DoD Awards Northrop Grumman $33.3M for PGU-28 SAPHEI Ammunition Under Family Buy 3 IDIQ
Contract Overview
Contract Amount: $33,322,925 ($33.3M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2024-07-30
End Date: 2027-12-31
Contract Duration: 1,249 days
Daily Burn Rate: $26.7K/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: PGU-28 A/B SEMI-ARMOR PIERCING HIGH EXPLOSIVE INCENDIARY (SAPHEI) BULK PACK (BP) PROCUREMENT ON THE FAMILY BUY 3 IDIQ
Place of Performance
Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55442
Plain-Language Summary
Department of Defense obligated $33.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: PGU-28 A/B SEMI-ARMOR PIERCING HIGH EXPLOSIVE INCENDIARY (SAPHEI) BULK PACK (BP) PROCUREMENT ON THE FAMILY BUY 3 IDIQ Key points: 1. Procurement focuses on specialized PGU-28 SAPHEI ammunition, a critical component for certain aircraft. 2. Northrop Grumman Systems Corporation is the sole awardee for this specific delivery order. 3. The contract utilizes a Fixed Price with Economic Price Adjustment (FPEPA) pricing structure. 4. This award falls under the broader "Family Buy 3" IDIQ contract vehicle.
Value Assessment
Rating: fair
The contract is a Fixed Price with Economic Price Adjustment (FPEPA), which allows for price changes based on economic factors. This can lead to cost overruns if not carefully managed. Benchmarking against similar ammunition procurements is difficult without more specific cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under "Full and Open Competition After Exclusion of Sources," indicating a limited competition scenario. This method may restrict the pool of potential bidders and potentially impact price discovery compared to unrestricted full and open competition.
Taxpayer Impact: The FPEPA structure introduces potential for increased costs due to economic fluctuations, impacting taxpayer funds. The limited competition may also prevent achieving the lowest possible price.
Public Impact
Ensures supply of critical PGU-28 SAPHEI ammunition for military operations. Supports a major defense contractor, potentially impacting jobs and regional economy. The use of FPEPA pricing requires ongoing monitoring to control costs. Limited competition raises questions about optimal resource allocation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic Price Adjustment (EPA) clause can increase costs.
- Limited competition may lead to higher prices.
- Lack of specific unit cost data hinders detailed analysis.
Positive Signals
- Addresses a specific military requirement for specialized ammunition.
- Utilizes an existing IDIQ contract vehicle, potentially streamlining procurement.
- Award to a known defense contractor suggests established capabilities.
Sector Analysis
This procurement falls within the Ammunition (except Small Arms) Manufacturing sector. Spending in this sector is driven by defense readiness requirements and technological advancements in ordnance. Benchmarks are highly dependent on the specific type and quantity of ammunition.
Small Business Impact
The awardee is Northrop Grumman Systems Corporation, a large business. There is no indication of small business participation in this specific delivery order, suggesting limited direct impact on small businesses for this contract.
Oversight & Accountability
The use of an IDIQ contract and a delivery order structure implies established oversight mechanisms. However, the FPEPA clause necessitates diligent monitoring of economic factors to ensure fair pricing and prevent unwarranted cost increases.
Related Government Programs
- Ammunition (except Small Arms) Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for cost escalation due to EPA.
- Limited competition may result in suboptimal pricing.
- Lack of transparency in specific cost drivers.
- Dependence on a single large business contractor for this order.
Tags
ammunition-except-small-arms-manufacturi, department-of-defense, mn, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. PGU-28 A/B SEMI-ARMOR PIERCING HIGH EXPLOSIVE INCENDIARY (SAPHEI) BULK PACK (BP) PROCUREMENT ON THE FAMILY BUY 3 IDIQ
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 $33.3 million.
What is the period of performance?
Start: 2024-07-30. End: 2027-12-31.
What is the historical cost performance of PGU-28 SAPHEI ammunition under similar FPEPA contracts?
Historical cost performance data for PGU-28 SAPHEI ammunition under similar FPEPA contracts is not publicly available in this dataset. Analyzing past performance would require access to detailed contract histories and economic adjustment data. Without this, it's difficult to assess if the current EPA terms are reasonable or if past adjustments led to significant cost increases beyond initial projections.
How does the "Full and Open Competition After Exclusion of Sources" process impact the final negotiated price compared to unrestricted full and open competition?
Excluding sources limits the number of potential bidders, which can reduce competitive pressure and potentially lead to higher negotiated prices than if all qualified sources were allowed to compete. While some exclusion might be justified by specific technical requirements or existing contract vehicles, it generally diminishes the government's leverage in price discovery and negotiation.
What are the specific economic factors included in the Economic Price Adjustment (EPA) clause for this contract, and what is their projected impact?
The specific economic factors included in the EPA clause are not detailed in the provided data. These typically include indices for labor, materials, and overhead. The projected impact is a potential increase in the contract price over its duration, tied to fluctuations in these economic indicators. Without knowing the specific indices and their weighting, the precise financial risk to taxpayers cannot be quantified.
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: $33,322,925
Exercised Options: $33,322,925
Current Obligation: $33,322,925
Subaward Activity
Number of Subawards: 7
Total Subaward Amount: $7,545,980
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: 2024-07-30
Current End Date: 2027-12-31
Potential End Date: 2027-12-31 12:12:00
Last Modified: 2025-12-23
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