DoD's $101.9M contract for aircraft parts awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $101,900,000 ($101.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2008-04-11

End Date: 2010-09-11

Contract Duration: 883 days

Daily Burn Rate: $115.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ICAP III LOT 3 KITS, SPARES, ESS CHAMBER, AND PARTIAL TEST SYSTEM

Place of Performance

Location: BETHPAGE, NASSAU County, NEW YORK, 11714

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $101.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: ICAP III LOT 3 KITS, SPARES, ESS CHAMBER, AND PARTIAL TEST SYSTEM Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value. 2. Limited competition may have led to higher costs compared to a more open bidding process. 3. The contract's duration and value suggest a significant commitment for specialized aircraft components. 4. Performance context is limited due to the lack of competitive benchmarking. 5. Sector positioning within 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' is specific. 6. Risk indicators are elevated due to the sole-source nature and lack of transparent pricing.

Value Assessment

Rating: questionable

Benchmarking the value of this $101.9 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to assess if the pricing reflects fair market value or if taxpayers received optimal value for money. Comparisons to similar sole-source awards in the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector would be necessary for a more robust assessment, but such data is not readily available. The fixed-price contract type offers some cost certainty, but the absence of competition limits the ability to verify cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The Department of the Navy did not solicit bids from multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no multiple bidders to drive down prices through a bidding war, potentially impacting the final cost to the government.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the absence of competitive pressure. Without multiple bids, the government had less leverage to negotiate the lowest possible price.

Public Impact

The Department of the Navy benefits from the acquisition of critical ICAP III LOT 3 components, spares, and test systems. This contract supports the operational readiness and maintenance of specific naval aircraft platforms. The geographic impact is primarily linked to Northrop Grumman's operations in New York. Workforce implications are tied to the specialized manufacturing and support roles at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price transparency and potential for cost savings.
Lack of competition raises concerns about whether the government secured the best possible value.
Contract duration and value could indicate potential for cost overruns if not closely managed.

Positive Signals

Fixed-price contract provides some cost certainty for the government.
Award to an established contractor like Northrop Grumman may indicate reliability for specialized components.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry, a specialized segment of the aerospace and defense sector. The market for such components is often characterized by high barriers to entry due to technical expertise, proprietary technology, and stringent quality requirements. Spending in this sector is driven by military readiness, aircraft modernization programs, and sustainment efforts. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition awards for similar specialized aircraft systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting plans for small businesses. This suggests that the primary awardee, Northrop Grumman, will likely perform the majority of the work. The impact on the small business ecosystem is likely minimal unless Northrop Grumman voluntarily engages small businesses as subcontractors, which is not a stated requirement of this award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which shifts some risk to the contractor. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Aviation Maintenance
Aircraft Component Procurement
Defense Logistics Agency Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency in cost justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $101.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. ICAP III LOT 3 KITS, SPARES, ESS CHAMBER, AND PARTIAL TEST SYSTEM

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 $101.9 million.

What is the period of performance?

Start: 2008-04-11. End: 2010-09-11.

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

Northrop Grumman, as a major defense contractor, has a history of receiving both competed and sole-source contracts across various defense programs. Sole-source awards are often justified by unique capabilities, proprietary technology, or the need for specific system integration. While these awards can be efficient for acquiring specialized or critical components, they necessitate robust government oversight to ensure fair pricing and value. Analyzing Northrop Grumman's past sole-source awards, particularly for similar complex systems, could provide context on their pricing strategies and performance history in such scenarios. However, without specific data on this contract's pricing relative to historical sole-source awards for comparable items, a definitive assessment remains challenging.

How does the value of this contract compare to similar sole-source awards for aircraft parts?

Direct comparison of this $101.9 million contract value to similar sole-source awards for aircraft parts is difficult without access to a comprehensive database of sole-source procurements, including detailed specifications and quantities. Sole-source contracts are inherently less transparent regarding pricing benchmarks. Factors such as the specific type of parts (kits, spares, chamber, test system), their complexity, the required quantities, and the urgency of need all influence pricing. Generally, sole-source awards may command higher prices than competed ones due to the lack of competitive pressure. To assess value, one would need to benchmark against contracts for identical or highly similar items awarded under similar sole-source conditions, which is often not publicly available.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($101.9 million) include potential overpricing due to the absence of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in cost justification. There's also a risk that the government may not be aware of alternative solutions or suppliers that could offer better value or performance. Furthermore, sole-source awards can sometimes lead to vendor lock-in, making it difficult to switch suppliers in the future. Robust contract management, including detailed cost analysis and performance monitoring, is crucial to mitigate these risks.

How effective is a firm-fixed-price contract in managing costs for sole-source procurements?

A firm-fixed-price (FFP) contract is generally considered effective in managing costs for sole-source procurements because it places the primary responsibility for cost control on the contractor. The contractor agrees to a set price, and any cost overruns are absorbed by them, while any savings benefit the contractor. This incentivizes the contractor to perform efficiently. However, for sole-source awards, the effectiveness hinges on the initial price negotiation. If the baseline fixed price is set too high due to lack of competition, the FFP structure still results in the government paying an inflated price. Therefore, while FFP provides cost certainty, the initial price determination is critical for ensuring value in sole-source situations.

What is the historical spending pattern for ICAP III LOT 3 components and related systems?

Analyzing the historical spending pattern for 'ICAP III LOT 3 Kits, Spares, ESS Chamber, and Partial Test System' requires access to historical contract databases and specific program information. This particular award, dated April 11, 2008, with an end date of September 11, 2010, represents a specific procurement phase. To understand the broader spending pattern, one would need to examine all contracts related to the ICAP III program, particularly for Lot 3 components, across different fiscal years and agencies. This would involve looking at the total obligated amounts, contract types, and awardees over time to identify trends, potential increases or decreases in spending, and the prevalence of sole-source versus competed awards for these systems.

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

Solicitation ID: N0001907R0075

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $101,900,000

Exercised Options: $101,900,000

Current Obligation: $101,900,000

Parent Contract

Parent Award PIID: N0001908D0002

IDV Type: IDC

Timeline