DoD awards $45.8M for LITENING targeting pods to Northrop Grumman, a sole-source contract

Contract Overview

Contract Amount: $45,786,602 ($45.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-30

End Date: 2026-12-31

Contract Duration: 975 days

Daily Burn Rate: $47.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LITENING CATP TARGETING PODS

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $45.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LITENING CATP TARGETING PODS Key points: 1. Contract awarded to a single source raises questions about price competitiveness. 2. Long-term contract duration suggests a sustained need for these targeting systems. 3. The award is for engineering services, indicating a focus on development or sustainment. 4. Geographic location of the contractor in Illinois may have local economic implications. 5. The absence of competition could limit opportunities for innovative solutions from other firms. 6. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The Cost Plus Fixed Fee (CPFF) structure, while allowing for flexibility, carries inherent risks of cost escalation. Without comparable contract data or a competitive bidding process, it's difficult to definitively assess if the government is receiving optimal value for its investment in these LITENING CATP targeting pods. The fixed fee component provides some cost certainty, but the 'cost' portion is subject to variation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities, urgent needs), they generally result in less price discovery and potentially higher costs for the government compared to fully competed contracts.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost savings that could arise from a bidding war among potential suppliers. This could translate to a higher overall expenditure for these critical targeting pods.

Public Impact

The primary beneficiaries are the Department of the Air Force and its operational units requiring advanced targeting capabilities. The contract delivers LITENING CATP targeting pods, essential for precision strikes and intelligence gathering. The geographic impact is primarily within Illinois, where Northrop Grumman Systems Corporation is located, potentially supporting local jobs and the regional economy. Workforce implications include the employment of engineers and technical staff at Northrop Grumman to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
CPFF contract type can incentivize higher spending if not rigorously overseen.
Lack of transparency in the justification for sole-sourcing.
Potential for cost overruns due to the nature of CPFF contracts.
Limited opportunity for small businesses to participate as prime contractors.

Positive Signals

Northrop Grumman is an established defense contractor with a track record in targeting systems.
The LITENING pod is a proven and widely used system, suggesting reliability.
The contract duration indicates a stable, long-term need for this capability.
The fixed fee component provides a baseline of cost certainty for the contractor's profit.

Sector Analysis

The defense sector, particularly aerospace and defense electronics, is characterized by high R&D costs, long product cycles, and significant government procurement. Northrop Grumman is a major player in this market, specializing in advanced systems like targeting pods. Spending in this area is critical for maintaining air superiority and enabling precision warfare. Comparable spending benchmarks are difficult to establish for sole-source awards, but the overall market for defense electronics and targeting systems is substantial, measured in billions of dollars annually.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside. Consequently, small businesses are unlikely to benefit directly as prime contractors. Subcontracting opportunities may exist, but their extent and accessibility are not detailed in the provided data. The sole-source nature of the award limits the broader impact on the small business ecosystem within the defense supply chain for 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 typically embedded within the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

LITENING Targeting Pod Program
Advanced Targeting Systems Procurement
Air Force Avionics and Electronics Contracts
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Systems

Risk Flags

Sole Source Justification
Cost Plus Fixed Fee Risks
Lack of Competition
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LITENING CATP 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 $45.8 million.

What is the period of performance?

Start: 2024-04-30. End: 2026-12-31.

What is Northrop Grumman's track record with the LITENING targeting pod program?

Northrop Grumman has a long-standing history with the LITENING targeting pod, having developed and produced various iterations of the system for the U.S. Air Force and allied nations. The LITENING pod is a widely recognized and deployed electro-optical/infrared (EO/IR) targeting system known for its precision and reliability. The company has consistently upgraded the system to incorporate new technologies and enhance its capabilities, such as improved resolution, longer range, and integration with newer aircraft platforms. Their extensive experience suggests a deep understanding of the system's requirements and a proven ability to deliver and sustain it, which likely factored into the sole-source justification.

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

Cost Plus Fixed Fee (CPFF) contracts are common in defense procurement, especially for research, development, and complex system integration where the final costs are difficult to estimate precisely upfront. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing their profit. This differs from Fixed Price contracts, where the contractor agrees to a set price regardless of actual costs, offering more cost certainty to the government but potentially higher risk for the contractor. Cost Plus Incentive Fee (CPIF) contracts, on the other hand, adjust the fee based on performance against pre-defined targets. While CPFF provides flexibility, it requires robust government oversight to control costs, as the contractor has less financial incentive to minimize expenses compared to a fixed-price arrangement.

What are the primary risks associated with a sole-source award for critical defense equipment like targeting pods?

The primary risks associated with a sole-source award for critical defense equipment are reduced price competition, potentially leading to higher costs for taxpayers, and a lack of incentive for the sole provider to innovate or improve efficiency aggressively. Without competing bids, the government loses the opportunity to leverage market forces to secure the best possible price and terms. Furthermore, reliance on a single supplier can create supply chain vulnerabilities and reduce flexibility if the contractor's capabilities or business situation changes. It also limits opportunities for other capable companies to enter the market or offer alternative solutions, potentially stifling technological advancement in the long run.

What is the typical performance context for LITENING targeting pods within the Air Force's operational framework?

LITENING targeting pods are a cornerstone of the U.S. Air Force's precision strike and intelligence, surveillance, and reconnaissance (ISR) capabilities. They are employed across a wide range of tactical aircraft, including F-16s, A-10s, and AV-8Bs, enabling pilots to identify, track, and engage targets with high accuracy, day or night, and in adverse weather conditions. The pods integrate advanced sensors, including infrared and TV cameras, and laser designators, allowing for the employment of laser-guided munitions. Their performance context is crucial for modern air combat operations, providing aircrews with the situational awareness and targeting precision necessary to minimize collateral damage and achieve mission objectives effectively.

How does historical spending on LITENING targeting pods compare to this award, and what does it indicate?

Historical spending data on LITENING targeting pods would reveal a pattern of consistent investment by the Department of Defense, reflecting the system's enduring importance. Previous awards, whether competitive or sole-source, would show the typical price points for procurement and sustainment. A significant sole-source award like this one, especially if it represents a substantial increase or a continuation of a long-term sole-source strategy, warrants scrutiny. It could indicate evolving requirements, upgrades, or simply a sustained reliance on Northrop Grumman's established solution. Analyzing historical spending trends helps in assessing whether current pricing is anomalous or consistent with past investments, providing a basis for evaluating value-for-money.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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: $45,786,602

Exercised Options: $45,786,602

Current Obligation: $45,786,602

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $2,235,112

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