DoD awards $6.7M contract for F-16 targeting pod upgrades to Northrop Grumman, raising questions about competition

Contract Overview

Contract Amount: $6,689,720 ($6.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-05-04

End Date: 2023-05-04

Contract Duration: 730 days

Daily Burn Rate: $9.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LITENING TARGETING POD (OPERATIONAL FLIGHT PLAN AND/OR INCIDENTAL FIRMWARE AND HARDWARE) IDIQ FOR COMBAT AIR FORCE (CAF) LITENING TARGETING POD (TGP) TO SUPPORT INTEGRATION WITH THE F-16 PRE-BLOCK 30/32 SYSTEM CAPABILITY UPGRADES

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $6.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LITENING TARGETING POD (OPERATIONAL FLIGHT PLAN AND/OR INCIDENTAL FIRMWARE AND HARDWARE) IDIQ FOR COMBAT AIR FORCE (CAF) LITENING TARGETING POD (TGP) TO SUPPORT INTEGRATION WITH THE F-16 PRE-BLOCK 30/32 SYSTEM CAPABILITY UPGRADES Key points: 1. Contract awarded to a single vendor, limiting potential for competitive pricing. 2. Focus on firmware and hardware upgrades for a specific F-16 variant. 3. Duration of two years suggests a focused scope of work. 4. Cost-plus fixed-fee structure may incentivize higher costs without strict oversight. 5. Lack of competition raises concerns about overall value for taxpayer dollars. 6. Contract falls under software publishing NAICS code, indicating a focus on digital solutions.

Value Assessment

Rating: questionable

The contract's value of $6.7 million for targeting pod upgrades appears moderate for defense systems. However, without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus fixed-fee (CPFF) contract type, while allowing for flexibility, can lead to cost overruns if not managed diligently. The absence of competition prevents an assessment of whether this price represents the best value achievable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to a higher price than if multiple bids had been considered.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from a competitive bidding environment. This can result in less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the F-16 Pre-Block 30/32 aircraft, receiving enhanced targeting capabilities. The contract delivers critical firmware and hardware upgrades for the LITENING Targeting Pod. The geographic impact is primarily within the operational theaters of the U.S. Air Force. Workforce implications may include specialized software and hardware engineers at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential savings.
Cost-plus fixed-fee contract type requires robust oversight to control costs.
Lack of transparency in the procurement process due to sole-sourcing.

Positive Signals

Addresses a specific capability gap for the F-16 fleet.
Northrop Grumman is an established defense contractor with experience in targeting systems.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on avionics and targeting systems for fighter aircraft. The market for such specialized defense technology is often characterized by limited players and high barriers to entry due to R&D costs and security requirements. Comparable spending benchmarks are difficult to establish without competitive data, but upgrades to critical mission systems like targeting pods are essential for maintaining air superiority.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large defense contractor, the direct impact on the small business ecosystem is likely minimal, unless Northrop Grumman engages small businesses as subcontractors for specific components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). The CPFF structure necessitates close monitoring of costs and performance to ensure adherence to the fixed fee and prevent unnecessary expenditures. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

F-16 Aircraft Sustainment
Advanced Targeting Systems
Defense Avionics Modernization
Combat Air Force Modernization

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LITENING TARGETING POD (OPERATIONAL FLIGHT PLAN AND/OR INCIDENTAL FIRMWARE AND HARDWARE) IDIQ FOR COMBAT AIR FORCE (CAF) LITENING TARGETING POD (TGP) TO SUPPORT INTEGRATION WITH THE F-16 PRE-BLOCK 30/32 SYSTEM CAPABILITY UPGRADES

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 $6.7 million.

What is the period of performance?

Start: 2021-05-04. End: 2023-05-04.

What is Northrop Grumman's track record with LITENING Targeting Pods and similar systems?

Northrop Grumman has a long history with the LITENING Targeting Pod, having developed and supplied various generations of the system to the U.S. military and allied nations. They are a major defense contractor with extensive experience in developing and integrating advanced targeting and navigation systems for a wide range of aircraft platforms. Their portfolio includes other sensor systems, electronic warfare capabilities, and integrated avionics. This established expertise suggests a strong technical capability to fulfill the requirements of this specific contract for F-16 integration and firmware/hardware upgrades.

How does the $6.7 million cost compare to similar targeting pod upgrade contracts?

Benchmarking this $6.7 million contract is challenging due to its sole-source nature and the specific scope (firmware/hardware for F-16 Pre-Block 30/32 integration). However, major avionics and targeting system upgrades for fighter aircraft can range from several million to tens of millions of dollars, depending on the complexity, number of units, and the specific technologies involved. Without competitive bids, it's impossible to definitively state if this price is optimal. The cost-plus fixed-fee structure also means the final cost could fluctuate based on incurred expenses, making direct comparisons difficult without detailed cost breakdowns.

What are the primary risks associated with this sole-source, cost-plus fixed-fee contract?

The primary risks stem from the contract type and award method. A sole-source award eliminates competitive pressure, potentially leading to inflated prices and reduced innovation. The cost-plus fixed-fee (CPFF) structure carries the risk of cost overruns, as the contractor is reimbursed for allowable costs plus a negotiated fixed fee. If cost controls are weak or the scope definition is imprecise, the government could end up paying more than anticipated. There's also a risk of contractor complacency due to the lack of competitive threat, potentially impacting the pace or quality of delivery.

How effective are LITENING Targeting Pods in supporting F-16 combat operations?

LITENING Targeting Pods are highly effective and widely used systems designed to provide pilots with advanced precision strike capabilities. They enable the detection, tracking, and engagement of ground targets in various weather conditions and at extended ranges, utilizing infrared and electro-optical sensors. For the F-16, these pods are crucial for modern air-to-ground missions, enhancing situational awareness and enabling pilots to employ precision-guided munitions accurately. The upgrades specified in this contract aim to further enhance integration and capability with specific F-16 variants, ensuring the platform remains a relevant and potent asset.

What is the historical spending trend for LITENING Targeting Pods or similar systems within the DoD?

Historical spending on LITENING Targeting Pods and similar advanced targeting systems within the Department of Defense has been substantial and ongoing for decades. The DoD consistently invests in upgrading and maintaining these critical systems to keep pace with evolving threats and technological advancements. Spending often occurs through a mix of sole-source contracts for upgrades and sustainment, and competitive procurements for new systems or major enhancements. Annual spending can fluctuate based on modernization priorities, fleet size, and specific upgrade cycles, often running into hundreds of millions of dollars across various platforms over time.

What is the significance of the 'Software Publishers' NAICS code (511210) for this contract?

The assignment of the 'Software Publishers' NAICS code (511210) to this contract indicates that a significant portion of the work involves the development, modification, or licensing of software, specifically firmware and operational flight plan updates for the LITENING Targeting Pod. While the contract also covers hardware, the NAICS code suggests the primary focus or the most complex aspect of this particular award is software-related. This classification helps in understanding the nature of the services being procured and can be used for industry analysis and tracking spending within the software development domain for defense applications.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA823218R3004

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

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

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: $6,712,568

Exercised Options: $6,712,568

Current Obligation: $6,689,720

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $40,800

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA823218D0013

IDV Type: IDC

Timeline