Northrop Grumman awarded $18.8M contract for ammunition manufacturing, with delivery expected by late 2026
Contract Overview
Contract Amount: $18,882,500 ($18.9M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2024-03-29
End Date: 2026-12-31
Contract Duration: 1,007 days
Daily Burn Rate: $18.8K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: XM1198
Place of Performance
Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442
Plain-Language Summary
Department of Defense obligated $18.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: XM1198 Key points: 1. Contract value appears reasonable given the scope of ammunition manufacturing. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. Potential risks include supply chain disruptions and adherence to strict quality standards. 4. This contract supports the Department of the Army's ongoing munitions needs. 5. The defense sector sees significant investment in ammunition production capabilities.
Value Assessment
Rating: good
The contract value of $18.8 million for ammunition manufacturing seems aligned with industry standards for similar defense procurements. Benchmarking against historical contracts for comparable munitions would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure offers some cost certainty while allowing for market fluctuations.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while initial sources might have been considered, the final award was made through a broad competitive process. The presence of two bids suggests a moderate level of competition, which generally aids in price discovery and achieving fair market value.
Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers, as it likely drove down costs compared to a sole-source procurement and ensured the government received competitive pricing for essential ammunition.
Public Impact
The Department of the Army is the primary beneficiary, securing critical ammunition supplies. This contract ensures the continued availability of ammunition for military operations and readiness. The manufacturing will likely occur in Minnesota, potentially impacting the local workforce and economy. The defense industrial base benefits from sustained demand for manufacturing capabilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to economic price adjustment clauses if material costs escalate significantly.
- Ensuring consistent quality and timely delivery of ammunition is critical and can be challenging.
- Dependence on specific raw material suppliers could introduce supply chain vulnerabilities.
Positive Signals
- Award to a well-established defense contractor like Northrop Grumman suggests a high likelihood of meeting technical requirements.
- The fixed-price nature of the contract provides a degree of cost control for the government.
- The contract duration allows for sustained production and planning.
Sector Analysis
The defense manufacturing sector is characterized by high technological requirements, stringent quality control, and significant government investment. Ammunition production is a critical component of this sector, with demand driven by national security needs and geopolitical events. Comparable spending benchmarks for ammunition contracts can vary widely based on type and quantity, but this $18.8 million award falls within a typical range for specialized munitions.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Subcontracting opportunities for small businesses may exist within Northrop Grumman's supply chain, but specific details are not provided in this data. The direct award to a large prime contractor suggests limited immediate impact on the small business ecosystem unless significant subcontracting occurs.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Army's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is generally maintained through contract award databases, though specific performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Department of Defense Ammunition Procurement
- Northrop Grumman Defense Contracts
- Army Munitions Manufacturing
- Fixed-Price Contracts with Economic Price Adjustment
Risk Flags
- Potential supply chain vulnerabilities for raw materials.
- Adherence to stringent quality and safety standards.
- Economic price adjustment clauses may lead to cost increases.
- Dependence on a limited number of qualified bidders.
Tags
defense, ammunition, northrop-grumman, department-of-the-army, fixed-price-economic-price-adjustment, full-and-open-competition, delivery-order, minnesota, manufacturing, medium-value-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. XM1198
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 Army).
What is the total obligated amount?
The obligated amount is $18.9 million.
What is the period of performance?
Start: 2024-03-29. End: 2026-12-31.
What is Northrop Grumman's track record with similar ammunition manufacturing contracts for the Department of Defense?
Northrop Grumman has a long-standing history as a major defense contractor, involved in various aspects of aerospace and defense systems, including munitions. While specific details on past ammunition contracts are not provided here, the company's extensive experience in complex manufacturing and defense programs suggests a strong capability to fulfill this contract. Historical performance data from the Federal Procurement Data System (FPDS) or other government databases would be necessary to conduct a detailed analysis of their past performance on similar contracts, including on-time delivery rates, quality compliance, and any past disputes or contract modifications.
How does the $18.8 million contract value compare to similar ammunition procurements in the last five years?
Benchmarking the $18.8 million contract value requires comparing it to procurements of similar types and quantities of ammunition. Without knowing the specific type of ammunition (e.g., artillery shells, mortar rounds, specialized munitions), a precise comparison is difficult. However, general trends in defense spending indicate that contracts in the tens of millions are common for significant quantities of standard munitions or smaller batches of specialized ones. Factors like the economic price adjustment clause can also influence the final cost. A detailed analysis would involve querying procurement databases for contracts with similar Product Service Codes (PSCs) and award amounts over the past five years to identify average pricing and identify any outliers.
What are the primary risks associated with this specific ammunition manufacturing contract?
The primary risks for this contract include potential supply chain disruptions for raw materials (metals, propellants, explosives), adherence to stringent quality control and safety standards inherent in munitions manufacturing, and the impact of economic fluctuations on material costs, which is partially addressed by the economic price adjustment clause. Furthermore, geopolitical events could alter demand or impact the availability of certain components. Ensuring timely delivery to meet the Department of the Army's operational needs is also a critical risk factor. The exclusion of sources in the 'full and open' competition might also indicate specific technical requirements that could limit the pool of capable suppliers, potentially increasing risk if key suppliers face issues.
What is the expected program effectiveness and impact of this contract on the Army's readiness?
The expected program effectiveness hinges on the reliable and timely delivery of high-quality ammunition as specified in the contract. This procurement directly supports the Department of the Army's operational readiness by ensuring an adequate supply of munitions for training, deployment, and potential combat scenarios. The contract's duration, ending in late 2026, suggests it is intended to fulfill medium-term supply needs. Successful execution will bolster the Army's ability to maintain its operational capabilities and respond to national security requirements. The specific impact on readiness is contingent on the type and quantity of ammunition being produced and its criticality to current and projected Army missions.
How has federal spending on ammunition manufacturing evolved over the past decade, and where does this contract fit?
Federal spending on ammunition manufacturing has historically fluctuated based on geopolitical conditions, ongoing military operations, and strategic modernization efforts. Following periods of intense conflict, spending often stabilizes or shifts towards modernization and readiness sustainment. This $18.8 million contract represents a specific procurement action within the broader context of sustained investment in the defense industrial base. It fits into a pattern of the Department of Defense ensuring a robust supply chain for essential munitions. Analyzing historical spending trends (e.g., via USAspending.gov) would reveal overall budget allocations for ammunition and identify whether this contract aligns with or deviates from established spending patterns for this category.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 2
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 4700 NATHAN LN N, MINNEAPOLIS, MN, 55442
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: $18,882,500
Exercised Options: $18,882,500
Current Obligation: $18,882,500
Subaward Activity
Number of Subawards: 7
Total Subaward Amount: $1,146,254
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W519TC24D0007
IDV Type: IDC
Timeline
Start Date: 2024-03-29
Current End Date: 2026-12-31
Potential End Date: 2026-12-31 12:12:00
Last Modified: 2025-12-04
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