DoD spent $48.4M on EA-6B outer wing panels, a sole-source contract awarded to Northrop Grumman

Contract Overview

Contract Amount: $48,393,199 ($48.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-03-24

End Date: 2007-05-31

Contract Duration: 1,163 days

Daily Burn Rate: $41.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: EA-6B OUTER WING PANEL FOR FY04-FY06 * / **

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $48.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: EA-6B OUTER WING PANEL FOR FY04-FY06 * / ** Key points: 1. Contract awarded for aircraft parts, indicating a need for specialized components. 2. Sole-source award suggests limited market options or specific contractor capabilities. 3. Contract duration of over 3 years points to a sustained requirement. 4. Fixed Price Incentive contract type aims to balance cost control with performance. 5. Awarded by the Department of the Navy, part of broader defense procurement. 6. Northrop Grumman is a major defense contractor, suggesting established relationships and expertise.

Value Assessment

Rating: fair

The total contract value of $48.4 million for EA-6B outer wing panels over a period of approximately three years appears to be within a reasonable range for specialized aerospace components. However, without specific cost breakdowns or comparisons to similar panel procurements for other aircraft, a definitive value-for-money assessment is challenging. The fixed-price incentive structure suggests an attempt to manage costs while ensuring delivery, but the ultimate cost-effectiveness depends on the incentive clauses and performance outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was considered. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of a necessary component. The lack of competition means that the government did not benefit from a bidding process that could have potentially driven down prices through market forces. The justification for a sole-source award would need to be thoroughly documented to ensure it was appropriate.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as competition is absent, potentially limiting the government's ability to secure the best possible value.

Public Impact

The primary beneficiaries are the Department of the Navy and its EA-6B Prowler aircraft program, ensuring operational readiness. The contract delivers essential outer wing panels, critical for the structural integrity and performance of the aircraft. Geographic impact is primarily within the defense sector, supporting naval aviation operations. Workforce implications include employment at Northrop Grumman facilities involved in the manufacturing and assembly of these specialized parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of competitive bidding may reduce transparency in pricing and value determination.
Reliance on a single supplier can create supply chain risks if that supplier faces production issues.

Positive Signals

Fixed Price Incentive contract type aims to incentivize contractor performance and cost control.
Award to a major defense contractor like Northrop Grumman suggests established quality and reliability.
Sustained contract over multiple years indicates a consistent need and potential for long-term partnership.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, complex supply chains, and significant R&D investment. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sub-sector. Spending in this area is driven by defense procurement needs for maintaining and upgrading existing fleets. Comparable spending benchmarks would involve analyzing the cost of similar aircraft components across different platforms and manufacturers, which is often difficult due to proprietary information and unique specifications.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman, is a large defense corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specifics of such arrangements are not detailed in this data. The absence of a direct set-aside means small businesses would likely participate as subcontractors, if at all, rather than as direct awardees.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Fixed Price Incentive (FPI) contract type, which links contractor profit to performance against cost targets. Transparency is generally limited in sole-source defense contracts, though contract modifications and performance reports are typically available through official channels like the Federal Procurement Data System (FPDS). Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

EA-6B Prowler Aircraft Sustainment
Naval Aviation Parts Procurement
Defense Aircraft Component Manufacturing
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to incentive structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. EA-6B OUTER WING PANEL FOR FY04-FY06 * / **

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 Navy).

What is the total obligated amount?

The obligated amount is $48.4 million.

What is the period of performance?

Start: 2004-03-24. End: 2007-05-31.

What is the historical spending trend for EA-6B outer wing panels?

The provided data covers spending from FY04 to FY06, totaling $48.4 million for EA-6B outer wing panels. To understand the historical trend, one would need to examine procurement data for these specific parts across a broader range of fiscal years, potentially including earlier production phases or subsequent sustainment efforts. Analyzing spending patterns before FY04 and after FY06 would reveal whether this $48.4 million represents a peak, a trough, or a consistent level of expenditure for this component. It would also be beneficial to compare this spending against the overall budget allocated to the EA-6B program during those periods to gauge its relative importance.

How does the pricing of these wing panels compare to similar components for other naval aircraft?

A direct comparison of pricing for these EA-6B outer wing panels to similar components for other naval aircraft is challenging without access to detailed cost breakdowns and specifications for those other components. The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category is broad, and wing panels can vary significantly in size, material, complexity, and manufacturing process depending on the aircraft. Factors such as the specific aerodynamic requirements, structural loads, and technological sophistication of different aircraft platforms will influence the cost. A robust comparison would require identifying aircraft with comparable wing designs and performance characteristics and then analyzing their respective parts procurement data, ideally on a per-unit or per-pound basis, while accounting for inflation and contract type.

What are the specific risks associated with a sole-source award for critical aircraft components?

Sole-source awards for critical aircraft components like the EA-6B outer wing panels present several risks. Firstly, the absence of competition can lead to inflated prices, as the government lacks the leverage of multiple bidders vying for the contract. This can result in less value for taxpayer money. Secondly, there's a heightened risk of supply chain disruption. If the sole-source provider encounters production issues, financial instability, or decides to cease operations, the government may face significant delays or be unable to procure necessary parts, potentially grounding aircraft. Thirdly, sole-source contracts can reduce transparency in the procurement process, making it harder to independently verify the fairness of the pricing and the justification for awarding to a single entity. Finally, it can stifle innovation, as there is less incentive for alternative suppliers to develop competing products or processes.

What is Northrop Grumman's track record with producing aircraft components for the Department of Defense?

Northrop Grumman is a major defense contractor with an extensive history of producing a wide array of aircraft components and systems for the Department of Defense (DoD). Their track record includes manufacturing airframes, avionics, weapons systems, and specialized parts for numerous military aircraft platforms, including fighters, bombers, and surveillance aircraft. The company has been involved in significant defense programs, often serving as a prime contractor. While specific performance metrics for every contract are not publicly detailed, Northrop Grumman's continued success in securing large DoD contracts suggests a generally positive track record in terms of quality, reliability, and program execution. However, like any large contractor, they may have faced challenges or criticisms on specific projects, which would require a deeper dive into individual contract histories.

How does the Fixed Price Incentive (FPI) contract type aim to manage costs and ensure performance?

The Fixed Price Incentive (FPI) contract type is designed to share the risks and rewards between the government and the contractor. It establishes an initial target cost, a target profit, and a price ceiling. The final contract price is determined by the final cost incurred by the contractor, with adjustments to profit based on how the final cost compares to the target cost. If the final cost is below the target cost, both the government and contractor share in the savings (often through a negotiated sharing ratio). Conversely, if the final cost exceeds the target cost, the contractor's profit is reduced, and potentially their loss increases, up to the negotiated price ceiling. This structure incentivizes the contractor to control costs effectively while still meeting performance specifications, as their profit is directly tied to achieving cost efficiencies.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 600 GRUMMAN ROAD WEST, BETHPAGE, NY, 03

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $48,500,242

Exercised Options: $48,393,199

Current Obligation: $48,393,199

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001904D0072

IDV Type: IDC

Timeline