DoD Awards Northrop Grumman $3.08B for Aircraft Manufacturing, Lacking Competition
Contract Overview
Contract Amount: $3,076,522,197 ($3.1B)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2003-08-04
End Date: 2022-09-30
Contract Duration: 6,997 days
Daily Burn Rate: $439.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: MELBOURNE, BREVARD County, FLORIDA, 32904
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $3.08 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Significant contract value of over $3 billion awarded to a single large corporation. 2. Lack of competition suggests potential for inflated costs and reduced innovation. 3. Long contract duration (nearly 7,000 days) raises concerns about adaptability and value. 4. The sector is critical for national defense, but procurement methods warrant scrutiny.
Value Assessment
Rating: questionable
The contract's total value is substantial, but without competitive bidding, it's difficult to assess if the pricing is optimal. Benchmarking against similar sole-source contracts would be necessary for a fair evaluation.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer competitive pricing.
Taxpayer Impact: The absence of competition in a multi-billion dollar contract likely results in a higher financial burden on taxpayers than a competitively awarded contract would.
Public Impact
Taxpayers may be overpaying for aircraft manufacturing services due to the lack of competitive bidding. The long-term nature of the contract could mean outdated technology or processes are being funded. Dependence on a single contractor for critical defense assets poses a strategic risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- Long Contract Duration
- Sole-Source Award
- Potential for Cost Overruns
Positive Signals
- Critical Defense Capability
- Established Contractor Relationship
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, which is vital for national defense. Spending in this sector is often characterized by high R&D costs and long production cycles, but competitive procurement is still crucial for cost efficiency.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a major defense contractor, and there is no indication of small business involvement. This suggests a lack of opportunity for small businesses in this specific procurement.
Oversight & Accountability
The sole-source nature of this large contract warrants close oversight to ensure fair pricing and effective delivery. Regular performance reviews and cost audits are essential for accountability.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Long contract duration
- Potential for inflated costs
- Limited transparency on pricing justification
Tags
aircraft-manufacturing, department-of-defense, fl, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $3.08 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
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 $3.08 billion.
What is the period of performance?
Start: 2003-08-04. End: 2022-09-30.
What was the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or circumstances where only one contractor can meet the requirement. However, even in such cases, agencies must conduct thorough price analyses, benchmark against similar contracts, and negotiate aggressively to ensure the pricing is fair and reasonable. Without this information, it's difficult to ascertain the value achieved.
Given the contract's duration and lack of competition, what are the primary risks to national security and taxpayer funds?
The primary risks include potential cost overruns due to the absence of competitive pressure, leading to inefficient use of taxpayer funds. National security risks could arise if the contractor's technology becomes outdated or if the sole-source dependency creates vulnerabilities in the supply chain or strategic capabilities. Ensuring continuous innovation and cost control is paramount.
How effectively has Northrop Grumman Systems Corporation performed under this contract, and has the Department of Defense actively managed performance and costs?
Assessing performance effectiveness is challenging without access to detailed contract performance reports and cost data. However, the 'COST PLUS AWARD FEE' (CPAF) contract type suggests performance incentives are in place. Active management by the Defense Contract Management Agency (DCMA) is expected, but the lack of competition means the primary driver for cost control is negotiation and oversight rather than market forces.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 2000 W NASA BLVD, MELBOURNE, FL, 32904
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $2,838,755,874
Exercised Options: $2,194,688,838
Current Obligation: $3,076,522,197
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2003-08-04
Current End Date: 2022-09-30
Potential End Date: 2022-09-30 00:00:00
Last Modified: 2023-06-14
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