similar weapon system production contracts?

Direct comparisons for the XM813 cannon production are difficult due to its specific nature and the sole-source award. However, the value of $29.2 million for a production order of advanced weapon systems is within the typical range for such specialized military hardware. For context, other large-scale production contracts for components of armored vehicles or new weapon systems can range from tens to hundreds of millions of dollars, depending on the complexity, quantity, and technological sophistication. The firm-fixed-price nature of this contract provides a degree of cost certainty, but without competitive bidding, it's harder to ascertain if this represents the best possible price achievable in a more open market.

What are the primary risks associated with this sole-source contract for the XM813 cannon production?

The primary risk associated with this sole-source contract is the lack of competition, which can lead to higher costs for taxpayers and potentially less incentive for the contractor to innovate or optimize production efficiency. Another significant risk is supply chain dependency; the U.S. Army is reliant on Northrop Grumman for the timely and quality production of these critical components. Any production delays, quality issues, or unforeseen cost increases by the sole supplier could directly impact the Stryker ECP program's timeline and budget. Furthermore, the long-term availability of spare parts and sustainment could also be a concern if the contractor's focus shifts away from this specific system in the future.

How effective is the XM813 cannon expected to be in enhancing the Stryker combat vehicle's capabilities?

The XM813 cannon is designed to significantly enhance the firepower of the Stryker combat vehicle, providing a more potent direct-fire capability compared to its predecessors. Its incorporation into the Stryker via the Engineering Change Proposal (ECP) program aims to address evolving battlefield threats and provide greater lethality against a wider range of targets, including hardened enemy positions and armored vehicles. The effectiveness will be measured by its operational performance in training and combat scenarios, its reliability, and its integration with the Stryker platform's existing systems. Successful integration and deployment are key to realizing the intended improvements in the Army's ground combat capabilities.

What are the historical spending patterns for ordnance and armored vehicle components within the Department of the Army?

The Department of the Army consistently allocates substantial funding towards ordnance and armored vehicle modernization and sustainment. Historical spending patterns reveal significant investments in platforms like the Abrams tank and the Stryker family of vehicles, including upgrades to their weapon systems. Budgets for these categories often fluctuate based on geopolitical conditions, strategic priorities, and the lifecycle of existing equipment. The Army typically procures large quantities of ammunition, cannons, and related components through multi-year contracts, often awarded to major defense contractors. Analyzing past budgets for similar programs, such as previous Stryker upgrades or new cannon development, can provide context for the current $29.2 million award.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 4700 NATHAN LN N, PLYMOUTH, MN, 55442

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: $29,191,273

Exercised Options: $29,191,273

Current Obligation: $29,191,273

Subaward Activity

Number of Subawards: 69

Total Subaward Amount: $14,124,108

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV20D0108

IDV Type: IDC

Timeline