DoD awards $52.6M for aircraft targeting systems, with Northrop Grumman as sole source

Contract Overview

Contract Amount: $52,563,631 ($52.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2018-10-10

End Date: 2023-11-30

Contract Duration: 1,877 days

Daily Burn Rate: $28.0K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: ACAT III, B-2 RADAR AIDED TARGETING SYSTEM (RATS)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $52.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: ACAT III, B-2 RADAR AIDED TARGETING SYSTEM (RATS) Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant duration of over 5 years suggests a long-term need for the system. 3. The contract type (Cost Plus Incentive Fee) can lead to cost overruns if not managed carefully. 4. Focus on a specific targeting system indicates a specialized defense capability. 5. The award to a large, established defense contractor suggests a reliance on existing expertise.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized equipment. The Cost Plus Incentive Fee (CPIF) contract type, while allowing for flexibility, can incentivize contractors to increase costs to achieve higher fee percentages. Without competitive bids, it's difficult to ascertain if the $52.6 million represents a fair market price. Further analysis would require access to cost breakdowns and comparisons with similar, competitively procured systems, which are not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corp, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and can potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment. The absence of competition means the government cannot leverage multiple offers to secure the best possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring advanced targeting systems. The contract delivers critical components and services for the B-2 RADAR AIDED TARGETING SYSTEM (RATS). The geographic impact is primarily within the United States, supporting defense operations and potentially maintenance facilities. Workforce implications include specialized engineering, manufacturing, and technical support roles within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Incentive Fee contract type carries inherent risk of cost escalation.
Lack of transparency in sole-source justification makes value assessment difficult.
Long contract duration could mask inefficiencies if not closely monitored.

Positive Signals

Award to an established contractor with proven expertise in defense systems.
Focus on a critical targeting system essential for national security.
Potential for technological advancement and improved defense capabilities.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, specifically focusing on specialized electronic systems for military aircraft. The defense electronics market is characterized by high R&D costs, long product lifecycles, and significant government investment. Comparable spending benchmarks would involve other advanced avionics and targeting system procurements, which are often awarded through complex, long-term contracts due to the specialized nature of the technology.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Northrop Grumman actively engages them in its supply chain. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The Cost Plus Incentive Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and performance targets are met. Transparency is limited by the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard accountability measures. Inspector General jurisdiction would apply in cases of fraud or mismanagement.

Related Government Programs

B-2 Spirit Bomber Program
Advanced Avionics Systems
Defense Electronics Procurement
Aircraft Targeting Systems
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost Plus Incentive Fee contract type
Lack of competitive bidding
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.6 million to NORTHROP GRUMMAN SYSTEMS CORP. ACAT III, B-2 RADAR AIDED TARGETING SYSTEM (RATS)

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 $52.6 million.

What is the period of performance?

Start: 2018-10-10. End: 2023-11-30.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when a unique capability is required, there is an urgent need that cannot be met through competition, or only one responsible source exists. For a specialized system like the B-2 RADAR AIDED TARGETING SYSTEM (RATS), the justification might stem from proprietary technology, unique integration requirements with the B-2 platform, or a lack of alternative qualified suppliers. A full justification would detail these factors and demonstrate why competition is not feasible or advantageous.

How does the Cost Plus Incentive Fee (CPIF) structure impact the final cost and performance?

The Cost Plus Incentive Fee (CPIF) contract type aims to incentivize the contractor to control costs and meet performance targets. Under CPIF, the final negotiated fee is adjusted based on the relationship between the final negotiated total cost and the target cost. If the final cost is below the target, the contractor receives a higher fee percentage; if it's above, the fee is reduced. This structure encourages efficiency but also requires robust government oversight to ensure the target costs are realistic and that the contractor is genuinely motivated to achieve savings rather than simply increasing the base cost to earn a higher incentive fee. The effectiveness hinges on well-defined performance metrics and realistic cost targets.

What is the historical spending trend for the B-2 RADAR AIDED TARGETING SYSTEM (RATS) or similar systems?

The provided data only covers a single contract award of $52.6 million for the B-2 RATS from October 2018 to November 2023. It does not provide historical spending trends for this specific system or comparable systems. To assess historical spending, one would need to access historical contract databases (like FPDS or SAM.gov) for previous awards related to the B-2 RATS or similar targeting systems, looking at contract values, durations, and award types over time. This would help identify patterns of investment and potential cost escalation or reduction.

What are the key performance indicators (KPIs) associated with this contract, and how is performance being measured?

The provided data does not specify the key performance indicators (KPIs) for this contract. However, given the nature of the B-2 RADAR AIDED TARGETING SYSTEM (RATS), KPIs would likely relate to system reliability, accuracy, operational readiness, integration with the B-2 platform, and timely delivery of components or upgrades. Performance measurement under a CPIF contract is crucial, as it directly influences the contractor's fee. The government would track metrics against predefined targets, and deviations would trigger adjustments to the incentive fee, requiring detailed reporting and verification processes.

What is Northrop Grumman's track record with similar defense contracts, particularly sole-source awards?

Northrop Grumman Systems Corp is a major defense contractor with extensive experience in developing and producing complex systems for the U.S. military, including avionics and targeting systems. They have a history of large, sole-source contracts, often due to the specialized and proprietary nature of their technologies and their established role as a prime contractor on major platforms like the B-2 bomber. While their track record generally indicates capability, sole-source awards warrant scrutiny regarding pricing and competition. Analyzing their past performance on similar sole-source contracts, including any cost overruns or disputes, would provide further context on their reliability and value proposition in such situations.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,473,633

Exercised Options: $63,473,633

Current Obligation: $52,563,631

Actual Outlays: $4,707,239

Subaward Activity

Number of Subawards: 96

Total Subaward Amount: $168,445,898

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline