DoD awards $62.1M to Northrop Grumman for aircraft parts, contract was not competed

Contract Overview

Contract Amount: $62,137,321 ($62.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-06-04

End Date: 2008-06-30

Contract Duration: 1,487 days

Daily Burn Rate: $41.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LOT I PHASE 1VIIP

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $62.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LOT I PHASE 1VIIP Key points: 1. Contract awarded on a firm-fixed-price basis, indicating a defined scope and cost. 2. The contract duration of approximately 4 years suggests a significant, ongoing need. 3. Awarded by the Defense Contract Management Agency, highlighting a focus on defense procurement. 4. The North American Industry Classification System (NAICS) code 336413 points to specialized aircraft parts manufacturing. 5. The contract was not competed, raising questions about potential cost efficiencies and market engagement. 6. The contract was awarded in New York, indicating a specific geographic focus for this procurement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar aircraft parts. The firm-fixed-price structure suggests the government accepted the contractor's proposed price. However, the lack of competition means there was no market-driven price discovery to ensure optimal value for taxpayer dollars. Further analysis would require access to internal cost data or historical pricing for similar components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential suppliers. This approach is typically used when only one source can fulfill the requirement, such as for proprietary technology or unique capabilities. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's purchasing power and potentially diverts funds that could be used for other critical needs.

Public Impact

The primary beneficiaries are the Department of Defense, which receives essential aircraft parts for its operations. The services delivered involve the manufacturing and supply of specialized aircraft components. The geographic impact is concentrated in New York, where the contractor is located. Workforce implications include employment opportunities within Northrop Grumman's facilities in New York.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source awards can reduce government leverage in negotiations.
Limited transparency into the justification for sole-source procurement.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established defense contractor suggests a degree of reliability.
Contract addresses a specific, likely critical, need within the defense sector.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized defense components is often characterized by high barriers to entry, proprietary technology, and a limited number of qualified suppliers. Spending in this area is critical for maintaining military readiness. Comparable spending benchmarks are difficult to establish due to the specialized nature of the parts and the sole-source award.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large defense contractor, there are no direct subcontracting opportunities for small businesses mandated by this specific contract. The impact on the small business ecosystem is neutral to negative, as opportunities were not specifically directed towards small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the firm-fixed-price structure, which caps the government's financial liability. Transparency regarding the justification for the sole-source award would be key to assessing accountability.

Related Government Programs

Aircraft Manufacturing
Defense Procurement
Aerospace Components
Northrop Grumman Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LOT I PHASE 1VIIP

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 $62.1 million.

What is the period of performance?

Start: 2004-06-04. End: 2008-06-30.

What is Northrop Grumman Systems Corporation's track record with the Department of Defense?

Northrop Grumman Systems Corporation is a major defense contractor with a long history of supplying complex systems and components to the Department of Defense (DoD). They are involved in various programs, including aerospace, defense electronics, and information systems. Their track record with the DoD is extensive, encompassing numerous contracts for aircraft, spacecraft, and related technologies. While specific performance metrics for individual contracts are often not publicly detailed, their continued role as a prime contractor indicates a generally accepted level of capability and reliability within the defense industrial base. However, like many large contractors, they have also faced scrutiny and reviews regarding contract performance and pricing on specific projects over the years.

How does the value of this contract compare to similar aircraft parts procurements?

Direct comparison of this $62.1 million contract for aircraft parts is difficult due to its sole-source nature and the specific, likely specialized, components involved. Publicly available data rarely details the exact nature of parts procured under sole-source awards. Generally, sole-source contracts tend to be higher than competitively bid ones for similar items because they lack the price pressure from multiple bidders. Without access to internal DoD cost analyses or data on comparable sole-source awards for identical or highly similar parts, a precise value comparison is not feasible. However, the firm-fixed-price structure suggests the government accepted the contractor's proposed price, implying a negotiated value rather than a market-determined one.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the absence of competition. Without competing bids, the government may not be achieving the best possible price for the aircraft parts. Another risk is a lack of incentive for the contractor to innovate or improve efficiency beyond what is contractually required, as there is no competitive threat. Furthermore, sole-source awards can sometimes indicate a lack of available qualified suppliers or a reliance on a single source for critical components, which can create supply chain vulnerabilities. Transparency in the justification for the sole-source award is crucial to mitigate the risk of an unjustified or poorly negotiated contract.

How effective is the Defense Contract Management Agency (DCMA) in overseeing contracts like this?

The Defense Contract Management Agency (DCMA) plays a crucial role in overseeing defense contracts, including sole-source awards. Their responsibilities include ensuring contractor compliance with contract terms, monitoring performance, and verifying cost and pricing data where applicable. For a firm-fixed-price contract, DCMA's oversight focuses on ensuring the contractor delivers the specified goods or services on time and to the required quality standards. While DCMA provides essential oversight, the effectiveness of their review on a sole-source contract is inherently limited by the lack of competitive benchmarking. Their ability to ensure 'value for money' is more constrained compared to competitive procurements, relying heavily on the initial negotiation and the contractor's adherence to the agreed-upon terms and conditions.

What are the historical spending patterns for aircraft parts manufacturing by the Department of Defense?

The Department of Defense (DoD) consistently allocates significant portions of its budget to the procurement of aircraft and related parts. Historical spending patterns show a substantial and ongoing investment in maintaining and modernizing its vast aircraft fleet, which includes fighter jets, bombers, transport planes, and helicopters. This spending encompasses everything from raw materials and components to complex integrated systems. The DoD often engages in both competitive bidding for standard parts and sole-source contracts for highly specialized, proprietary, or technologically advanced components, as seen in this case. Fluctuations in spending are influenced by geopolitical events, modernization programs, and the lifecycle of existing aircraft platforms. The total annual spending on aircraft parts can run into billions of dollars across all branches of the military.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 600 GRUMMAN ROAD WEST, BETHPAGE, NY, 11714

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $62,137,321

Exercised Options: $62,137,321

Current Obligation: $62,137,321

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001904D0072

IDV Type: IDC

Timeline