DoD awards $26.7M for LITENING TARGETING PODS to Northrop Grumman, a sole-source contract

Contract Overview

Contract Amount: $26,720,074 ($26.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-08

End Date: 2025-10-16

Contract Duration: 1,864 days

Daily Burn Rate: $14.3K/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 $26.7 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 competition. 2. Long contract duration of 1864 days suggests a sustained need for the services. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 4. Northrop Grumman is the sole contractor, indicating a lack of market competition. 5. The contract is for Engineering Services, supporting critical defense capabilities. 6. The award value is substantial, requiring careful oversight of expenditures.

Value Assessment

Rating: questionable

Benchmarking the value for this sole-source contract is challenging due to the lack of competitive bids. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can incentivize contractors to increase costs to achieve a higher fixed fee, potentially leading to less favorable pricing for the government compared to fixed-price contracts. Without comparable contract data or competitive pricing, it's difficult to definitively assess if the government is receiving excellent value for its investment in these targeting pods.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may be paying a premium for this equipment due to the absence of competitive pressure to lower prices. The government's negotiating position is weakened without alternative sources.

Public Impact

The primary beneficiaries are the U.S. Air Force, receiving advanced targeting pod systems. These pods enhance the precision and effectiveness of aerial combat missions. The contract supports critical defense capabilities, contributing to national security. The contract is managed by the Department of the Air Force, indicating its strategic importance. Work is likely performed in Illinois, supporting the local economy and workforce in that state.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can lead to cost overruns and less incentive for efficiency.
Long contract duration may not reflect the most current technological advancements or market prices.
Lack of transparency in pricing due to sole-source nature makes value assessment difficult.

Positive Signals

Northrop Grumman is a known defense contractor with established expertise in targeting systems.
The contract addresses a critical need for advanced targeting capabilities within the Air Force.
The fixed fee component of the CPFF contract provides some level of cost predictability.

Sector Analysis

The defense sector, particularly aerospace and defense electronics, is characterized by high R&D costs, long product development cycles, and significant government procurement. The market for targeting pods is specialized, often dominated by a few key players due to technological barriers and stringent military requirements. Northrop Grumman is a major incumbent in this space. Comparable spending benchmarks are difficult to ascertain without more specific details on the pod's capabilities and the competitive landscape.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on established capabilities rather than fostering small business participation. Further investigation into subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management systems, with potential involvement from the Air Force's Inspector General. Transparency is limited due to the sole-source nature and CPFF contract type. Accountability measures would rely on contract performance monitoring, milestone achievement, and adherence to cost ceilings, though the CPFF structure itself can complicate direct cost accountability.

Related Government Programs

Air Force Targeting Pods
Defense Advanced Systems Procurement
Northrop Grumman Defense Contracts
Cost Plus Fixed Fee Contracts
Sole Source Defense Acquisitions

Risk Flags

Sole Source Justification
Cost Plus Contract Type
Lack of Competition
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 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 $26.7 million.

What is the period of performance?

Start: 2020-09-08. End: 2025-10-16.

What is the specific capability and technological generation of the LITENING TARGETING PODS being procured?

The LITENING TARGETING POD is an advanced, self-contained, multi-target airborne targeting pod system. It provides fighter aircraft with high-resolution imagery and precision-guided munitions delivery capabilities. The specific technological generation is not detailed in the provided data, but it is a mature system that has undergone various upgrades over its service life. Its primary function is to detect, identify, track, and engage targets from standoff ranges, significantly enhancing air-to-ground combat effectiveness and reducing collateral damage. The system integrates with various aircraft platforms, offering flexibility and operational advantage.

How does the Cost Plus Fixed Fee (CPFF) structure impact the government's cost control for this contract?

The Cost Plus Fixed Fee (CPFF) contract structure means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee. While the fixed fee provides some predictability regarding the contractor's profit, the 'cost-plus' element means the government bears the risk of cost overruns. This structure can incentivize contractors to incur higher costs, as their fee is fixed regardless of the total cost. Effective oversight, stringent cost accounting standards, and clear definition of allowable costs are crucial for the government to control expenditures under a CPFF contract. Without robust monitoring, this structure can be less cost-effective than fixed-price alternatives.

What are the historical spending patterns for LITENING TARGETING PODS or similar systems procured by the Department of Defense?

Historical spending data for LITENING TARGETING PODS and similar systems reveals a consistent and significant investment by the Department of Defense over many years. Northrop Grumman, as the primary provider, has received substantial funding for these pods across various contracts and delivery orders. Spending often fluctuates based on modernization programs, operational tempo, and fleet readiness requirements. While specific historical dollar amounts for this exact contract line are not provided, the overall trend indicates a sustained demand for advanced targeting capabilities, with annual expenditures often in the tens to hundreds of millions of dollars for such systems across the services.

What is Northrop Grumman's track record with sole-source defense contracts, particularly for high-value systems?

Northrop Grumman has a long history of securing sole-source contracts for various defense systems, often due to their specialized expertise, proprietary technology, or established role as a prime contractor on complex platforms. Their track record with sole-source awards is extensive, covering major programs across aerospace, electronics, and defense services. While sole-source awards can be efficient for acquiring unique capabilities, they also draw scrutiny regarding pricing and competition. Government accountability offices and oversight bodies often review these awards to ensure fair and reasonable pricing and to confirm the necessity of the sole-source justification. Northrop Grumman's performance on these contracts is generally viewed as meeting technical requirements, but cost-effectiveness remains a key area of analysis.

What are the potential risks associated with relying on a single contractor for critical defense equipment like targeting pods?

Relying on a single contractor for critical defense equipment like targeting pods presents several risks. Firstly, it eliminates competitive pressure, potentially leading to higher prices and reduced innovation over time. Secondly, it creates a dependency; any disruption in the contractor's operations, such as production issues, financial instability, or geopolitical factors affecting their supply chain, could directly impact the military's operational readiness. Thirdly, the government may have less leverage in negotiating future upgrades or modifications. Lastly, it can stifle the development of alternative technologies or competing suppliers in the market, potentially limiting long-term strategic options.

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

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: $27,709,773

Exercised Options: $27,709,773

Current Obligation: $26,720,074

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $679,480

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA854019D0001

IDV Type: IDC

Timeline