DoD's $22.1M F-5 aircraft support contract awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $22,114,564 ($22.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2012-05-15

End Date: 2015-01-31

Contract Duration: 991 days

Daily Burn Rate: $22.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: O&A EFFORT TO SUPPORT PDM OF F-5 A/C SN-54.

Place of Performance

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

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $22.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: O&A EFFORT TO SUPPORT PDM OF F-5 A/C SN-54. Key points: 1. Contract awarded on a sole-source basis, raising concerns about potential overpayment and lack of competitive pricing. 2. The contract duration of 991 days suggests a long-term need for these engineering services. 3. Services provided are critical for maintaining the F-5 aircraft fleet, indicating a significant operational impact. 4. The absence of competition limits the government's ability to leverage market forces for cost savings. 5. Performance is managed by the Defense Contract Management Agency, suggesting established oversight protocols. 6. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids. The Cost Plus Fixed Fee structure, while allowing for flexibility, can lead to higher costs if not managed rigorously. Without comparable sole-source contracts for similar aircraft sustainment, it's difficult to definitively assess if the pricing reflects fair market value. The total award amount of $22.1 million over its period of performance warrants scrutiny to ensure efficiency and prevent potential cost creep.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in less favorable pricing for the government compared to fully competed contracts. The lack of multiple bidders means there was no direct price competition to drive down costs.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competition. The government missed an opportunity to secure potentially lower prices through a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating and maintaining the F-5 aircraft fleet. The contract delivers essential engineering services for the sustainment and operational readiness of F-5 aircraft. Services are geographically focused in Florida, supporting a specific regional maintenance or operational hub. The contract supports specialized engineering roles, potentially impacting a niche segment of the aerospace engineering workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may lead to higher costs.
Cost Plus Fixed Fee contract type carries inherent risk of cost overruns without strict oversight.
Lack of transparency in the sole-source justification process.
Potential for contractor lock-in due to specialized knowledge of F-5 systems.

Positive Signals

Contract addresses a critical need for F-5 aircraft sustainment, ensuring operational readiness.
Northrop Grumman is an established aerospace contractor with relevant experience.
Defense Contract Management Agency oversight provides a layer of accountability.
Services are delivered in Florida, potentially supporting regional economic activity.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting aerospace and defense. The market for aircraft sustainment and engineering services is substantial, with significant government spending allocated to maintaining aging fleets and developing new platforms. Northrop Grumman is a major player in this sector. Comparable spending benchmarks for similar sustainment contracts would typically involve competitive solicitations for aircraft maintenance and engineering support, where pricing is driven by market dynamics.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting goals for small businesses. Consequently, the direct impact on the small business ecosystem is likely minimal, and opportunities for small businesses to participate in this specific contract are not evident from the provided data.

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 would typically involve performance reviews, milestone tracking, and financial audits, especially given the Cost Plus Fixed Fee structure. Transparency regarding the sole-source justification and the specific details of the fixed fee would be crucial for a comprehensive assessment of oversight effectiveness.

Related Government Programs

F-5 Aircraft Sustainment Programs
Aerospace Engineering Services
Defense Contract Management
Sole-Source Procurement
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. O&A EFFORT TO SUPPORT PDM OF F-5 A/C SN-54.

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 $22.1 million.

What is the period of performance?

Start: 2012-05-15. End: 2015-01-31.

What is Northrop Grumman's track record with similar sole-source contracts for aircraft sustainment?

Northrop Grumman Systems Corporation has a long history of supporting various military aircraft platforms, including legacy systems like the F-5. While specific data on their sole-source contracts for sustainment is not detailed here, their extensive experience suggests a capacity to perform such work. However, the effectiveness and value derived from sole-source awards can vary significantly based on the specific contract terms, the level of competition avoided, and the rigor of government oversight. A deeper analysis would require examining past sole-source awards to Northrop Grumman for similar services, including their pricing structures, performance outcomes, and any associated cost variances or audits.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for engineering services in terms of value for money?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or is expected to evolve. It reimburses the contractor for allowable costs plus a fixed fee, representing profit. While it offers flexibility, it can incentivize cost overruns as the contractor is not directly penalized for higher costs beyond the fixed fee. In contrast, Fixed-Price contracts generally offer better value for money when the scope is well-defined, as they place cost risk on the contractor. Best value is often achieved through competitive bidding, regardless of contract type, as it leverages market forces to establish a fair price. For engineering services, a well-defined scope with a competitive fixed-price bid is often preferred for value, but CPFF can be appropriate for research and development or complex sustainment where scope uncertainty is high, provided robust oversight is in place.

What are the primary risks associated with sole-source procurement for defense engineering services?

The primary risks associated with sole-source procurement for defense engineering services include a lack of price competition, which can lead to inflated costs and reduced value for taxpayer money. There's also a risk of contractor complacency or reduced innovation due to the absence of competitive pressure. Furthermore, sole-source awards can create contractor dependency and make it difficult to switch providers in the future. Transparency in the justification for sole-sourcing is crucial, as without it, there's a risk of awards being made without adequate consideration of alternatives or potential conflicts of interest. Effective oversight is paramount to mitigate these risks.

What is the historical spending pattern for F-5 aircraft sustainment by the Department of Defense?

Historical spending on F-5 aircraft sustainment by the Department of Defense has been ongoing for decades, as the F-5 is a legacy platform used by various allied nations and sometimes for training or aggressor roles within the U.S. military. Specific aggregate spending figures for F-5 sustainment are not readily available in this dataset, but it is understood that maintaining aging aircraft fleets involves significant costs related to parts, depot-level maintenance, engineering support, and upgrades. This particular contract for $22.1 million represents a portion of that broader sustainment effort. Trends in such spending are often influenced by the operational tempo of the F-5 fleet, the availability of spare parts, and decisions regarding fleet modernization or retirement.

How does the geographic location (Florida) influence the cost and performance of this contract?

The geographic location in Florida (st. FL, sn. FLORIDA) for this contract could influence costs and performance in several ways. Florida has a significant aerospace and defense industry presence, which might mean a readily available pool of skilled labor and specialized subcontractors. However, depending on the specific location within Florida and prevailing wage rates, labor costs could be higher or lower compared to other regions. Proximity to military bases or maintenance facilities could reduce logistical costs and travel time, potentially improving performance efficiency. The presence of established aerospace infrastructure in Florida might also facilitate access to necessary facilities and equipment, contributing to smoother execution of engineering services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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 (UEI: 967356127)

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: $22,114,564

Exercised Options: $22,114,564

Current Obligation: $22,114,564

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0018912DZ014

IDV Type: IDC

Timeline