Northrop Grumman awarded $365M for WAX POD UPGRADES, a sole-source contract with a 5-year duration

Contract Overview

Contract Amount: $365,139,215 ($365.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-24

End Date: 2019-08-31

Contract Duration: 1,802 days

Daily Burn Rate: $202.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: WAX POD UPGRADES

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $365.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: WAX POD UPGRADES Key points: 1. Contract awarded to a single, established provider, raising questions about potential cost efficiencies and innovation. 2. The firm-fixed-price structure aims to control costs, but the lack of competition limits price discovery. 3. A long contract duration of 1802 days suggests a stable, long-term need for these upgrades. 4. The contract falls under Aircraft Manufacturing (NAICS 336411), indicating a focus on aerospace components. 5. The absence of small business set-asides or subcontracting requirements may limit broader economic participation.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable data for 'WAX POD UPGRADES'. The firm-fixed-price contract type suggests an attempt to cap costs, but without competitive bids, it's difficult to ascertain if the $365 million represents optimal value for money. Further analysis would require understanding the specific technical requirements and market rates for similar aerospace upgrade services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The rationale for a sole-source award would need to be justified by factors such as unique capabilities, proprietary technology, or urgent need.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competition.

Public Impact

The primary beneficiary is the Department of Defense, specifically entities requiring upgraded WAX POD systems. The services delivered involve the manufacturing and integration of upgraded components for aircraft. The contract's geographic impact is likely concentrated around Northrop Grumman's facilities in Illinois, where the contract is managed. Workforce implications may include specialized manufacturing and engineering roles within Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competed contract.
Sole-source awards can stifle innovation by not encouraging new market entrants.
Limited transparency into the justification for sole-source award.

Positive Signals

Firm-fixed-price contract type helps to establish cost certainty.
Long-term contract duration provides stability for program execution.
Award to an established contractor with likely relevant experience.

Sector Analysis

The contract falls within the aerospace and defense manufacturing sector, a significant segment of the U.S. economy. This sector is characterized by high technological barriers to entry, long product development cycles, and substantial government procurement. Spending in this area is often driven by national security requirements and technological advancement. Comparable spending benchmarks would typically involve other large-scale aircraft component manufacturing and upgrade contracts within the Department of Defense.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, nor is there an indication of mandatory subcontracting goals for small businesses. Awarding to a large prime contractor like Northrop Grumman often means that opportunities for small businesses are limited to the subcontracting tier, if at all. The absence of explicit small business considerations in the prime contract could mean a missed opportunity to foster growth and innovation within the small business defense industrial base.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA). The firm-fixed-price structure provides a degree of cost control. Transparency regarding the specific justification for the sole-source award and the detailed breakdown of costs would be crucial for a comprehensive assessment of accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Component Manufacturing
Aerospace Systems Development
Defense Procurement
Sole-Source Contracts
Northrop Grumman Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $365.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. WAX POD UPGRADES

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 $365.1 million.

What is the period of performance?

Start: 2014-09-24. End: 2019-08-31.

What is the specific nature of 'WAX POD UPGRADES' and why were they necessary?

The specific nature of 'WAX POD UPGRADES' is not detailed in the provided data. Typically, 'pod' in an aerospace context refers to a self-contained unit that can be attached to an aircraft, housing various equipment such as sensors, weapons, or fuel. Upgrades could involve enhancing performance, adding new capabilities, improving reliability, or extending the service life of these pods. The necessity would stem from evolving operational requirements, technological obsolescence of existing systems, or identified performance deficiencies that impact mission effectiveness or safety. Without further documentation, the precise function and upgrade rationale remain speculative but are critical for understanding the contract's true value.

What is the historical spending pattern for WAX POD UPGRADES with Northrop Grumman or other contractors?

The provided data indicates a single contract award of $365,139,215.01 to Northrop Grumman Systems Corporation for 'WAX POD UPGRADES' with a start date of September 24, 2014, and an end date of August 31, 2019. This suggests that this specific contract represents the entirety of the publicly visible federal spending on this particular item with this contractor during that period. To assess historical spending patterns, one would need to search for prior contracts related to 'WAX POD UPGRADES' or similar systems, potentially under different nomenclature, awarded to Northrop Grumman or other defense contractors. The absence of prior awards in this dataset implies either a new requirement, a consolidation of previous efforts, or that previous spending was not captured or is not publicly accessible through this data source.

How does the $365 million contract value compare to similar aerospace upgrade contracts awarded by the DoD?

Comparing the $365 million contract value for 'WAX POD UPGRADES' to similar aerospace upgrade contracts requires identifying comparable procurements. Aerospace upgrades can range widely in cost depending on the complexity, technology involved, and the platform being upgraded. For instance, upgrades to major aircraft systems, avionics, or structural components can easily run into hundreds of millions of dollars. However, 'WAX POD UPGRADES' sounds like a more specific component. If these pods are relatively minor or specialized, $365 million might represent a significant investment. Conversely, if they are critical mission systems for a major platform, this value could be within the expected range. Without knowing the exact nature and scope of the 'WAX POD UPGRADES', a precise comparison is difficult. However, given the sole-source nature and the contractor's scale, the amount is substantial but not unprecedented for large defense systems integration.

What are the risks associated with a sole-source contract of this magnitude and duration?

Sole-source contracts of this magnitude ($365 million) and duration (nearly 5 years) carry several inherent risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no pressure to offer the most cost-effective solution. Secondly, there's a reduced incentive for innovation, as the contractor is guaranteed the business regardless of whether superior or more cost-effective alternatives emerge. Thirdly, there's a potential for vendor lock-in, making it difficult and costly to switch providers in the future. Finally, transparency can be an issue, as the justification for sole-sourcing may not always be fully disclosed or scrutinized, potentially masking inefficiencies or suboptimal decision-making. The long duration also increases the risk of cost overruns if not managed tightly, despite the firm-fixed-price structure.

What is Northrop Grumman's track record with similar sole-source defense contracts?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in developing and manufacturing complex aerospace systems. As a large, established company, it frequently holds sole-source contracts, particularly for specialized components, upgrades, or sustainment services where its proprietary technology or unique capabilities are essential. Their track record with such contracts is generally characterized by the delivery of sophisticated systems, though like any large contractor, they have faced scrutiny regarding cost, schedule, and performance on various programs. Assessing their specific track record for similar sole-source contracts would involve examining past performance evaluations, contract modifications, and any associated audits or investigations related to cost and schedule adherence on other sole-source awards within the defense sector.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

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: 600 HICKS RD, ROLLING MEADOWS, IL, 60008

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: $449,829,941

Exercised Options: $365,490,541

Current Obligation: $365,139,215

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862612D2137

IDV Type: IDC

Timeline