DoD's $46.4M LAIRCM AAQ-24 Repairs contract awarded to Northrop Grumman, lacking competition

Contract Overview

Contract Amount: $46,388,153 ($46.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2022-12-14

End Date: 2023-12-13

Contract Duration: 364 days

Daily Burn Rate: $127.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 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 $46.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: LAIRCM AAQ-24 REPAIRS Key points: 1. Contract awarded on a sole-source basis, raising concerns about potential overpricing and limited value for taxpayer funds. 2. The fixed-price contract type offers some cost certainty but does not mitigate the risks associated with a lack of competitive bidding. 3. Performance is concentrated in Georgia, potentially limiting broader economic benefits and access to specialized repair services. 4. The contract duration of one year suggests a focus on immediate repair needs rather than long-term sustainment or upgrades. 5. Lack of competition may hinder innovation and the adoption of more cost-effective repair methodologies. 6. The specific nature of LAIRCM repairs indicates a critical defense system, where specialized expertise is required, but competition should still be explored.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, specialized equipment involved (LAIRCM). Without competitive bids, it's difficult to ascertain if the $46.4 million represents a fair market price. The fixed-price structure provides some predictability, but the absence of competition means there's no market pressure to drive down costs or ensure optimal value for the services rendered. Comparisons to similar sole-source repair contracts for defense systems would be necessary for a more robust assessment, but such data is often proprietary or not publicly available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not solicit bids from multiple vendors. This approach is typically justified when only one vendor possesses the necessary technical expertise, proprietary data, or unique capabilities to perform the required work. However, the lack of competition significantly limits price discovery and may result in higher costs for the government compared to a competitively awarded contract. It also raises questions about whether alternative solutions or more cost-effective providers were adequately explored.

Taxpayer Impact: Taxpayers may be paying a premium for these repairs due to the absence of competitive pressure. Without multiple bids, there is no assurance that the government secured the best possible price for these critical defense system services.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Air Force, ensuring the operational readiness of the LAIRCM system. Services delivered include repairs and maintenance for the Large Aircraft Infrared Countermeasures (LAIRCM) system, crucial for aircraft survivability. The geographic impact is concentrated in Georgia, where the repairs are being performed. Workforce implications include the employment of skilled technicians and support staff at Northrop Grumman's facility in Georgia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs.
Lack of transparency in the procurement process due to non-competitive award.
Dependence on a single contractor for critical system repairs.
Potential for cost overruns if not closely managed, despite fixed-price structure.

Positive Signals

Award to an established defense contractor with presumed expertise in LAIRCM systems.
Fixed-price contract provides cost certainty for the awarded amount.
Contract addresses a critical need for aircraft survivability equipment maintenance.

Sector Analysis

The defense electronics and maintenance sector is characterized by high technical barriers to entry and significant government investment. Contracts for specialized systems like LAIRCM often involve a limited number of qualified contractors due to the complexity and proprietary nature of the technology. The market size for such niche repair services is difficult to quantify but is directly tied to the fleet size and operational tempo of the aircraft equipped with these systems. This contract fits within the broader category of defense sustainment and readiness, where long-term support and maintenance are critical.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on specialized capabilities that are typically held by larger, established defense firms. This could limit the direct economic impact on the small business ecosystem within this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the fixed-price contract type, which obligates the contractor to perform the work for the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract performance or closeout.

Related Government Programs

Aircraft Survivability Equipment (ASE) Maintenance
Defense Electronics Repair
Avionics Systems Support
Military Aircraft Sustainment
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.4 million to NORTHROP GRUMMAN SYSTEMS CORP. 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 $46.4 million.

What is the period of performance?

Start: 2022-12-14. End: 2023-12-13.

What is the track record of Northrop Grumman Systems Corp in performing LAIRCM repairs or similar defense electronics maintenance?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in developing, manufacturing, and supporting complex defense systems, including electronic warfare and countermeasures. They are a primary contractor for the LAIRCM system itself. Their track record in performing repairs and sustainment for such systems is generally considered strong, backed by significant technical expertise and established processes. However, specific performance metrics for this particular contract, such as on-time delivery, quality of repairs, and adherence to budget (within the fixed-price scope), would require deeper analysis of past performance reviews and delivery orders under this contract vehicle, which are not detailed in the provided data.

How does the $46.4 million contract value compare to historical spending on LAIRCM repairs or similar systems?

Direct comparison of the $46.4 million contract value to historical spending on LAIRCM repairs is difficult without access to specific historical contract data for this system. However, given that LAIRCM is a sophisticated and critical defense system, repair costs can be substantial. The annual value of this contract, approximately $46.4 million for a one-year duration, suggests a significant level of repair activity. To benchmark effectively, one would need to analyze prior delivery orders under the same contract or similar contracts for LAIRCM sustainment awarded to Northrop Grumman or other potential providers, looking at trends in cost per repair, total annual spend, and the scope of work covered.

What are the primary risks associated with awarding a sole-source contract for critical defense system repairs?

The primary risks associated with sole-source contracts for critical defense system repairs include inflated pricing due to the lack of competitive pressure, potential for reduced innovation as the contractor faces no market-driven incentive to improve efficiency or offer better solutions, and a higher risk of vendor lock-in. Taxpayers may bear the brunt of these risks through higher costs. Furthermore, a sole-source award can sometimes indicate a lack of market research or an over-reliance on a single supplier, potentially impacting long-term system availability if that supplier faces financial or operational difficulties. Robust oversight and negotiation are crucial to mitigate these risks.

How effective is the fixed-price contract type in ensuring value for money in this sole-source scenario?

The fixed-price contract type aims to ensure value for money by establishing a ceiling cost for the work. This shifts some of the financial risk to the contractor, as they must absorb any cost overruns. In a sole-source scenario, however, the effectiveness is diminished because the initial price is not validated by competition. While it provides cost certainty for the government regarding the total amount obligated, it does not guarantee that the price itself is competitive or represents the best value. The government must still rely on strong negotiation skills and potentially independent cost estimates to ensure the fixed price is reasonable. Without competition, the contractor has less incentive to be highly efficient if the initial price is set too high.

What is the significance of the contract being awarded to Northrop Grumman Systems Corp for LAIRCM AAQ-24 repairs?

The significance of awarding this contract to Northrop Grumman Systems Corp lies in their position as a likely original equipment manufacturer (OEM) or a highly specialized provider for the LAIRCM system. LAIRCM is a complex electronic warfare system designed to protect aircraft from infrared-guided missiles. As the OEM, Northrop Grumman possesses unique technical data, proprietary knowledge, and specialized tooling essential for effective repairs and maintenance. This expertise is often difficult for other companies to replicate, which can justify a sole-source award in certain circumstances. Their involvement ensures that repairs are conducted according to the manufacturer's specifications, maintaining the system's integrity and performance critical for aircrew safety.

What are the potential implications of concentrating LAIRCM repair work in Georgia?

Concentrating LAIRCM repair work in Georgia has several implications. For the local economy in Georgia, it means job creation and economic activity related to high-tech defense maintenance. For the Department of Defense, it centralizes repair operations, potentially streamlining logistics and oversight for that specific location. However, it also creates a single point of failure; any disruption in Georgia (e.g., natural disasters, labor disputes, facility issues) could significantly impact the availability of LAIRCM repairs nationwide. Furthermore, it limits the opportunity for other regions or smaller businesses across the country to develop capabilities and compete for such work, potentially concentrating expertise and economic benefits geographically.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - END USER

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

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

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: $46,388,153

Exercised Options: $46,388,153

Current Obligation: $46,388,153

Subaward Activity

Number of Subawards: 186

Total Subaward Amount: $65,096,392

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852218D0002

IDV Type: IDC

Timeline