Northrop Grumman receives $185M for KC-10 contractor logistic support, awarded under full and open competition

Contract Overview

Contract Amount: $185,213,237 ($185.2M)

Contractor: Northrop Grumman Technical Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2015-10-01

End Date: 2016-09-30

Contract Duration: 365 days

Daily Burn Rate: $507.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CL,CT::IGF KC-10 CONTRACTOR LOGISTIC SUPPORT

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $185.2 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC. for work described as: IGF::CL,CT::IGF KC-10 CONTRACTOR LOGISTIC SUPPORT Key points: 1. Contract value of $185.2M for one year of logistic support. 2. Awarded to Northrop Grumman Technical Services, Inc. 3. Full and open competition was utilized for this award. 4. The contract type is Firm Fixed Price. 5. The contract is for support activities for air transportation. 6. The contract was managed by the Defense Contract Management Agency.

Value Assessment

Rating: fair

The contract value of $185.2 million for one year of logistic support for the KC-10 aircraft appears substantial. Benchmarking this against similar sustainment contracts for large military aircraft is challenging without more specific service details. However, the firm fixed-price structure suggests that the contractor bears the risk of cost overruns, which can be a positive indicator for value if the scope is well-defined. Further analysis would require comparing the per-unit costs of specific support services (e.g., parts, labor hours) to industry standards or historical government rates for comparable aircraft.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but the use of full and open competition generally suggests a competitive environment that should drive prices towards market rates. This approach is intended to maximize the pool of potential offerors and ensure the government receives the best value.

Taxpayer Impact: A competitive award process like full and open competition is beneficial for taxpayers as it aims to secure the most cost-effective solution by fostering price discovery among multiple vendors.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the KC-10 Extender aircraft, ensuring their operational readiness. Services delivered include contractor logistic support, crucial for maintaining the aging KC-10 fleet. The geographic impact is likely global, supporting KC-10 operations wherever they are deployed. Workforce implications include employment for personnel involved in aircraft maintenance, logistics, and supply chain management within Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep if scope is not tightly managed, despite FFP.
Dependence on a single contractor for critical logistic support.
Risk of obsolescence for parts and support if not proactively managed.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor.
Full and open competition suggests a robust bidding process.
Experienced contractor (Northrop Grumman) likely possesses deep knowledge of the platform.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and support services. The market for military aircraft logistic support is substantial, driven by the need to maintain aging fleets and ensure operational readiness. Northrop Grumman is a major player in this sector, providing a wide range of defense services. Comparable spending benchmarks would involve looking at other sustainment contracts for large, strategic aircraft like the C-17 or KC-135.

Small Business Impact

The provided data indicates that small business participation (sb) was false and small business set-aside (ss) was false. This suggests that the contract was not specifically set aside for small businesses. While Northrop Grumman is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. However, without specific subcontracting plans or data, the direct impact on the small business ecosystem is unclear, though large prime contracts often flow down to smaller suppliers.

Oversight & Accountability

The Defense Contract Management Agency (DCMA) is responsible for overseeing this contract, ensuring compliance with terms and conditions. The firm fixed-price nature of the contract provides a degree of accountability for the contractor regarding cost. Transparency is generally facilitated through contract award databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

KC-135 Stratotanker Sustainment
C-17 Globemaster III Sustainment
Air Mobility Command Logistics Programs
Defense Logistics Agency Aviation Support

Risk Flags

Potential for cost overruns if scope is not well-defined.
Contractor performance risk.
Dependency on specific parts and supply chain.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $185.2 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC.. IGF::CL,CT::IGF KC-10 CONTRACTOR LOGISTIC SUPPORT

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 $185.2 million.

What is the period of performance?

Start: 2015-10-01. End: 2016-09-30.

What is Northrop Grumman's track record with similar large-scale aircraft sustainment contracts?

Northrop Grumman has a long history of providing sustainment and support services for various defense platforms, including aircraft. They have been involved in programs such as the B-2 Spirit, E-2 Hawkeye, and C-130 Hercules, among others. Their experience typically encompasses maintenance, repair, overhaul, supply chain management, and engineering support. This extensive background suggests a strong capability to manage complex logistic support requirements like those for the KC-10. However, the specific performance metrics and cost-effectiveness of past contracts would need to be reviewed to fully assess their track record for this particular type of service.

How does the $185.2 million contract value compare to historical spending on KC-10 sustainment?

To accurately compare the $185.2 million contract value to historical spending on KC-10 sustainment, one would need access to historical contract data for this specific aircraft program. This would involve examining previous contracts for logistic support, maintenance, and upgrades awarded over the life cycle of the KC-10 fleet. Factors such as inflation, changes in operational tempo, and evolving maintenance requirements would need to be considered for a meaningful comparison. Without this historical context, it is difficult to definitively state whether this award represents an increase, decrease, or stable level of spending for KC-10 sustainment.

What are the key performance indicators (KPIs) used to measure the success of this logistic support contract?

Key performance indicators (KPIs) for a contractor logistic support contract typically focus on ensuring aircraft availability and mission readiness. Common KPIs include aircraft mission capable rates (MCR), which measure the percentage of time aircraft are available for their intended missions. Other critical metrics might involve response times for parts and repair services, turnaround times for maintenance actions, and adherence to scheduled maintenance. For this specific contract, the government would likely track metrics related to the timely delivery of support services, the quality of maintenance performed, and the overall impact on KC-10 operational availability. The firm fixed-price nature implies that meeting these KPIs within budget is the contractor's primary responsibility.

What is the estimated remaining service life of the KC-10 fleet and how does this contract align with it?

The KC-10 Extender fleet is aging, with many aircraft having been delivered in the 1980s. The U.S. Air Force has been evaluating its future aerial refueling capabilities, including potential replacements or extensions of service life for the KC-10. As of recent reports, the KC-10 fleet is expected to remain operational for several more years, potentially into the late 2020s or early 2030s, depending on sustainment efforts and modernization. This $185.2 million contract, covering a one-year period (FY2016), aligns with the ongoing need to maintain the fleet's operational status during this extended service period. It ensures the aircraft remain airworthy and capable until decisions are made regarding their ultimate retirement or replacement.

What are the potential risks associated with relying on a single contractor for comprehensive logistic support of the KC-10?

Relying on a single contractor, such as Northrop Grumman in this case, for comprehensive logistic support of the KC-10 fleet presents several potential risks. Firstly, there is a risk of vendor lock-in, where the government may have limited leverage in future negotiations due to the contractor's deep institutional knowledge and established infrastructure. Secondly, a single point of failure could arise if the contractor experiences financial difficulties, labor disputes, or major operational disruptions, potentially impacting aircraft availability. Thirdly, without ongoing competitive pressure, there's a risk that innovation or efficiency improvements might stagnate. Finally, the government's ability to switch providers in the future could be complicated and costly due to the specialized nature of the support required.

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: $201,885,086

Exercised Options: $201,885,086

Current Obligation: $185,213,237

Subaward Activity

Number of Subawards: 190

Total Subaward Amount: $164,605,276

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA810610D0001

IDV Type: IDC

Timeline