DoD's $30.4M LAIRCM repair contract awarded to Northrop Grumman shows limited competition

Contract Overview

Contract Amount: $30,385,800 ($30.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2016-08-25

End Date: 2019-12-31

Contract Duration: 1,223 days

Daily Burn Rate: $24.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF LAIRCM AAQ-24 REPAIRS

Place of Performance

Location: WARNER ROBINS, HOUSTON County, GEORGIA, 31088

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $30.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF LAIRCM AAQ-24 REPAIRS Key points: 1. Contract awarded on a sole-source basis, raising questions about price competitiveness. 2. The contract duration of 1223 days suggests a long-term need for these specialized repairs. 3. Northrop Grumman's established role in this niche area likely influenced the sole-source award. 4. The fixed-price contract type aims to control costs, but without competition, true value is harder to ascertain. 5. Focus on repair services indicates a need to maintain existing critical defense systems. 6. Geographic location in Georgia for the repair work may have logistical implications.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to determine if the $30.4 million price represents a fair market value. The fixed-price contract type offers some cost control, but the absence of competition means the government may not have secured the most economical option. Further analysis would require comparing the scope and pricing of similar repair services for advanced defense systems, which are often proprietary and limited in availability.

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 Corp, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances, such as when a unique capability is required or only one vendor can perform the work, they limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these repair services, as there was no market pressure to drive down prices. This award highlights a potential area where exploring competitive options in the future could yield cost savings.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the operational readiness of critical aircraft defense systems. Services delivered include the repair of the Large Aircraft Infrared Countermeasures (LAIRCM) system, vital for protecting aircrews. The geographic impact is centered in Georgia, where the repair work is being performed. Workforce implications include the need for highly skilled technicians capable of servicing advanced aerospace and defense equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-sourcing could mask inefficiencies.
Dependence on a single contractor for critical repairs poses a long-term risk if capabilities are lost or pricing escalates.
The specific nature of LAIRCM repairs may create a barrier to entry for potential competitors.
Limited public data on the specific repair tasks makes independent value assessment difficult.

Positive Signals

Fixed-price contract type provides some cost certainty for the government.
Northrop Grumman is a known entity with established expertise in defense systems.
The contract addresses a clear need for maintaining critical defense capabilities.
The repair services ensure the continued operational effectiveness of vital military assets.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and often, long product lifecycles. Contracts for specialized repair and maintenance, like this one for the LAIRCM system, are crucial for ensuring the operational readiness of military assets. The market for such services is often concentrated among a few large, specialized contractors due to the stringent requirements and security clearances involved. Spending in this sub-sector is driven by the need to maintain aging fleets and integrate new technologies, with significant government investment directed towards sustainment and upgrade programs.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by the 'sb': false field. The prime contractor, Northrop Grumman, is a large aerospace and defense company. There is no explicit information provided regarding subcontracting plans with small businesses for this specific delivery order. Without this data, it's difficult to assess the direct impact on the small business ecosystem, though large prime contractors often utilize small businesses for various components and services in their supply chains.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. As a delivery order under a larger contract vehicle, its execution is monitored for performance, schedule, and adherence to the terms. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is limited by the sole-source nature, but contract modifications and performance reports are usually maintained internally and may be subject to Freedom of Information Act (FOIA) requests, albeit with potential redactions.

Related Government Programs

Aircraft Maintenance and Repair
Defense Electronics
Avionics Systems
Countermeasures Systems
Aerospace Manufacturing Support

Risk Flags

Sole-source award
Limited competition
Potential for cost overruns
Contractor dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.4 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF LAIRCM AAQ-24 REPAIRS

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $30.4 million.

What is the period of performance?

Start: 2016-08-25. End: 2019-12-31.

What is the specific nature of the LAIRCM system repairs being performed under this contract?

The Large Aircraft Infrared Countermeasures (LAIRCM) system is a critical defense technology designed to protect aircraft from heat-seeking missiles. Repairs under this contract likely involve diagnosing and fixing malfunctions in the system's infrared detection sensors, missile warning receivers, and countermeasures dispensing units. This could include component-level repairs, software updates, or replacement of worn-out parts. The specific tasks are detailed in technical orders and statements of work associated with the delivery order, but are often considered sensitive military information. The $30.4 million allocated suggests a significant scope of work, potentially encompassing multiple aircraft platforms or a substantial number of repair actions over the contract period.

How does the $30.4 million cost compare to similar LAIRCM repair contracts or industry benchmarks?

Directly comparing the $30.4 million cost is challenging due to the sole-source nature of this award and the proprietary aspects of defense contracting. Without competitive bids, there's no market-driven price point for validation. However, the duration of the contract (1223 days) suggests an average annual spend of approximately $9.9 million. This figure needs to be contextualized against the complexity of the LAIRCM system, the specialized labor required, and the overhead of a major defense contractor like Northrop Grumman. Industry benchmarks for specialized aerospace repair can vary widely, but for critical, high-technology systems, costs are generally substantial. A more robust assessment would require access to historical pricing data for similar repair services or a detailed cost breakdown from the contractor.

What are the primary risks associated with awarding this contract on a sole-source basis?

The primary risk of a sole-source award is the potential for inflated pricing due to the lack of competition. Without competing bids, the government loses the opportunity to leverage market forces to secure the best possible price. This can lead to taxpayers footing a higher bill than necessary. Another risk is reduced innovation; a sole-source contractor may have less incentive to improve efficiency or develop cost-saving solutions when their position is guaranteed. Furthermore, it creates a dependency on a single supplier for critical maintenance, which can be problematic if the contractor faces financial difficulties, changes strategic direction, or experiences supply chain disruptions. This dependency also limits the government's flexibility in seeking alternative solutions or vendors in the future.

What is Northrop Grumman's track record with LAIRCM systems and similar defense contracts?

Northrop Grumman has a long-standing and significant track record with the LAIRCM system, having been a primary developer and manufacturer. They are a major defense contractor with extensive experience in producing, integrating, and sustaining complex electronic warfare and avionics systems for military aircraft. Their history includes numerous contracts with the Department of Defense for various aircraft platforms and defense technologies. This established relationship and demonstrated capability are often key factors cited in justifying sole-source awards for specialized maintenance and upgrades, as they possess the unique knowledge, tooling, and personnel required.

How does this contract fit into the broader context of Department of Defense spending on aircraft sustainment and electronic warfare?

This contract for LAIRCM repairs fits squarely within the DoD's substantial spending on aircraft sustainment and electronic warfare (EW). Aircraft sustainment encompasses all activities required to maintain aircraft in operational condition, including maintenance, repair, and overhaul. EW systems, like LAIRCM, are critical components of modern military aircraft, providing protection against threats. The DoD allocates billions annually to sustain its vast fleet and maintain technological superiority in EW. Contracts like this, even if for specific repair tasks, represent a vital part of ensuring the readiness and survivability of air assets, reflecting the ongoing investment in maintaining and upgrading these complex systems throughout their service life.

What are the potential implications of this contract for future competition in the LAIRCM repair market?

The sole-source nature of this award suggests that the market for LAIRCM repairs may be highly concentrated or that Northrop Grumman holds unique, proprietary knowledge and access essential for these specific repairs. This could limit future competition, as other companies might lack the necessary technical data, certifications, or specialized equipment. For competition to emerge, the government might need to actively encourage technology transfer, break down the system into more manageable components for competitive bidding, or foster partnerships between prime contractors and smaller, specialized repair firms. Without such initiatives, the market is likely to remain dominated by the incumbent contractor for the foreseeable future.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 101 INDUSTRIAL PARK BLVD, WARNER ROBINS, GA, 31088

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,385,800

Exercised Options: $30,385,800

Current Obligation: $30,385,800

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA853912D0003

IDV Type: IDC

Timeline