DoD's $136M engine overhaul contract for KC-10/KDC-10 program awarded to Northrop Grumman

Contract Overview

Contract Amount: $136,058,889 ($136.1M)

Contractor: Northrop Grumman Technical Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-10-25

End Date: 2015-09-30

Contract Duration: 705 days

Daily Burn Rate: $193.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF TO OBLIGATE FY14 FUNDING FOR ENGINE OVERHAULS TO SUPPORT THE KC-10/KDC-10 PROGRAM.

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $136.1 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC. for work described as: IGF::OT::IGF TO OBLIGATE FY14 FUNDING FOR ENGINE OVERHAULS TO SUPPORT THE KC-10/KDC-10 PROGRAM. Key points: 1. Contract awarded for engine overhauls, supporting critical KC-10/KDC-10 aircraft. 2. Full and open competition was utilized for this award. 3. The contract duration is 705 days. 4. Northrop Grumman Technical Services, Inc. is the prime contractor. 5. The contract type is Firm Fixed Price, indicating cost certainty. 6. This award obligates FY14 funding.

Value Assessment

Rating: good

The contract value of $136 million for engine overhauls appears reasonable given the scope of supporting a significant military aircraft program like the KC-10/KDC-10. Benchmarking against similar large-scale aircraft maintenance contracts would provide a more precise value-for-money assessment. The firm fixed-price structure suggests a degree of cost control and risk transfer to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to compete. This process is generally expected to yield competitive pricing and a wider range of technical solutions. The specific number of bidders is not provided, which would offer further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition is favorable for taxpayers as it typically drives down costs through market forces, ensuring the government receives the best value.

Public Impact

The primary beneficiaries are the U.S. Air Force and the Department of Defense, ensuring the operational readiness of the KC-10/KDC-10 fleet. Services delivered include essential engine overhauls, crucial for aircraft safety and performance. The geographic impact is likely concentrated around military bases where these aircraft are stationed or maintained. Workforce implications include skilled technicians and engineers involved in the overhaul process, potentially supporting jobs within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific bidder count limits assessment of competitive intensity.
No explicit mention of small business subcontracting goals or performance.

Positive Signals

Awarded under full and open competition, maximizing potential for competitive pricing.
Firm Fixed Price contract type provides cost certainty for the government.
Supports critical military aviation assets, ensuring national security readiness.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft maintenance and sustainment. The market for military aircraft engine overhauls is specialized, often dominated by original equipment manufacturers or large defense contractors with the necessary expertise and facilities. Spending in this area is driven by the operational tempo and aging of military fleets, with significant government investment required to maintain readiness.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides. This suggests that the prime contract was not specifically targeted towards small businesses. Further analysis would be needed to determine if Northrop Grumman has plans for small business subcontracting, which is crucial for fostering the small business ecosystem within the defense industrial base.

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 contract type, which places cost risk on the contractor. Transparency is facilitated through contract award databases, though detailed performance metrics may not always be publicly available.

Related Government Programs

KC-10 Extender Sustainment Programs
Air Mobility Command Aircraft Maintenance
DoD Aircraft Engine Repair and Overhaul Contracts
Defense Logistics Agency Aviation Support

Risk Flags

Potential for schedule delays impacting fleet readiness.
Risk of unforeseen technical issues requiring additional funding or time.
Dependence on contractor's specialized expertise and supply chain.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $136.1 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC.. IGF::OT::IGF TO OBLIGATE FY14 FUNDING FOR ENGINE OVERHAULS TO SUPPORT THE KC-10/KDC-10 PROGRAM.

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN TECHNICAL SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $136.1 million.

What is the period of performance?

Start: 2013-10-25. End: 2015-09-30.

What is Northrop Grumman's track record with similar DoD engine overhaul contracts?

Northrop Grumman Technical Services, Inc. has a significant history of supporting U.S. military aviation programs, including sustainment, maintenance, and logistics services. While specific data on their track record for KC-10 engine overhauls requires deeper database access, the company is a major defense contractor with extensive experience in complex aircraft programs. Their past performance on similar large-scale contracts would be a key factor in the DoD's source selection process, influencing aspects like technical capability, past performance ratings, and management approach. Assessing their historical success rates, on-time delivery, and adherence to budget on comparable contracts would provide a clearer picture of their reliability in executing this specific engine overhaul requirement.

How does the $136 million value compare to industry benchmarks for similar engine overhauls?

Benchmarking the $136 million contract value for KC-10/KDC-10 engine overhauls against industry standards is challenging without specific details on the scope of work (e.g., number of engines, specific overhaul procedures, parts included). However, large military aircraft engine overhauls are inherently complex and costly, often running into millions of dollars per engine. The KC-10 is a large tanker aircraft, and its CF6 engines are substantial. Given the contract duration of approximately two years and the total value, the cost per engine overhaul appears to be within a plausible range for such specialized heavy maintenance. A more precise comparison would require access to data on recent overhaul costs for similar engines (e.g., other large turbofan engines used on military transport or bomber aircraft) or specific cost breakdowns from the contract itself.

What are the primary risks associated with this engine overhaul contract?

Key risks for this contract include potential cost overruns if unforeseen issues arise during the overhaul process, despite the firm fixed-price structure. Schedule delays are another significant risk, which could impact the operational readiness of the KC-10/KDC-10 fleet. Technical risks involve the possibility of discovering more extensive damage or wear than initially anticipated, requiring additional repairs or parts. Contractor performance risk is also present; ensuring Northrop Grumman maintains the required technical expertise, quality control, and timely execution is crucial. Furthermore, supply chain disruptions for specialized parts could lead to delays and increased costs. The aging nature of the KC-10 fleet itself might introduce unique maintenance challenges.

How effective is the firm fixed-price (FFP) contract type in managing costs for this type of service?

The Firm Fixed-Price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and the risks are understood, as is often the case with established engine overhaul procedures. For this contract, FFP shifts the primary cost risk to Northrop Grumman, incentivizing them to control expenses and perform efficiently to maximize profit. This provides the Department of Defense with significant cost certainty, as the total price is fixed. However, if unforeseen technical complexities arise that were not reasonably foreseeable during the bidding process, the contractor might seek equitable adjustments, potentially leading to cost increases. The effectiveness also depends on the accuracy of the initial cost estimates and the contractor's ability to manage their own internal costs.

What is the historical spending trend for KC-10/KDC-10 sustainment and maintenance?

Analyzing historical spending trends for the KC-10/KDC-10 sustainment and maintenance requires access to detailed historical contract data beyond this single award. However, it's understood that maintaining aging aircraft fleets like the KC-10 involves consistent and substantial investment over their lifecycle. Spending typically fluctuates based on major maintenance cycles, component replacements, and upgrades. Contracts for engine overhauls, airframe repairs, and depot-level maintenance represent significant portions of this spending. Given the KC-10's role as a critical aerial refueling and strategic airlift platform, sustained funding for its upkeep is a priority for the Air Mobility Command. Trends would likely show periods of higher spending during major overhaul campaigns and lower spending during routine operational maintenance.

What is the significance of obligating FY14 funding for this contract?

The notation 'IGF::OT::IGF TO OBLIGATE FY14 FUNDING' indicates that this contract action is utilizing funds appropriated in Fiscal Year 2014. In federal contracting, funds are typically appropriated for specific fiscal years and must be obligated (committed to a specific contract) within that year or a defined period thereafter. Obligating FY14 funds for an award made in late 2013 (contract start date 2013-10-25) suggests that these funds were available and designated for this purpose. It highlights the budgetary planning and execution process within the Department of Defense, ensuring that allocated resources are put to use for necessary programs and services in a timely manner.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2411 DULLES CORNER PARK STE 800, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $136,058,889

Exercised Options: $136,058,889

Current Obligation: $136,058,889

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810610D0001

IDV Type: IDC

Timeline