DoD awards $37.1M sole-source contract for LAIRCM AAQ-24 repairs to Northrop Grumman

Contract Overview

Contract Amount: $37,164,837 ($37.2M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2024-09-12

End Date: 2026-01-30

Contract Duration: 505 days

Daily Burn Rate: $73.6K/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 $37.2 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 questions about price competition. 2. The contract duration of 505 days suggests a need for ongoing sustainment. 3. Focus on repairs indicates potential for aging equipment or high usage. 4. The fixed-price contract type aims to control costs for the government. 5. Geographic location in Georgia may impact logistics and local economic benefits. 6. The specific nature of LAIRCM repairs suggests a specialized technical requirement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and lack of publicly available comparable contract data for LAIRCM AAQ-24 specific repairs. The awarded amount of $37.1 million for a period of approximately 1.7 years (505 days) needs to be assessed against the scope of work and the criticality of the LAIRCM system. Without competitive bids, it's difficult to ascertain if this represents a fair market price or if potential cost savings were forgone.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Systems Corp, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium for this system due to the absence of competitive bidding, as the government did not benefit from multiple offers to drive down prices.

Public Impact

The U.S. Air Force benefits from the continued operational readiness of the LAIRCM system. This contract ensures the sustainment and repair of critical aircraft defense systems. The geographic impact is concentrated in Georgia, where the repairs will be performed. The contract supports specialized technical jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-sourcing.
Potential for cost overruns if not closely managed due to lack of competition.

Positive Signals

Firm fixed-price contract type provides cost certainty.
Contract awarded to a known entity with potential expertise in LAIRCM.
Focus on repairs suggests a commitment to maintaining existing defense capabilities.

Sector Analysis

The defense sector, particularly electronic warfare and aircraft survivability systems, is characterized by high technological complexity and significant R&D investment. Contracts for specialized repair and maintenance, like this one for the LAIRCM system, are crucial for ensuring the operational readiness of advanced military platforms. The market for such systems is often dominated by a few large prime contractors due to the specialized knowledge and security clearances required. Spending benchmarks for similar sustainment contracts can vary widely based on the system's complexity and the scope of services.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the specialized requirements of LAIRCM repairs, it is unlikely that small businesses would be primary contractors. However, Northrop Grumman may engage small businesses as subcontractors for specific components or services, which would need to be tracked to assess their impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures would include performance monitoring against contract requirements, delivery schedules, and quality standards. Transparency may be limited due to the sole-source award, but contract modifications and performance reports would be subject to standard government oversight processes. The Inspector General's office could investigate if any improprieties are suspected.

Related Government Programs

Aircraft Survivability Equipment
Missile Warning Systems
Electronic Warfare Systems
Defense Logistics Agency Maintenance Contracts
Air Force Sustainment Programs

Risk Flags

Sole-source award may lead to higher costs.
Lack of competition limits price discovery.
Potential for contractor dependency.
Need for robust government oversight to ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 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 $37.2 million.

What is the period of performance?

Start: 2024-09-12. End: 2026-01-30.

What is the specific nature of the LAIRCM AAQ-24 system and its criticality to Air Force operations?

The AN/AAQ-24 is a Large Aircraft Infrared Countermeasures (LAIRCM) system designed to protect large transport and special mission aircraft from infrared-guided missiles. It works by detecting incoming missiles and employing countermeasures, such as directed infrared countermeasures (DIRCM), to confuse or decoy the missile's seeker. The system is critical for ensuring the survivability of high-value assets and personnel during missions in contested environments. Its effective operation is paramount for maintaining air superiority and enabling global reach capabilities for the Air Force.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED.' While the specific justification is not detailed, sole-source awards are typically made when only one responsible source is available or capable of meeting the government's needs. For complex defense systems like LAIRCM, this often stems from proprietary technology, unique manufacturing capabilities, or extensive prior experience and integration with existing platforms that only the original equipment manufacturer (OEM) or a highly specialized entity possesses. The Air Force would have had to document and approve this justification, citing reasons such as technical superiority, essentiality, or lack of viable alternatives.

How does the firm fixed-price (FFP) contract type benefit the government in this context?

A Firm Fixed-Price (FFP) contract type is generally advantageous for the government as it shifts the risk of cost overruns to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides budget certainty for the government and incentivizes the contractor to manage their expenses efficiently. For repair and maintenance services where the scope of work can be reasonably defined, FFP helps prevent unexpected cost increases, making it a preferred contract type for controlling expenditures.

What are the potential risks associated with a sole-source repair contract for critical defense systems?

The primary risk of a sole-source repair contract is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the contractor may have less incentive to offer the most cost-effective solution. Additionally, there's a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility and innovation. If the sole-source provider experiences financial difficulties or operational issues, it could lead to significant disruptions in maintaining critical defense capabilities, impacting readiness and national security.

What is the typical duration and cost range for similar LAIRCM sustainment or repair contracts?

Determining a precise cost range for similar LAIRCM sustainment or repair contracts is difficult without access to detailed contract databases and specific system configurations. However, sustainment contracts for complex defense systems often span multiple years and can involve hundreds of millions or even billions of dollars over their lifecycle, depending on the number of systems, operational tempo, and scope of services (e.g., depot-level maintenance, field support, upgrades). The $37.1 million awarded here for a period of approximately 1.7 years suggests a significant but potentially contained scope for specific repair actions or a portion of the overall sustainment effort.

How does the geographic location in Georgia (ST: GA) influence the contract's execution and potential economic impact?

The contract's performance location in Georgia (ST: GA) indicates that Northrop Grumman's repair facilities or a significant portion of the work will occur within that state. This has several implications: it suggests that the state's workforce and infrastructure will be utilized, potentially creating or sustaining jobs in the aerospace and defense sector within Georgia. It may also influence logistics, as parts and personnel would be routed to or from Georgia. For the Air Force, the location might be chosen based on proximity to operational bases, existing maintenance infrastructure, or cost-effectiveness of facilities in that region.

Industry Classification

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

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

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: $37,164,837

Exercised Options: $37,164,837

Current Obligation: $37,164,837

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852224D0004

IDV Type: IDC

Timeline