Northrop Grumman awarded $18M for LAIRCM follow-on, a sole-source contract with a 5-year duration

Contract Overview

Contract Amount: $17,990,715 ($18.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2010-12-29

End Date: 2016-01-29

Contract Duration: 1,857 days

Daily Burn Rate: $9.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HOS INDIA LAIRCM FOLLOW-ON

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $18.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: HOS INDIA LAIRCM FOLLOW-ON Key points: 1. The contract value of $17.99 million for the LAIRCM follow-on indicates a significant investment in critical defense technology. 2. As a sole-source award, the absence of competitive bidding raises questions about potential price efficiencies and market responsiveness. 3. The 5-year contract duration suggests a long-term need for the specified services or equipment, implying ongoing program importance. 4. The firm-fixed-price contract type shifts cost risk to the contractor, which can be beneficial for budget predictability. 5. The lack of small business participation noted in the award details warrants further investigation into subcontracting opportunities. 6. The contract's focus on electronic components highlights a specific, yet crucial, aspect of the broader defense systems lifecycle.

Value Assessment

Rating: fair

Benchmarking the value of this $17.99 million contract is challenging without direct comparisons to similar sole-source LAIRCM follow-on procurements. The firm-fixed-price structure is generally favorable for cost control, but the lack of competition means there's no direct market validation of the pricing. Without competitive bids, it's difficult to definitively assess if the price represents optimal value for the taxpayer. Further analysis would require access to the contractor's cost breakdown and historical pricing for comparable systems.

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 Corporation, was solicited. This typically occurs when a unique capability is required, or when it's deemed impractical or uneconomical to solicit bids from multiple sources, such as in follow-on procurements where specialized knowledge or tooling is already invested. The limited competition means there was no direct price negotiation against market alternatives.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the government lacks the leverage of multiple offers to drive down prices.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military requiring the LAIRCM system for aircraft protection. The services delivered likely involve the sustainment, upgrade, or production of components for the Large Aircraft Infrared Countermeasures system. The geographic impact is national, supporting defense readiness across various Air Force installations where these aircraft operate. Workforce implications include specialized roles in aerospace engineering, manufacturing, and logistics at Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
Sole-source nature limits transparency in cost justification.
Contract duration of 5 years without re-competition could mask inefficiencies.
No indication of small business participation or set-asides.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Follow-on nature suggests continuity and potential for leveraging existing infrastructure.
Award to an established defense contractor implies familiarity with the technology.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and countermeasures systems. The market for such specialized defense technologies is often characterized by high barriers to entry, significant R&D investment, and a limited number of qualified prime contractors. Spending in this sub-sector is driven by evolving threat landscapes and the need for advanced protection capabilities for military platforms. Comparable spending benchmarks would involve other large-scale defense system sustainment or upgrade contracts.

Small Business Impact

The award details indicate that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals. This suggests that the prime contractor, Northrop Grumman, is expected to perform the majority of the work. Further investigation would be needed to determine if any subcontracting opportunities were made available to small businesses within the supply chain for this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified goods or services. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if performance issues arise.

Related Government Programs

Aircraft Survivability Equipment
Electronic Warfare Systems
Department of Defense Procurement
Northrop Grumman Defense Contracts
Air Force Sustainment Programs

Risk Flags

Sole-source award
Lack of competition
Potential for price escalation
Limited transparency on cost justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. HOS INDIA LAIRCM FOLLOW-ON

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 $18.0 million.

What is the period of performance?

Start: 2010-12-29. End: 2016-01-29.

What is the historical spending trend for LAIRCM systems, and how does this $17.99 million award compare?

Analyzing historical spending on Large Aircraft Infrared Countermeasures (LAIRCM) systems is crucial for contextualizing this $17.99 million award. While specific aggregate spending figures for LAIRCM are not publicly itemized in a single database, it is known to be a significant program within the Department of Defense's electronic warfare and aircraft survivability portfolios. Awards for LAIRCM components, sustainment, and upgrades have historically been substantial, often running into tens or hundreds of millions of dollars annually across various contracts and platforms. This particular $17.99 million award for a follow-on effort represents a specific slice of that broader spending. Without access to detailed historical contract data for this specific follow-on effort or comparable LAIRCM procurements, it's difficult to definitively state if this amount is higher or lower than previous iterations or similar systems. However, given the nature of defense contracting and the specialized technology involved, such figures are not unusual for sustainment or component-level contracts over a multi-year period.

What are the specific risks associated with sole-source defense contracts like this one?

Sole-source defense contracts, such as the $17.99 million award to Northrop Grumman for LAIRCM follow-on, carry inherent risks. The primary risk is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price, leading to inefficient use of taxpayer funds. Another risk is reduced innovation; contractors may have less incentive to develop cost-saving efficiencies or introduce technological advancements if they are guaranteed the contract regardless of alternatives. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single supplier, potentially creating vendor lock-in and limiting future flexibility. Ensuring adequate oversight and robust negotiation strategies becomes paramount to mitigate these risks and secure the best value possible under these circumstances.

How does the firm-fixed-price (FFP) contract type impact cost control and risk for this LAIRCM follow-on contract?

The firm-fixed-price (FFP) contract type for this $17.99 million LAIRCM follow-on award is designed to provide cost certainty for the government. Under an FFP agreement, the contractor, Northrop Grumman, is obligated to complete the work for a predetermined price, regardless of their actual costs. This shifts the majority of the cost risk from the government to the contractor. If Northrop Grumman's expenses exceed their estimates, their profit margin will decrease; conversely, if they manage costs effectively, their profit will increase. This structure incentivizes the contractor to control costs efficiently and manage performance diligently to meet the contract requirements within the agreed-upon budget. For the government, this means predictable spending and protection against cost overruns, assuming the initial price negotiated was fair and reasonable.

What is Northrop Grumman's track record with LAIRCM systems or similar defense electronics?

Northrop Grumman has a significant and established track record in developing and producing advanced defense electronics, including systems related to aircraft survivability and countermeasures. They are a major prime contractor for numerous U.S. Department of Defense programs. Specifically concerning the Large Aircraft Infrared Countermeasures (LAIRCM) system, Northrop Grumman has been a key player, often involved in its development, integration, and sustainment across various military aircraft platforms. Their long-standing involvement suggests a deep understanding of the system's complexities, performance requirements, and the evolving threat environment it addresses. This extensive experience with LAIRCM and similar sophisticated defense technologies positions them as a capable provider for this follow-on contract, although the sole-source nature still necessitates careful oversight of their performance and pricing.

Are there any specific performance metrics or deliverables associated with this $17.99 million contract?

While the provided data does not detail the specific performance metrics or deliverables for this $17.99 million LAIRCM follow-on contract, it can be inferred based on the contract type and its nature. As a firm-fixed-price contract, the core deliverable is the successful completion of the specified work, likely involving the provision of electronic components, sustainment services, or upgrades for the LAIRCM system, within the agreed-upon timeframe (ending January 29, 2016, from a December 29, 2010 start). Performance metrics would typically be outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). These could include adherence to technical specifications, delivery schedules, quality standards, and potentially reliability or operational readiness targets for the components or services provided. Failure to meet these would constitute a breach of contract, with potential remedies for the government.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Electronic Capacitor Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $18,094,315

Exercised Options: $18,094,315

Current Obligation: $17,990,715

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline