DoD's $32.8M LAIRCM AAQ-24 contract to Northrop Grumman awarded without competition

Contract Overview

Contract Amount: $32,797,907 ($32.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2016-10-26

End Date: 2020-12-31

Contract Duration: 1,527 days

Daily Burn Rate: $21.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LAIRCM AAQ-24

Place of Performance

Location: WARNER ROBINS, HOUSTON County, GEORGIA, 31088

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $32.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: LAIRCM AAQ-24 Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract duration of over 4 years suggests a significant, long-term need for these systems. 3. Lack of competition may limit opportunities for innovation and cost reduction from alternative providers. 4. Performance context is limited due to the sole-source nature, making direct value-for-money assessment challenging. 5. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 6. The firm-fixed-price contract type shifts some risk to the contractor, but without competition, the baseline price is unverified.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is difficult without comparable bids. The $32.8 million award for LAIRCM AAQ-24 systems, while potentially justified by unique capabilities, lacks the transparency that competition provides. Without competitive bids, it's hard to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for their investment. Further analysis would require access to cost breakdowns or comparisons with similar sole-source procurements for specialized defense systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple potential suppliers. This approach is typically used when only one contractor possesses the necessary technology, expertise, or capability to fulfill the requirement. The absence of competition means there were no other bidders to compare against, limiting the government's ability to negotiate the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the potential for competitive pressure to drive down prices is eliminated. This necessitates robust internal justification and oversight to ensure the price is fair and reasonable.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches of the DoD requiring advanced aircraft protection systems. The contract delivers critical systems for aircraft survivability, specifically the Large Aircraft Infrared Countermeasures (LAIRCM) system. The geographic impact is likely global, supporting military operations wherever these aircraft are deployed. Workforce implications include supporting specialized manufacturing and technical roles within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Sole-source awards can stifle innovation by not encouraging alternative solutions from the market.
Transparency in pricing and justification for the sole-source award is crucial for accountability.

Positive Signals

The contract addresses a critical defense need for aircraft survivability, indicating a high priority for the DoD.
Northrop Grumman is a known entity in defense contracting, suggesting a level of established capability.
The firm-fixed-price contract type provides cost certainty for the government, assuming the initial price was fair.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and aircraft survivability systems. The market for such specialized defense equipment is often characterized by high barriers to entry due to technological complexity and stringent security requirements. While specific market size data for LAIRCM systems is proprietary, the overall defense electronics market is substantial, with significant government investment. This contract represents a portion of that investment in advanced threat detection and countermeasures.

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 prime contractor, the direct impact on the small business ecosystem is likely minimal unless Northrop Grumman voluntarily engages small businesses in its supply chain. Further investigation into subcontracting plans would be needed to assess any indirect benefits.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given it's a sole-source award, the justification and pricing negotiation process would be subject to internal DoD review and potentially audits by agencies like the Defense Contract Audit Agency (DCAA). Transparency is limited due to the non-competitive nature, but accountability rests on the DoD's ability to validate the necessity and fair pricing of the sole-source procurement.

Related Government Programs

Aircraft Survivability Equipment (ASE)
Electronic Warfare Systems
Missile Warning Systems
Countermeasures Systems
Defense Procurement
Sole-Source Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for unverified pricing due to lack of competition.
Limited transparency on technical necessity and alternatives considered.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.8 million to NORTHROP GRUMMAN SYSTEMS CORP. LAIRCM AAQ-24

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 $32.8 million.

What is the period of performance?

Start: 2016-10-26. End: 2020-12-31.

What is the specific capability provided by the LAIRCM AAQ-24 system?

The LAIRCM AAQ-24 system is a crucial component of aircraft survivability equipment (ASE) designed to detect, track, and counter infrared-guided missiles. It utilizes advanced infrared countermeasures to decoy or jam incoming threats, significantly increasing the survivability of large military aircraft such as transports and bombers. The system's ability to automatically detect and respond to missile launches provides aircrews with enhanced protection in hostile environments. Its development and deployment are critical for maintaining operational readiness and force protection during missions in contested airspace.

Why was this contract awarded on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED,' signifying a sole-source procurement. While the specific justification is not detailed, sole-source awards are typically made when a product or service is available only from a single responsible source. This could be due to proprietary technology, unique capabilities, essential system integration requirements, or a lack of viable alternatives in the market. For advanced defense systems like LAIRCM, it's common for a single contractor to hold the intellectual property and manufacturing expertise, necessitating a sole-source approach to ensure continued support and upgrades.

How does the firm-fixed-price contract type affect risk and value?

A firm-fixed-price (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. This shifts the primary cost risk to the contractor, Northrop Grumman. For the government, it provides budget certainty. However, the value proposition hinges entirely on the initial price negotiation. Since this was a sole-source award, the government lacked the leverage of competitive bidding to ensure the FFP was the most advantageous possible. While the contractor bears cost overruns, the initial price might have been higher than in a competitive scenario.

What is the historical spending trend for LAIRCM systems by the DoD?

Analyzing historical spending trends for LAIRCM systems requires access to broader contract databases beyond this single award. However, the existence of a multi-year, multi-million dollar contract suggests a sustained and significant investment by the DoD in this technology. LAIRCM systems are critical for protecting high-value, vulnerable aircraft, and their deployment is often tied to specific fleet modernization or threat response programs. Spending on such systems typically fluctuates based on defense budgets, perceived threats, and the lifecycle of the aircraft platforms they protect. Without more data, it's difficult to establish a precise trend, but this award indicates ongoing commitment.

What are the potential risks associated with sole-source defense contracts?

Sole-source defense contracts carry several inherent risks. Firstly, the lack of competition can lead to inflated prices, as the government cannot leverage market forces to secure the best deal. Secondly, it can reduce incentives for the contractor to innovate or improve efficiency, as there is no competitive pressure. Thirdly, it can create vendor lock-in, making it difficult and costly to switch providers in the future. Finally, transparency and accountability can be diminished, making it harder for oversight bodies and the public to verify that taxpayer money is being spent wisely and effectively.

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: COMM/DETECT/COHERENT RADIATION

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: $32,797,907

Exercised Options: $32,797,907

Current Obligation: $32,797,907

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