DoD's $147M Northrop Grumman contract for aircraft countermeasures faces scrutiny over competition and value

Contract Overview

Contract Amount: $146,685,230 ($146.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-05-27

End Date: 2024-10-31

Contract Duration: 1,253 days

Daily Burn Rate: $117.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSS FUNCTIONAL

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $146.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSS FUNCTIONAL Key points: 1. Contract awarded via sole-source negotiation, limiting price discovery and potentially increasing costs. 2. Significant contract value raises questions about cost-effectiveness and alternative solutions. 3. Lack of competition may indicate limited market availability or strategic sourcing decisions. 4. Performance period extends over three years, requiring ongoing monitoring of deliverables. 5. Focus on sustainment engineering suggests a long-term commitment to existing platforms. 6. Geographic concentration in Illinois for a national defense program.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized requirements for infrared countermeasures. Without competitive bids, it's difficult to ascertain if the $146.7 million price represents a fair market value. Comparisons to similar sustainment engineering contracts for advanced defense systems would be necessary to provide a more robust assessment, but such data is often proprietary or not publicly available. The firm-fixed-price structure offers some cost certainty, but the absence of competition limits the government's ability to negotiate the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means that the Department of Defense did not receive multiple proposals, which limits the government's ability to compare pricing and technical solutions from various vendors. This can lead to higher costs for taxpayers and potentially less innovation compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings and innovation that typically arise from a competitive bidding process. This can result in higher overall expenditure for the government.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring advanced aircraft protection systems. The contract delivers sustainment engineering services for large aircraft infrared countermeasures, crucial for aircraft survivability. The geographic impact is concentrated in Illinois, where Northrop Grumman Systems Corporation's operations are located. Workforce implications include employment for engineers, technicians, and support staff involved in the sustainment and development of these critical systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in the negotiation process for sole-source contracts.
Dependence on a single contractor for critical sustainment engineering.
Potential for cost overruns if not closely managed due to limited oversight.
Specialized nature of the technology may limit future contractor flexibility.

Positive Signals

Northrop Grumman is a major defense contractor with extensive experience in aerospace and defense systems.
Firm-fixed-price contract provides cost predictability for the government.
Focus on sustainment engineering ensures continued operational readiness of critical aircraft systems.
Long-term contract duration suggests a strategic alignment with DoD's needs.
The contract addresses a critical national security requirement for aircraft survivability.

Sector Analysis

The market for aircraft infrared countermeasures and associated sustainment engineering is highly specialized, dominated by a few large defense contractors. This sector requires significant R&D investment and adherence to stringent military specifications. Spending in this area is driven by the need to protect high-value aerial assets from evolving threats. Comparable spending benchmarks are difficult to establish publicly due to the classified nature of some technologies and the unique requirements of each platform. The overall defense electronics manufacturing sector is substantial, but contracts for specific countermeasure systems are niche.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman Systems Corporation, is a large aerospace and defense company. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means that small businesses are unlikely to be the primary recipients of this contract funding, though they may participate indirectly through subcontracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, given its role as the servicing agency. The firm-fixed-price structure provides a degree of cost control, but the sole-source nature necessitates diligent monitoring of performance, deliverables, and adherence to contract terms. Accountability measures would involve performance reviews, milestone tracking, and potential penalties for non-compliance. Transparency is limited due to the sole-source award and the sensitive nature of defense technologies. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Survivability Equipment
Avionics Systems
Defense Electronics Manufacturing
Aerospace Engineering Services
Military Aircraft Sustainment

Risk Flags

Sole-source award
Lack of competitive bidding
High contract value
Specialized technology
Long-term sustainment requirement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $146.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSS FUNCTIONAL

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 $146.7 million.

What is the period of performance?

Start: 2021-05-27. End: 2024-10-31.

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

Northrop Grumman Systems Corporation has a long history of working with the Department of Defense on various sole-source and competed contracts, particularly in aerospace and defense systems. Their track record includes developing and sustaining complex platforms and components, often involving specialized technologies like infrared countermeasures. While specific details on past sole-source sustainment contracts for similar systems are often proprietary, the company generally possesses the technical expertise and infrastructure required for such work. However, the absence of competition in sole-source awards means that performance and value are primarily assessed against the agreed-upon contract terms rather than against market alternatives. Historical performance data, including any past issues or successes with sustainment engineering for critical defense systems, would be crucial for a comprehensive assessment of their capability and reliability in this specific instance.

How does the $146.7 million contract value compare to industry benchmarks for similar aircraft countermeasure sustainment engineering services?

Directly comparing the $146.7 million contract value to public industry benchmarks for similar aircraft countermeasure sustainment engineering services is challenging due to several factors. Firstly, the 'sustainment engineering' aspect is broad and can encompass a wide range of activities, from software updates and diagnostics to hardware maintenance and lifecycle support. Secondly, infrared countermeasures are highly specialized and often proprietary technologies, meaning that the specific systems and their support requirements vary significantly. Thirdly, the sole-source nature of this award means there was no competitive bidding process to establish a market-driven price. To perform a robust benchmark, one would need access to detailed cost breakdowns, the specific technical scope of work, and data from comparable sole-source or negotiated contracts for similar advanced defense systems, which are typically not publicly available. Without such granular data, any comparison remains speculative.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a contract of this magnitude ($146.7 million) on a sole-source basis are significant. Firstly, the lack of competition means the Department of Defense (DoD) may not be achieving the best possible price, potentially leading to higher costs for taxpayers. Without competing bids, there's less incentive for the contractor to offer the most cost-effective solution. Secondly, there's a risk of reduced innovation, as the contractor may not feel the same pressure to develop novel or more efficient approaches compared to a competitive environment. Thirdly, sole-source awards can sometimes indicate a lack of market availability or a contractor's unique control over critical technology, which can create long-term dependencies and reduce future flexibility. Finally, oversight becomes even more critical to ensure the contractor delivers the required quality and performance within the agreed-upon terms, as there are no alternative providers to switch to if issues arise.

What is the expected impact of this contract on the operational readiness and survivability of the affected aircraft platforms?

This contract is expected to have a positive impact on the operational readiness and survivability of the affected aircraft platforms by ensuring the continued sustainment engineering for their large aircraft infrared countermeasures (IRCM). IRCM systems are critical defensive suites designed to protect aircraft from heat-seeking missiles, a significant threat in modern combat environments. By providing ongoing engineering support, this contract aims to maintain, upgrade, and troubleshoot these complex systems. This includes ensuring the systems are functioning optimally, addressing any technical deficiencies, and potentially incorporating necessary updates to counter evolving threats. Ultimately, effective sustainment engineering directly contributes to the reliability of these defensive systems, thereby enhancing the survivability of the aircraft and the safety of their crews during missions.

How does this contract fit into the broader historical spending patterns for aircraft countermeasures within the Department of Defense?

This contract for $146.7 million for sustainment engineering of large aircraft infrared countermeasures fits within a broader historical pattern of significant DoD investment in aircraft survivability equipment. The DoD consistently allocates substantial funds towards protecting its aerial assets from various threats, including infrared-guided missiles. Spending in this area is driven by the continuous evolution of threat technologies and the need to maintain a technological edge. Contracts for countermeasures, including their development, procurement, and sustainment, represent a consistent and often substantial portion of the defense budget. While the specific amount of $146.7 million is significant for a single contract, it is likely part of a larger, ongoing lifecycle support strategy for these critical systems across the Air Force and potentially other branches, reflecting a sustained commitment to aircraft protection over many years.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

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: $146,685,230

Exercised Options: $146,685,230

Current Obligation: $146,685,230

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $279,630

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