DoD Awards $964M Aircraft Manufacturing Contract to Northrop Grumman, Undermining Competition

Contract Overview

Contract Amount: $963,941,240 ($963.9M)

Contractor: Northrop Grumman Technical Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-10-31

End Date: 2015-09-30

Contract Duration: 2,891 days

Daily Burn Rate: $333.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CLS SUPPORT 31 OCT 2007 THROUGH 30 OCT 2008. NUMEROUS OPTIONS ARE ALSO INCLUDED, WHICH MAY BE AWARDED AT A LATER DATE.

Place of Performance

Location: COLUMBUS, FRANKLIN County, OHIO, 43218

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $963.9 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC. for work described as: CLS SUPPORT 31 OCT 2007 THROUGH 30 OCT 2008. NUMEROUS OPTIONS ARE ALSO INCLUDED, WHICH MAY BE AWARDED AT A LATER DATE. Key points: 1. Significant contract value of $964 million awarded for aircraft manufacturing. 2. Lack of competition raises concerns about potential overspending and reduced innovation. 3. Contract duration extends to 2015, indicating a long-term commitment without competitive pressure. 4. The 'OH' status suggests potential for future modifications or task orders.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes it difficult to benchmark pricing effectively against similar contracts. The total award amount of $964 million is substantial, and without competitive bids, it's hard to ascertain if this represents fair market value.

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 competitive pressure to drive down prices or encourage efficiency.

Taxpayer Impact: The absence of competition likely results in a higher cost to taxpayers than if the contract had been awarded through a competitive process.

Public Impact

Taxpayers may be overpaying due to the lack of competitive bidding. Limited transparency in pricing and performance metrics due to sole-source nature. Potential for reduced innovation and technological advancement in aircraft manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus-fixed-fee contract type
Long contract duration without re-competition

Positive Signals

Established contractor with experience
Clear contract start and end dates

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical area for defense spending. Benchmarks for similar large-scale aircraft manufacturing contracts are often influenced by technological complexity, research and development costs, and the level of competition.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as both 'ss' and 'sb' fields are false. This represents a missed opportunity to support small business participation in defense contracting.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight to ensure cost control and performance. Regular reviews of the contractor's expenditures and adherence to the fixed-fee structure are crucial for accountability.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition
Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
No small business participation indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $963.9 million to NORTHROP GRUMMAN TECHNICAL SERVICES, INC.. CLS SUPPORT 31 OCT 2007 THROUGH 30 OCT 2008. NUMEROUS OPTIONS ARE ALSO INCLUDED, WHICH MAY BE AWARDED AT A LATER DATE.

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $963.9 million.

What is the period of performance?

Start: 2007-10-31. End: 2015-09-30.

What specific justifications were provided for not competing this significant aircraft manufacturing contract, and how were these justified to ensure best value for the government?

The provided data does not include the specific justifications for not competing this contract. Typically, sole-source awards require extensive documentation demonstrating why a competitive process is not feasible or advantageous, such as unique capabilities, urgent needs, or lack of market availability. Without this information, it's impossible to assess if the government received best value.

Given the cost-plus-fixed-fee structure and lack of competition, what mechanisms are in place to mitigate the risk of cost overruns and ensure efficient performance?

Cost-plus-fixed-fee contracts inherently carry a risk of cost overruns as the contractor is reimbursed for allowable costs plus a fixed fee. Without competition, the incentive to control costs is reduced. Robust oversight, detailed audits of expenditures, and strict adherence to the contract's scope and performance metrics are essential to mitigate these risks and ensure taxpayer funds are used efficiently.

How does the long duration of this contract, extending to 2015, impact the government's ability to leverage technological advancements and adapt to evolving defense needs?

A long contract duration without periodic re-competition can stifle innovation and prevent the government from benefiting from newer technologies or more cost-effective solutions that may emerge during the contract period. It also limits the government's flexibility to adapt to changing strategic requirements or to bring in new contractors with potentially superior capabilities.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ07R0497

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 2411 DULLES CORNER PARK, STE-500, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $963,941,240

Exercised Options: $963,941,240

Current Obligation: $963,941,240

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline