DoD's $193.6M Northrop Grumman contract for aircraft countermeasures lacks competition, raising value concerns

Contract Overview

Contract Amount: $19,357,869 ($19.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-01-01

End Date: 2026-12-31

Contract Duration: 1,095 days

Daily Burn Rate: $17.7K/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 $19.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT ENGINEERING REQUIREMENTS CROSS FUNCTIONAL Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs. 2. Lack of competition raises questions about whether the government is receiving the best value. 3. The duration of the contract (nearly 3 years) suggests a long-term need for these services. 4. Northrop Grumman's established role in defense contracting positions them strongly for this type of work. 5. The contract is for sustainment engineering, indicating ongoing support rather than new development. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. Without comparison to other offers, it's difficult to ascertain if the pricing is optimal. The firm-fixed-price structure provides some cost certainty, but the absence of competition means the government relies heavily on Northrop Grumman's proposed pricing. Further analysis would require access to historical pricing for similar sustainment engineering services or internal cost estimates.

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 typically occurs when only one vendor possesses the necessary capabilities, technology, or security clearances, or in cases of urgent need. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. This raises concerns about potential overpayment and the efficient use of taxpayer funds.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure. The government's negotiating position is weakened without alternative sources.

Public Impact

The U.S. Air Force benefits from the sustainment engineering of critical infrared countermeasures systems. This contract ensures the continued operational readiness of large aircraft equipped with these defense systems. The services provided are essential for maintaining the effectiveness of aircraft against modern threats. The contract supports specialized engineering roles within Northrop Grumman, likely in Illinois. The sustainment of these systems indirectly supports the broader national security mission of the Department of Defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive 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 limited market oversight.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Northrop Grumman is a recognized leader in aerospace and defense technology.
Contract ensures continued availability of essential countermeasures for aircraft safety and mission success.
Sustainment engineering is crucial for maintaining the effectiveness of complex defense systems.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and countermeasures. The market for such specialized sustainment engineering is often dominated by a few large, established defense contractors like Northrop Grumman, due to the high barriers to entry, proprietary technology, and security requirements. Comparable spending benchmarks are difficult to establish without more specific details on the systems supported, but large sustainment contracts for critical defense platforms can run into hundreds of millions or even billions of dollars over their lifecycle.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside. Given the sole-source nature and the specialized requirements, it is unlikely that small businesses were primary awardees. Further investigation would be needed to determine if Northrop Grumman has plans for small business subcontracting as part of this award. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, but typically large sole-source contracts offer fewer direct opportunities for small businesses compared to competed efforts.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. As a sole-source award, scrutiny on pricing and performance is critical. Transparency is limited due to the non-competitive nature. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected. Regular performance reviews and audits would be expected to ensure adherence to contract terms and quality standards.

Related Government Programs

Aircraft Electronic Warfare Systems
Defense Infrared Countermeasures
Aerospace Sustainment Engineering
Department of Defense Procurement
Northrop Grumman Defense Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 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 $19.4 million.

What is the period of performance?

Start: 2024-01-01. End: 2026-12-31.

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 securing sole-source and competitively awarded contracts with the Department of Defense, particularly in areas of aerospace, defense electronics, and information systems. Their track record includes numerous sustainment and support contracts for major platforms. While specific data on past sole-source sustainment engineering contracts for infrared countermeasures is not publicly detailed here, the company generally demonstrates a capacity to deliver complex technical services. However, the value and efficiency of sole-source awards are always subject to scrutiny, regardless of the contractor's general performance history. Analysis of past performance would ideally involve reviewing contract performance reports (CPARs) and any documented issues or successes on similar engagements.

How does the $193.6 million value compare to similar sustainment engineering contracts for large aircraft countermeasures?

Direct comparison of the $193.6 million value is difficult without knowing the specific type and number of aircraft, the complexity of the countermeasures systems, and the scope of 'sustainment engineering' (e.g., depot-level maintenance, software updates, component repair, engineering change proposals). However, for large, advanced military aircraft, sustainment costs can be substantial, often exceeding the initial acquisition cost over the platform's life. Contracts in the range of $50-100 million annually for comprehensive sustainment of major weapon systems are not uncommon. Given the nearly three-year duration (1095 days), this contract's annual value is approximately $65 million, which appears within a plausible range for specialized sustainment of critical defense systems, though the lack of competition prevents definitive value assessment.

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

The primary risks associated with this sole-source contract include: 1) Inflated Pricing: Without competitive bidding, the contractor may not be incentivized to offer the lowest possible price, potentially leading to higher costs for taxpayers. 2) Reduced Innovation: A lack of competition can stifle innovation as the incumbent contractor may face less pressure to improve services or develop more cost-effective solutions. 3) Vendor Lock-in: The government becomes dependent on a single provider, making it difficult and costly to switch vendors in the future, even if performance or pricing becomes unsatisfactory. 4) Limited Oversight Effectiveness: While oversight mechanisms exist, they are more critical and challenging for sole-source awards to ensure fair pricing and adequate performance, as there's no market benchmark.

What is the expected program effectiveness and impact of this contract on Air Force readiness?

The expected program effectiveness hinges on Northrop Grumman's ability to provide high-quality sustainment engineering for the infrared countermeasures (IRCM) systems. Effective sustainment ensures these critical defensive systems remain operational, updated, and capable of protecting large aircraft from missile threats. This directly contributes to Air Force readiness by enhancing survivability and allowing aircraft to conduct missions in contested environments. The contract's duration suggests a commitment to maintaining these systems over a significant period, implying their continued importance for ongoing operations and future force projection. Successful execution should lead to reduced downtime for aircraft due to IRCM issues and improved mission assurance.

How does this $193.6 million spending compare to historical spending on aircraft countermeasures sustainment by the Air Force?

Historical spending on aircraft countermeasures sustainment by the Air Force can vary significantly year-to-year and by platform. The $193.6 million over nearly three years represents an average annual spend of approximately $65 million for this specific contract. To provide a meaningful comparison, one would need to analyze total Air Force spending on IRCM sustainment across all platforms over several fiscal years. This would involve looking at budgets allocated to programs like the C-130, C-17, B-52, or fighter/bomber fleets, depending on which 'large aircraft' this contract supports. Without that broader context, it's difficult to definitively state if this $193.6 million is high, low, or average relative to historical patterns, although it signifies a substantial investment in maintaining critical defensive capabilities.

Are there specific performance metrics or Key Performance Indicators (KPIs) associated with this contract?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) for this contract. However, for sustainment engineering contracts, typical KPIs often include metrics related to system uptime/availability, response times for engineering support, turnaround time for repairs or upgrades, defect rates, and adherence to delivery schedules for technical documentation or modifications. Given the sole-source nature, the government would likely place significant emphasis on ensuring these KPIs are met and rigorously monitored through contract management reviews. The specific KPIs would be detailed within the contract's Statement of Work (SOW) and associated performance clauses.

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: $26,089,842

Exercised Options: $26,089,842

Current Obligation: $19,357,869

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