DoD's $91.9M contract for aircraft countermeasures awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $91,907,479 ($91.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-02-28

End Date: 2026-10-30

Contract Duration: 1,705 days

Daily Burn Rate: $53.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSSFUNTIONAL

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $91.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSSFUNTIONAL Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and lack of market pressure. 2. The contract's duration of over four years suggests a long-term need for these critical defense systems. 3. Focus on sustainment engineering indicates a need for ongoing support and maintenance of existing infrared countermeasures. 4. The absence of competition limits opportunities for other capable firms to offer potentially more cost-effective solutions. 5. Performance is tied to a firm-fixed-price structure, which can offer cost certainty but may not incentivize efficiency without competition. 6. The contract's value, while significant, needs to be benchmarked against similar sustainment contracts for proper value assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this $91.9 million contract is challenging without detailed cost breakdowns and comparisons to similar sole-source sustainment contracts. The firm-fixed-price structure provides some cost certainty, but the lack of competition means there's no direct market comparison to assess if the pricing is truly competitive or reflects a premium for a non-contested award. Without competitive bids, it's difficult to ascertain if the government is receiving optimal value for its investment in these critical aircraft countermeasures.

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, technology, or when urgency dictates a rapid award. The lack of competition means that potential cost savings that could arise from a bidding process are unlikely to be realized, and the government may not benefit from the innovation or efficiency that multiple bidders might offer.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price, potentially leading to higher overall spending for the Department of Defense.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating aircraft equipped with infrared countermeasures, ensuring enhanced survivability. Services delivered include sustainment engineering, crucial for maintaining the operational readiness and effectiveness of these vital defense systems. The geographic impact is national, supporting Air Force operations across various bases and deployment locations. Workforce implications include the continued employment of specialized engineers and technicians at Northrop Grumman, maintaining critical skill sets within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Lack of competition may reduce pressure on contractor to innovate or improve efficiency.
Sustainment engineering costs can escalate if not carefully managed and benchmarked.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Focus on sustainment ensures continued operational capability of critical defense assets.
Award to an established contractor like Northrop Grumman suggests a known quantity in terms of capability.

Sector Analysis

The market for aircraft countermeasures and related sustainment engineering is a specialized segment within the broader aerospace and defense industry. This sector is characterized by high technological barriers to entry and significant government investment. Spending in this area is driven by the need to protect military aircraft from evolving threats. Comparable spending benchmarks would involve analyzing other sustainment contracts for complex defense systems, where long-term support and specialized engineering are paramount.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being Northrop Grumman Systems Corporation. There is no explicit information regarding subcontracting plans for small businesses within this specific award. The absence of a set-aside suggests that opportunities for small businesses may be limited unless they are part of Northrop Grumman's supply chain for this particular contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance requirements and reporting obligations. Transparency is generally maintained through contract databases, though detailed cost justifications for sole-source awards may be less publicly accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Survivability Equipment
Airborne Electronic Warfare Systems
Defense Logistics Agency Support Contracts
Department of the Air Force Sustainment Programs

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency in pricing justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $91.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSSFUNTIONAL

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 $91.9 million.

What is the period of performance?

Start: 2022-02-28. End: 2026-10-30.

What is Northrop Grumman's track record with similar sole-source sustainment contracts for the Department of Defense?

Northrop Grumman has a long history of performing complex sustainment and engineering services for various Department of Defense programs, often as a prime contractor on sole-source or limited-competition awards due to their specialized capabilities and established relationships. Their track record includes extensive work on aircraft systems, electronic warfare, and integrated logistics support. While specific details on past sole-source sustainment contracts for infrared countermeasures are not provided here, their overall performance in similar large-scale defense sustainment efforts is generally considered robust, though subject to ongoing program reviews and oversight. Analyzing past performance metrics, delivery timeliness, and cost control on comparable contracts would provide a more granular assessment of their suitability and value proposition in this specific instance.

How does the $91.9 million value compare to other sustainment contracts for infrared countermeasures?

Directly comparing the $91.9 million value of this contract to other sustainment contracts for infrared countermeasures is difficult without access to a comprehensive database of similar awards, including their scope, duration, and specific systems supported. However, for complex military aircraft systems, sustainment engineering contracts of this magnitude are not uncommon, especially when they span several years and involve critical, technologically advanced components. The value is influenced by factors such as the number of aircraft supported, the complexity of the countermeasures, the required level of engineering support, and the specific threat environment. A thorough benchmark analysis would require identifying contracts with similar technical requirements, contract types (firm-fixed-price), and durations, ideally from different branches of the military or allied nations, to establish a more accurate market comparison.

What are the primary risks associated with a sole-source award for aircraft countermeasures sustainment?

The primary risks associated with a sole-source award for aircraft countermeasures sustainment include a lack of competitive pricing, potentially leading to higher costs for the government. Without competition, there is reduced incentive for the contractor to innovate, improve efficiency, or offer the most cost-effective solutions. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch vendors in the future. Furthermore, sole-source awards can sometimes be perceived as less transparent, raising concerns about fairness and the optimal use of taxpayer funds. Effective risk mitigation requires robust contract oversight, detailed performance metrics, and potentially periodic reviews to ensure continued value.

How effective is firm-fixed-price contracting in managing costs for long-term sustainment engineering?

Firm-fixed-price (FFP) contracting is generally considered effective in managing costs for long-term sustainment engineering by shifting cost-risk to the contractor. Under an FFP contract, the contractor agrees to a set price for the work, regardless of their actual costs. This provides cost certainty for the government and incentivizes the contractor to control their expenses efficiently. However, for complex, long-term sustainment efforts, the initial FFP may need to be carefully negotiated based on realistic projections, and scope creep must be rigorously managed to prevent costly change orders. While FFP offers predictability, its effectiveness in ensuring the lowest possible price is maximized when combined with competitive bidding. Without competition, the FFP price itself might be higher than it would be in a competitive scenario.

What is the historical spending pattern for infrared countermeasures sustainment within the Department of the Air Force?

Historical spending patterns for infrared countermeasures (IRCM) sustainment within the Department of the Air Force (DAF) typically show consistent, significant investment driven by the ongoing need to protect aircrews and aircraft from evolving missile threats. These expenditures are often characterized by multi-year contracts for sustainment, upgrades, and engineering support, reflecting the long lifecycle of military aircraft and the continuous development of countermeasure technologies. Spending can fluctuate based on modernization programs, fleet size, operational tempo, and the introduction of new threat intelligence. Analyzing past DAF budgets and contract awards related to IRCM systems would reveal trends in annual spending, the prevalence of sole-source versus competitive awards, and the average duration and value of sustainment contracts over time.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $91,907,479

Exercised Options: $91,907,479

Current Obligation: $91,907,479

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $2,320,132

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA863819D0001

IDV Type: IDC

Timeline