Air Force awards $27.9M for LITENING TARGETING PODS to Northrop Grumman, a sole-source contract

Contract Overview

Contract Amount: $27,896,936 ($27.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-12-11

End Date: 2022-04-30

Contract Duration: 871 days

Daily Burn Rate: $32.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LITENING TARGETING PODS

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $27.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LITENING TARGETING PODS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns. 3. Performance period spans over two years, indicating a significant duration for the services provided. 4. The specific product, LITENING TARGETING PODS, suggests a critical defense capability. 5. The award is managed by the Department of the Air Force, a major component of the DoD. 6. The contractor, Northrop Grumman, is a significant player in the aerospace and defense industry.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee contract type, while allowing for flexibility, carries inherent risks of cost escalation. A comparison to similar targeting pod procurements, especially those that were competitively bid, would be necessary to assess if the pricing is reasonable. The lack of competition suggests potential for higher costs than might be achieved in a more open market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects true market value.

Public Impact

The primary beneficiaries are the Department of the Air Force and its operational units requiring advanced targeting capabilities. The services delivered involve the provision and potential sustainment of LITENING TARGETING PODS, crucial for precision strikes. The geographic impact is likely global, supporting Air Force deployments worldwide. Workforce implications may include specialized technical support and maintenance personnel for the targeting pods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can lead to cost overruns.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Northrop Grumman is an established defense contractor with relevant expertise.
The contract addresses a critical defense need for advanced targeting systems.

Sector Analysis

The defense sector, particularly aerospace and defense electronics, is characterized by high R&D costs, long product cycles, and significant government procurement. LITENING TARGETING PODS fall within this domain, representing advanced sensor and targeting technology. The market for such systems is dominated by a few large, specialized contractors. Comparable spending benchmarks would involve analyzing other advanced targeting pod procurements or similar sensor system contracts within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside component. Given the sole-source nature and the specialized technology involved, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available, unless the prime contractor proactively engages them for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring detailed reporting of costs and progress. Transparency may be limited due to the sole-source award, but contract modifications and performance reviews would be subject to internal DoD oversight and potentially Inspector General reviews if specific concerns arise.

Related Government Programs

Advanced Targeting Pods
Air-to-Ground Munitions
Aerospace Systems Procurement
Defense Electronics
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LITENING TARGETING PODS

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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $27.9 million.

What is the period of performance?

Start: 2019-12-11. End: 2022-04-30.

What is the historical spending pattern for LITENING TARGETING PODS by the Department of Defense?

Analyzing historical spending on LITENING TARGETING PODS requires access to detailed procurement data beyond this single award. However, the recurring need for such advanced systems suggests a consistent, multi-year investment by the Department of Defense. Past awards, whether competitive or sole-source, would indicate the scale of investment and the typical contract values. Trends in technology upgrades and sustainment needs also influence spending patterns. Without broader data, it's difficult to establish a definitive historical trend, but the nature of the equipment implies significant and ongoing expenditure to maintain operational readiness and technological superiority.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar defense systems?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or when there is significant uncertainty in the costs. It reimburses the contractor for allowable costs plus a fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if requirements change but shifts more cost risk to the government. Fixed-Price Incentive (FPI) contracts share cost risks between the government and contractor. For complex defense systems like targeting pods, FFP might be preferred if requirements are stable, offering better cost certainty. CPFF is generally considered less desirable from a cost control perspective than FFP due to the potential for cost overruns, but it can be necessary for R&D or highly uncertain procurements.

What is Northrop Grumman's track record with sole-source defense contracts?

Northrop Grumman, as a major defense contractor, has a history of receiving both competitive and sole-source awards. Sole-source awards are typically justified by factors such as unique capabilities, proprietary technology, or the absence of viable alternatives. While specific details of all sole-source contracts are not publicly available, the company's extensive portfolio includes numerous large-scale sole-source procurements across various defense platforms. Government oversight mechanisms are in place to review the justification for sole-source awards to ensure they are appropriate and that pricing is fair and reasonable, even in the absence of competition. Northrop Grumman's long-standing relationship with the DoD suggests a pattern of being awarded contracts, including sole-source ones, for critical systems.

What are the potential risks associated with the sole-source nature of this award for taxpayers?

The primary risk for taxpayers associated with a sole-source award is the potential for inflated prices. Without competitive bidding, there is less pressure on the contractor to offer the lowest possible price. The government may end up paying more than it would in a competitive environment. Furthermore, the lack of competition can reduce the incentive for the contractor to innovate or improve efficiency beyond what is necessary to meet the contract's minimum requirements. Oversight and negotiation become critical to ensure fair pricing, but the inherent limitation of not having alternative bids remains a significant risk factor for cost-effectiveness.

How does the 'Engineering Services' classification (NAICS 541330) apply to the procurement of LITENING TARGETING PODS?

The NAICS code 541330, 'Engineering Services,' is broad and encompasses firms that provide architectural, engineering, and related services. While LITENING TARGETING PODS are physical hardware, their development, integration, sustainment, and potential upgrades often involve significant engineering services. This can include design, testing, analysis, systems integration, and technical support. The classification suggests that the contract may cover not just the hardware itself but also the engineering expertise required to ensure its functionality, performance, and compatibility within the Air Force's broader systems. It implies a focus on the technical and design aspects rather than just the manufacturing of off-the-shelf components.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA854019R0010

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: $27,896,936

Exercised Options: $27,896,936

Current Obligation: $27,896,936

Actual Outlays: $4,725,222

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA854019D0001

IDV Type: IDC

Timeline