DoD's $158.7M contract for aircraft countermeasures awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $158,703,647 ($158.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-04-21

End Date: 2025-09-30

Contract Duration: 893 days

Daily Burn Rate: $177.7K/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 $158.7 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 on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract covers sustainment engineering for large aircraft infrared countermeasures, a critical defense capability. 3. Performance period extends over two years, indicating a need for ongoing support and maintenance. 4. The awardee, Northrop Grumman, is a major defense contractor with extensive experience in this domain. 5. Lack of competition limits opportunities for other firms and potentially reduces innovation incentives. 6. The contract's value suggests a significant investment in maintaining advanced defense systems.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The fixed-price nature of the contract provides some cost control, but the absence of competition means the government cannot be certain it secured the best possible price. Comparisons to similar sustainment contracts for advanced defense systems would be necessary to assess pricing reasonableness, but such data is not readily available in this context. The significant dollar amount warrants a thorough review of cost elements and justification for the sole-source award.

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. This typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means that multiple bidders were not considered, and the government did not benefit from the price reductions and innovation that can arise from a competitive environment. This approach can lead to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's ability to negotiate favorable terms is also diminished in a sole-source scenario.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating aircraft equipped with these countermeasures, ensuring their operational readiness and survivability. The services delivered include sustainment engineering, which encompasses maintenance, repair, and technical support for critical defense systems. The geographic impact is likely global, as Air Force aircraft operate worldwide, requiring reliable protection systems. 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 competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source award.
Reliance on a single contractor for critical sustainment engineering could create vendor lock-in.
Potential for cost overruns if not rigorously managed due to lack of competitive pressure.

Positive Signals

Awardee has established expertise in infrared countermeasures, suggesting technical capability.
Fixed-price contract provides some cost certainty for the government.
Sustainment engineering ensures continued operational readiness of vital defense assets.
Long-term contract indicates a recognized need for ongoing support.

Sector Analysis

The defense sector, particularly electronic warfare and countermeasures, is characterized by high technological complexity and significant R&D investment. This contract falls within the 'Other Electronic Component Manufacturing' NAICS code, but its function is specific to advanced defense systems. The market for such specialized components and sustainment services is often dominated by a few large, established defense contractors due to high barriers to entry, including intellectual property, specialized facilities, and security clearances. Comparable spending benchmarks are difficult to ascertain without more specific details on the technology and scope of sustainment.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, it is unlikely to directly benefit small businesses through prime contract opportunities. Any subcontracting would be at the discretion of Northrop Grumman, and without specific set-aside goals, the direct impact on the small business ecosystem is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the fixed-price structure, which incentivizes the contractor to manage costs. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Survivability Equipment
Electronic Warfare Systems
Defense Logistics Agency (DLA) Support Contracts
Air Force Sustainment and Modernization Programs
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $158.7 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 $158.7 million.

What is the period of performance?

Start: 2023-04-21. End: 2025-09-30.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to Northrop Grumman?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as "only one responsible source and no other supplies or services will satisfy the requirements of the agency," or "after solicitation of a number of sources, competition failed to result in award. " For critical defense systems like aircraft countermeasures, the justification often centers on proprietary technology, unique capabilities, or the need for seamless integration with existing platforms where only the original equipment manufacturer can provide the required sustainment engineering. A detailed review of the contract's Justification and Approval (J&A) document would be necessary to understand the precise rationale.

How does the $158.7 million contract value compare to historical spending on similar aircraft countermeasures sustainment programs?

Without specific details on the type of aircraft, the exact countermeasures system, and the scope of 'sustainment engineering,' a direct comparison to historical spending is challenging. However, $158.7 million over approximately two years (April 2023 to September 2025) represents a substantial investment. Large aircraft countermeasures are sophisticated systems, and their sustainment involves complex engineering, testing, and logistics. Historical data for similar advanced electronic warfare or survivability systems often shows multi-million dollar annual expenditures for sustainment. The value suggests a significant operational requirement and a mature, likely complex, system requiring ongoing, specialized support from the prime contractor.

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

The primary risk of a sole-source award is the potential for inflated costs due to the absence of competitive pressure. The government may not be achieving the best possible price or value for its investment. Another risk is vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility and innovation. Furthermore, without competition, there's a reduced incentive for the contractor to proactively seek cost efficiencies or introduce innovative sustainment solutions. Oversight and rigorous contract management become even more critical to mitigate these risks and ensure the government receives fair value.

What is Northrop Grumman's track record with Department of Defense contracts, particularly in the area of electronic warfare and countermeasures?

Northrop Grumman is a major defense contractor with a long and extensive history of performing work for the Department of Defense across numerous programs, including significant involvement in electronic warfare, radar systems, and aircraft survivability equipment. They are known for developing and sustaining complex defense technologies. Their track record generally indicates a high level of technical capability and program execution. However, like any large contractor, they have been involved in contracts that have faced scrutiny regarding cost, schedule, or performance. Specific performance metrics for this particular sustainment contract will only become apparent over its duration.

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

The contract's objective is to provide sustainment engineering for large aircraft infrared countermeasures. These systems are critical for protecting aircraft from heat-seeking missiles, thereby enhancing survivability in contested environments. By ensuring these systems are maintained, repaired, and technically supported, the contract directly contributes to the operational readiness of the affected Air Force platforms. This means the aircraft are more likely to be available for missions and better protected, increasing the safety of aircrews and the success probability of their missions. The sustainment ensures the technology remains effective against evolving threats.

Are there any specific performance metrics or key performance indicators (KPIs) associated with this contract that will be used to measure success?

The provided data does not detail the specific performance metrics or Key Performance Indicators (KPIs) for this contract. However, for sustainment engineering contracts, common KPIs often include metrics related to response time for support requests, repair turnaround times, system availability rates, reliability of repaired components, and adherence to technical specifications. Given the fixed-price nature, performance against these metrics would be crucial for ensuring value. The contract documents themselves would outline these specific requirements and the methods for measuring contractor performance.

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: $158,703,647

Exercised Options: $158,703,647

Current Obligation: $158,703,647

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $89,263

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