Northrop Grumman awarded $63.8M for F-5N/F aircraft depot maintenance, a sole-source contract

Contract Overview

Contract Amount: $63,776,671 ($63.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2014-04-22

End Date: 2020-10-15

Contract Duration: 2,368 days

Daily Burn Rate: $26.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-5 DEPOT MAINTENANCE - FIRM-FIXED-PRICE, COST-PLUS-FIXED-FEE, COST REIMBURSEMENT, INDEFINITE-DELIVERY, INDEFINITE-QUANTITY CONTRACT FOR THE DEPOT MAINTENANCE SERVICES OF 44 NAVY AND MARINE CORPS RESERVE F-5N/F AIRCRAFT. THE SERVICES WILL INCLUDE DEPOT LEVEL MAINTENANCE, AIRCRAFT INSPECTIONS, REPAIRS, OVERHAULS, EMERGENCY REPAIRS, MODIFICATIONS, ENGINEERING SUPPORT, AND PROCUREMENT OF STRUCTURAL COMPONENTS AS REQUIRED TO SUSTAIN THE F-5N/F AIRCRAFT.

Place of Performance

Location: SAINT AUGUSTINE, SAINT JOHNS County, FLORIDA, 32095

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $63.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: F-5 DEPOT MAINTENANCE - FIRM-FIXED-PRICE, COST-PLUS-FIXED-FEE, COST REIMBURSEMENT, INDEFINITE-DELIVERY, INDEFINITE-QUANTITY CONTRACT FOR THE DEPOT MAINTENANCE SERVICES OF 44 NAVY AND MARINE CORPS RESERVE F-5N/F AIRCRAFT. THE SERVICES WILL INCLUDE DEPOT LEVEL MAINTENANCE, AIRCRAF… Key points: 1. Contract focuses on depot-level maintenance, inspections, repairs, and modifications for 44 Navy and Marine Corps Reserve F-5N/F aircraft. 2. Services include engineering support and procurement of structural components to ensure aircraft sustainment. 3. The contract type is primarily Cost Plus Fixed Fee, indicating potential for cost overruns. 4. Awarded to Northrop Grumman Systems Corporation, a major defense contractor. 5. The duration of the contract is approximately 2368 days, spanning over six years. 6. Geographic focus is Florida, where the services will be performed. 7. No small business set-aside was included in this contract.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the specialized nature of F-5N/F aircraft maintenance and the sole-source award. The Cost Plus Fixed Fee structure inherently carries a higher risk of cost escalation compared to firm-fixed-price contracts. Without competitive bids, it's difficult to ascertain if the pricing reflects optimal value for money. The total award amount of $63.8 million over six years suggests a significant investment in sustaining these older aircraft.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Northrop Grumman Systems Corporation. The absence of competition limits the government's ability to solicit multiple bids and negotiate the most favorable terms. This approach is often taken when a single contractor possesses unique capabilities, proprietary technology, or is the sole provider of necessary parts or services for a specific platform.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the lack of competitive pressure. The government's negotiating position is weakened when only one source is considered.

Public Impact

The U.S. Navy and Marine Corps Reserve benefit from the sustained readiness of their F-5N/F aircraft fleet. Essential depot maintenance, repair, and modification services are delivered to ensure operational capability. The contract's geographic impact is centered in Florida, supporting local maintenance and technical expertise. Workforce implications include the employment of skilled technicians, engineers, and support staff in the aerospace maintenance sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure increases risk of cost overruns.
Sole-source award limits price negotiation and potential for better value.
Sustaining older aircraft platforms can be more expensive than acquiring newer ones.
Lack of competition may reduce incentive for contractor efficiency.
Dependence on a single contractor for critical maintenance services.

Positive Signals

Ensures continued operational readiness of critical training and aggressor aircraft.
Northrop Grumman has established expertise in maintaining this aircraft type.
Contract provides long-term sustainment, offering stability for maintenance operations.
Includes engineering support, addressing potential obsolescence and modification needs.

Sector Analysis

The aerospace and defense sector is characterized by complex, high-value contracts for aircraft manufacturing, maintenance, and support. This contract falls within the aircraft maintenance and repair sub-sector, focusing on sustaining legacy platforms. The market for specialized depot maintenance can be limited, often favoring original equipment manufacturers or highly specialized MRO (Maintenance, Repair, and Overhaul) providers. Spending benchmarks for similar depot-level services vary widely based on aircraft type, age, and required modifications.

Small Business Impact

This contract did not include a small business set-aside. As a sole-source award to a large defense contractor, there are no direct subcontracting requirements specified for small businesses within the contract terms. This means opportunities for small businesses to participate in this specific contract are limited unless they are already part of Northrop Grumman's supply chain or are engaged independently for specific components or services not covered by the prime contract.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the Cost Plus Fixed Fee structure, requiring detailed reporting and justification of costs. Transparency is facilitated through contract reporting mechanisms, though the sole-source nature limits public visibility into the competitive process. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

F-5 Aircraft Sustainment Programs
Defense Logistics Agency Aviation Support
Naval Air Systems Command (NAVAIR) Maintenance Contracts
Air Force Sustainment Center Contracts
Aggressor Squadron Support Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Sustainment of aging aircraft platform

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. F-5 DEPOT MAINTENANCE - FIRM-FIXED-PRICE, COST-PLUS-FIXED-FEE, COST REIMBURSEMENT, INDEFINITE-DELIVERY, INDEFINITE-QUANTITY CONTRACT FOR THE DEPOT MAINTENANCE SERVICES OF 44 NAVY AND MARINE CORPS RESERVE F-5N/F AIRCRAFT. THE SERVICES WILL INCLUDE DEPOT LEVEL MAINTENANCE, AIRCRAFT INSPECTIONS, REPAIRS, OVERHAULS, EMERGENCY REPAIRS, MODIFICATIONS, ENGINEERING SUPPORT, AND PROCUREMENT OF STRUCTURAL COMPONENTS AS REQUIRED TO SUSTAIN THE F-5N/F AIRCRAFT.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $63.8 million.

What is the period of performance?

Start: 2014-04-22. End: 2020-10-15.

What is Northrop Grumman's track record with F-5 aircraft maintenance?

Northrop Grumman Systems Corporation has a long history of supporting various military aircraft platforms, including the F-5 family. As a major defense contractor, they possess significant experience in aircraft depot maintenance, repair, overhaul, and modification. Their involvement with the F-5 program likely stems from their role as a manufacturer or a key sustainment partner for these aircraft over their operational lifespan. This includes providing engineering support, structural repairs, and component procurement necessary to keep the aging F-5 fleet mission-capable. Their established infrastructure and technical expertise are critical factors in their ability to perform these specialized services, often making them a preferred or sole-source provider for such niche maintenance requirements.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for this service?

The Cost Plus Fixed Fee (CPFF) contract structure is often used when the scope of work is not precisely defined at the outset or involves significant uncertainties, such as in complex maintenance and repair operations. Under CPFF, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from Firm-Fixed-Price (FFP) contracts, where the price is set regardless of actual costs incurred, offering greater cost certainty to the government but potentially higher initial prices to account for contractor risk. Cost Reimbursement contracts (like Cost Plus Incentive Fee or Cost Plus Award Fee) also exist, where the fee can vary based on performance. For depot maintenance, CPFF can provide flexibility to address unforeseen issues but carries a higher risk of cost growth for the government compared to FFP, as the contractor has less incentive to control costs beyond what is necessary to complete the work.

What are the primary risks associated with sustaining older aircraft like the F-5N/F?

Sustaining older aircraft platforms like the F-5N/F presents several significant risks. Firstly, the availability of spare parts can become a major challenge as original manufacturers may cease production, leading to reliance on limited inventories, refurbished parts, or costly custom fabrication. Secondly, the complexity and cost of maintenance often increase with age due to wear and tear, requiring more extensive repairs and overhauls. Thirdly, technological obsolescence can limit the aircraft's capabilities compared to modern platforms, potentially diminishing its effectiveness. Lastly, the specialized knowledge and skills required to maintain these older systems may be scarce, as personnel trained on them retire. These factors collectively contribute to higher sustainment costs and potential readiness issues.

What is the historical spending pattern for F-5 aircraft depot maintenance within the DoD?

Historical spending on F-5 aircraft depot maintenance within the Department of Defense (DoD) has been consistent, reflecting the long service life of these aircraft, particularly in roles such as training and adversary support. While specific figures fluctuate annually based on fleet readiness requirements, modernization efforts, and the availability of alternative platforms, the DoD has consistently allocated funds for the sustainment of its F-5 inventory. This spending typically covers scheduled depot maintenance, unscheduled repairs, component overhauls, and necessary modifications to extend operational life or incorporate limited upgrades. The total expenditure over the years represents a significant investment in maintaining a capable, albeit aging, asset within the military's aviation portfolio, often managed through multi-year contracts similar to the one awarded to Northrop Grumman.

How does the sole-source nature of this contract impact price discovery and taxpayer value?

The sole-source nature of this contract significantly impacts price discovery by eliminating the competitive bidding process. When only one contractor is solicited, the government cannot leverage the market's competitive forces to drive down prices or ensure the most cost-effective solution is identified. The contractor has considerable leverage, and the government's ability to negotiate favorable terms is diminished. This can lead to higher prices than might be achieved in a competitive environment. For taxpayers, this means a reduced likelihood of obtaining the best possible value for their investment. While the government may still negotiate, the absence of competing offers means the benchmark for 'fair and reasonable' pricing is less robust, potentially resulting in higher overall expenditures for the required services.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 5000 US HWY 1 N, SAINT AUGUSTINE, FL, 32095

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

Financial Breakdown

Contract Ceiling: $63,776,671

Exercised Options: $63,776,671

Current Obligation: $63,776,671

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $2,639,748

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001914D0022

IDV Type: IDC

Timeline