DoD's $252.6M LAIRCM hardware contract awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $252,649,037 ($252.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2009-03-13

End Date: 2016-12-31

Contract Duration: 2,850 days

Daily Burn Rate: $88.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: LAIRCM CY09 IDIQ HARDWARE BUY

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $252.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LAIRCM CY09 IDIQ HARDWARE BUY Key points: 1. Contract awarded without competition, raising concerns about price discovery and potential overpayment. 2. Significant duration of over 7 years suggests a long-term need for these specialized hardware components. 3. The contract's value, exceeding $250 million, represents a substantial investment in defense electronics. 4. Lack of small business participation noted, with no set-aside provisions. 5. Performance context is limited due to the 'not competed' status, making value-for-money assessment challenging. 6. The contract falls under 'Other Electronic Component Manufacturing' (NAICS 334419), indicating a specific niche.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is difficult without competitive bids. The 'not competed' award suggests potential for inflated pricing compared to a market with open competition. Given the long duration and specialized nature of the hardware, a detailed cost analysis would be necessary to ascertain true value for money. Without comparable contracts or market data, assessing if the $252.6 million represents a fair price is speculative.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This contract's value suggests a significant potential for overspending compared to a competed scenario.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical hardware for its aircraft protection systems. The services delivered involve the provision of specialized electronic components for the Large Aircraft Infrared Countermeasures (LAIRCM) system. Geographic impact is likely national, supporting military operations across various theaters. Workforce implications are primarily within Northrop Grumman's manufacturing and engineering divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Limited transparency into the pricing structure due to sole-source award.
Potential for vendor lock-in given the specialized nature of the components.
No small business participation, missing opportunities to foster smaller defense contractors.

Positive Signals

Ensures supply of critical hardware for national defense systems.
Long contract duration provides stability for the supplier and consistent availability for the DoD.
Northrop Grumman is a major defense contractor with established expertise.

Sector Analysis

This contract falls within the broader defense electronics sector, specifically focusing on electronic warfare and countermeasures. The market for such specialized components is often characterized by high barriers to entry due to technological complexity and stringent security requirements. Comparable spending benchmarks are difficult to establish without knowing the exact specifications of the LAIRCM hardware, but significant defense electronics contracts can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract did not include any small business set-aside provisions, nor is there any indication of subcontracting to small businesses. This represents a missed opportunity to engage the small business defense industrial base. The sole-source nature of the award further limits the potential for small businesses to participate in supplying these critical components.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contract compliance and performance. Transparency is limited due to the sole-source nature. Accountability measures would rely on Northrop Grumman's internal quality control and reporting, alongside government acceptance testing.

Related Government Programs

Aircraft Survivability Equipment
Electronic Warfare Systems
DoD Procurement of Electronic Components
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
No small business participation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $252.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LAIRCM CY09 IDIQ HARDWARE BUY

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 $252.6 million.

What is the period of performance?

Start: 2009-03-13. End: 2016-12-31.

What is the specific function of the LAIRCM hardware procured under this contract?

The Large Aircraft Infrared Countermeasures (LAIRCM) system is designed to protect large military aircraft from infrared-guided missiles. The hardware procured under this contract likely includes critical components such as infrared jammers, missile warning sensors, and associated processing units. These components work together to detect incoming heat-seeking missiles, identify them, and then deploy countermeasures to defeat the missile's guidance system, thereby enhancing aircraft survivability during missions in hostile environments.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data indicates the contract was 'NOT COMPETED,' suggesting a sole-source award. Common justifications for sole-source procurements include the unique capabilities of a single contractor, urgent and compelling needs where competition is impractical, or when only one source is capable of meeting the requirement. For specialized defense systems like LAIRCM, it's possible that Northrop Grumman possesses proprietary technology or unique manufacturing expertise essential for these specific hardware components, making competition infeasible or excessively costly to replicate.

What are the potential risks associated with a sole-source contract of this magnitude?

Sole-source contracts, especially those valued at over $250 million, carry inherent risks. The primary risk is the potential for inflated pricing due to the absence of competitive pressure, which can lead to suboptimal value for taxpayer dollars. Another risk is vendor lock-in, where the government becomes heavily reliant on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, without competitive oversight, there's a reduced incentive for the contractor to innovate or optimize costs aggressively. Ensuring robust government oversight and detailed cost analysis becomes paramount.

How does this contract's duration and value compare to similar defense electronics procurements?

A contract duration of over seven years (March 2009 to December 2016) for a single award is substantial, indicating a long-term, stable requirement for these specific LAIRCM hardware components. The value of $252.6 million places it within the upper tier of specialized defense electronics procurements. While exact comparisons are difficult without specific component details, multi-year contracts for complex electronic systems in the defense sector frequently reach hundreds of millions of dollars. However, the lack of competition makes a direct value-for-money comparison challenging against potentially competed, similar-value contracts.

What is the historical spending pattern for LAIRCM hardware or similar systems by the DoD?

Historical spending on the LAIRCM system and similar aircraft survivability equipment by the DoD has been significant over the past two decades. The system has been a priority for protecting high-value aircraft like bombers, transports, and helicopters. While specific historical spending figures for LAIRCM hardware alone are not detailed here, the DoD consistently allocates substantial budgets towards electronic warfare and countermeasures. This contract represents a significant portion of that ongoing investment, reflecting the continuous need to upgrade and maintain these critical defense capabilities across the fleet.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component 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 NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 600 HICKS RD, ROLLING MEADOW, IL, 60008

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $252,649,037

Exercised Options: $252,649,037

Current Obligation: $252,649,037

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862506D6453

IDV Type: IDC

Timeline