DoD's $27.2M contract for LAIRCM integration awarded to Northrop Grumman, raising questions about competition

Contract Overview

Contract Amount: $27,223,412 ($27.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-29

End Date: 2020-12-18

Contract Duration: 1,541 days

Daily Burn Rate: $17.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF GERMANY HOS BG5000 LAIRCM INTEGRATION

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $27.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF GERMANY HOS BG5000 LAIRCM INTEGRATION Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competitive bidding. 2. The contract duration of 1541 days suggests a significant, long-term need for these integration services. 3. Northrop Grumman's role as the sole awardee warrants scrutiny regarding market dynamics and potential barriers to entry. 4. The firm-fixed-price structure aims to control costs, but the lack of competition may inflate the final price. 5. Performance context is limited without specific details on the LAIRCM integration deliverables and success metrics. 6. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, indicating specialized defense needs.

Value Assessment

Rating: questionable

Benchmarking the value of this $27.2 million contract is challenging due to the lack of competitive bids. Without comparable contract data or market analysis, it's difficult to definitively assess if Northrop Grumman's pricing reflects fair market value. The sole-source nature means taxpayers did not benefit from the price discovery typically driven by a competitive bidding process. Further analysis would require understanding the specific technical requirements and the unique capabilities of Northrop Grumman in this specialized integration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This approach is typically employed when only one responsible source is available or capable of meeting the government's needs. The absence of multiple bidders means the government did not have the opportunity to solicit and evaluate offers from various companies, which could have led to a more competitive price and potentially innovative solutions.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium compared to what might have been achieved in an open bidding environment. This limits the government's ability to leverage market forces for cost savings.

Public Impact

The primary beneficiaries are likely the Department of Defense, specifically the Air Force, receiving enhanced aircraft survivability through LAIRCM integration. The services delivered involve the integration of the Large Aircraft Infrared Countermeasures (LAIRCM) system onto unspecified aircraft. The geographic impact is likely concentrated within military operational theaters where these aircraft are deployed. Workforce implications may include specialized technical personnel required for the integration and maintenance of the LAIRCM system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of transparency in the sole-source justification process hinders public understanding of necessity.
Limited performance metrics provided make it difficult to assess the true value and effectiveness of the integration.
The specific aircraft platforms for integration are not detailed, obscuring the full scope and impact.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Northrop Grumman is a known entity in defense contracting, suggesting a degree of established capability.
The contract addresses a critical defense need for aircraft survivability (LAIRCM).

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft components and integration services. The market for electronic warfare and countermeasures systems like LAIRCM is highly specialized, often dominated by a few large defense contractors. Spending in this area is driven by evolving threats and the need for advanced military capabilities. Comparable spending benchmarks would involve other contracts for aircraft modification, electronic warfare systems, and defense integration projects.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the specialized nature of LAIRCM integration and the sole-source award to a large prime contractor like Northrop Grumman, it is unlikely that significant subcontracting opportunities for small businesses were mandated or explored through a competitive process. This contract does not appear to directly support 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 Inspector General's office may conduct audits or investigations into the contract's execution and cost-effectiveness, particularly given the sole-source award. Transparency is limited by the nature of the award; however, contract modifications and performance reports would be subject to internal review and potentially public disclosure under FOIA, albeit with redactions for sensitive information.

Related Government Programs

Aircraft Modernization and Sustainment
Electronic Warfare Systems
Defense Advanced Research Projects Agency (DARPA) Programs
Tactical Aircraft Programs
Missile Defense Systems

Risk Flags

Sole-source award
Lack of competitive bidding
Limited performance transparency
Potential for cost overruns due to lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF GERMANY HOS BG5000 LAIRCM INTEGRATION

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 $27.2 million.

What is the period of performance?

Start: 2016-09-29. End: 2020-12-18.

What specific capabilities does the LAIRCM system provide, and why was Northrop Grumman the sole source for its integration?

The Large Aircraft Infrared Countermeasures (LAIRCM) system is designed to protect large military aircraft from heat-seeking missiles by detecting incoming threats and deploying countermeasures, such as flares or directed energy, to decoy or jam the missile. Northrop Grumman is a primary developer and manufacturer of the LAIRCM system itself. The sole-source justification likely stems from the need for specialized knowledge of the system's intricacies, proprietary technology, and the requirement for seamless integration with specific aircraft platforms where only Northrop Grumman possesses the necessary technical data, engineering expertise, and established processes. This often occurs when a system is highly integrated and requires the original equipment manufacturer's direct involvement for modifications or upgrades to ensure operational effectiveness and safety.

How does the $27.2 million cost compare to similar LAIRCM integration efforts or other aircraft modification contracts?

Direct comparison of the $27.2 million cost is difficult without specific details on the scope of work, the number of aircraft involved, and the complexity of the integration for this particular contract. However, integration of sophisticated defense systems onto large aircraft platforms can range from tens to hundreds of millions of dollars, depending on the system and aircraft type. Given that this is a sole-source award for a critical survivability system, the price may reflect the specialized nature of the technology and the contractor's unique position. A competitive environment might have yielded a lower price, but without benchmark data for comparable sole-source LAIRCM integrations, assessing value-for-money remains challenging. Further analysis would require access to detailed cost breakdowns and potentially classified information on threat environments.

What are the key performance indicators (KPIs) or metrics used to evaluate the success of this LAIRCM integration contract?

Specific Key Performance Indicators (KPIs) for this contract are not publicly detailed in the provided data. However, for LAIRCM integration contracts, success is typically measured by several factors. These include the successful installation and functionality of the system on the designated aircraft, demonstrated ability to detect and track infrared threats, effective deployment of countermeasures, minimal impact on aircraft performance and operability, and adherence to stringent safety and reliability standards. The system's effectiveness in real-world scenarios, though often classified, is the ultimate measure. Contract close-out would likely involve verification that all integration tasks were completed, the system meets technical specifications, and operational testing confirms its readiness.

What is Northrop Grumman's track record with the LAIRCM system and similar defense integration projects?

Northrop Grumman has a significant and established track record with the LAIRCM system, being a primary developer and integrator. They have been involved in the production, sustainment, and integration of LAIRCM onto various U.S. military aircraft platforms for many years. Their experience extends to other complex defense systems and aircraft modifications, positioning them as a key contractor in the aerospace and defense sector. This extensive history suggests a deep understanding of the technology, its operational requirements, and the challenges associated with integrating such systems into military aviation fleets. Their long-standing relationship with the Department of Defense on such programs indicates a level of trust and proven capability.

Are there any known risks associated with the integration of the LAIRCM system, and how are they being mitigated?

Risks associated with integrating complex systems like LAIRCM can include technical challenges, schedule delays, cost overruns (especially in sole-source contracts), potential impacts on aircraft performance or weight, and cybersecurity vulnerabilities. For this specific contract, the primary risk highlighted is the lack of competition, which could lead to suboptimal pricing. Mitigation strategies typically involve robust program management, detailed technical reviews, rigorous testing and validation phases, and close collaboration between the contractor and the government's technical representatives. The firm-fixed-price contract structure aims to mitigate cost overrun risks for the government, shifting that burden to the contractor. Cybersecurity protocols are also critical, given the networked nature of modern defense systems.

How has spending on LAIRCM or similar aircraft survivability systems evolved over the past decade?

Spending on LAIRCM and similar aircraft survivability systems has generally seen consistent or increasing investment over the past decade, driven by evolving global threats, particularly from sophisticated surface-to-air missile systems. Defense budgets prioritize force protection and survivability, making systems like LAIRCM a critical component of air operations. While specific figures fluctuate based on program maturity, new development, and procurement cycles, the overall trend reflects a sustained need for advanced countermeasures. Factors influencing spending include geopolitical tensions, the proliferation of advanced weaponry, and the operational tempo of military forces. Contracts for integration, upgrades, and sustainment of these systems represent a significant portion of this spending.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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: $27,223,412

Exercised Options: $27,223,412

Current Obligation: $27,223,412

Subaward Activity

Number of Subawards: 52

Total Subaward Amount: $526,920,298

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline