DoD's $146M Northrop Grumman contract for aircraft countermeasures faces scrutiny over competition and value

Contract Overview

Contract Amount: $146,099,074 ($146.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-08-19

End Date: 2027-02-28

Contract Duration: 923 days

Daily Burn Rate: $158.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT AND 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 $146.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT AND ENGINEERING REQUIREMENTS CROSS FUNCTIONAL Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Limited competition may lead to higher costs for taxpayers compared to a more open bidding process. 3. The contract's duration and value suggest a significant, long-term commitment to this specific technology. 4. Performance context is crucial to determine if the acquired countermeasures meet evolving defense needs. 5. Sector positioning highlights the reliance on established players for critical defense systems. 6. Risk indicators include potential for cost overruns and limited innovation due to lack of competition.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar sole-source awards. 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. Without competitive bids, it's difficult to ascertain if the $146 million represents a fair market value for the infrared countermeasures, sustainment, and engineering services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one vendor possesses the necessary capabilities, technology, or security clearances, or in cases of urgent need. The lack of multiple bidders means the government did not benefit from price discovery through a competitive bidding process, potentially resulting in a higher price than if multiple firms had vied for the contract.

Taxpayer Impact: Taxpayers may be paying a premium for these critical defense systems due to the absence of competitive pressure to drive down costs. The government's negotiating position is weakened without alternative offers.

Public Impact

The primary beneficiaries are the U.S. Air Force units equipped with advanced infrared countermeasures, enhancing aircraft survivability. Services delivered include acquisition, sustainment, and engineering support for these vital defense systems. The geographic impact is national, supporting Air Force operations across various bases and deployment locations. Workforce implications include continued employment for specialized engineers and technicians at Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Potential for vendor lock-in with limited future alternatives.
Oversight is critical to ensure performance and prevent scope creep in a sole-source environment.

Positive Signals

Firm fixed-price contract provides cost predictability.
Northrop Grumman is an established defense contractor with relevant expertise.
Sustainment and engineering support ensure long-term operational readiness.

Sector Analysis

The defense electronics sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. This contract falls within the 'Other Electronic Component Manufacturing' NAICS code, reflecting the specialized nature of infrared countermeasures. Spending in this area is driven by evolving threats and the need for advanced aircraft protection. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition contracts for similar advanced defense systems.

Small Business Impact

There is no indication of a small business set-aside for this contract, and the prime contractor, Northrop Grumman, is a large business. The contract's value and specialized nature suggest that subcontracting opportunities for small businesses may exist, particularly in component manufacturing or specialized support services. However, the primary award does not directly benefit small businesses through set-asides.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods and services. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports should be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Survivability Equipment
Defense Electronics Manufacturing
Air Force Procurement
Northrop Grumman Defense Contracts
Infrared Countermeasures Systems

Risk Flags

Sole-source award
Lack of competitive bidding
High contract value
Defense sector reliance on large contractors

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $146.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LARGE AIRCRAFT INFRARED COUNTERMEASURES ACQUISITION SUSTAINMENT AND 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 $146.1 million.

What is the period of performance?

Start: 2024-08-19. End: 2027-02-28.

What is Northrop Grumman's track record with similar large sole-source defense contracts?

Northrop Grumman has a long history of securing large, often sole-source or limited-competition contracts with the Department of Defense across various platforms and systems. Their track record includes major programs in aerospace, defense electronics, and information systems. While this demonstrates their capability and established relationship with the DoD, it also underscores the pattern of awarding significant contracts without open competition. Analyzing past performance on similar sole-source awards for electronic warfare or countermeasure systems would provide further context on their ability to deliver within budget and schedule, and whether cost overruns have been a recurring issue in such arrangements.

How does the $146 million value compare to industry benchmarks for similar aircraft countermeasures?

Directly comparing the $146 million value is difficult without specific details on the scope of 'acquisition, sustainment, and engineering requirements.' However, advanced infrared countermeasures systems are inherently expensive due to complex technology, rigorous testing, and specialized manufacturing. Industry benchmarks for similar systems, especially those integrated into large aircraft platforms like fighters or bombers, can range from tens to hundreds of millions of dollars over the life of a program. The sole-source nature of this award means a direct price comparison to competitive bids is impossible, making it crucial to rely on internal government cost analyses and historical data for similar sole-source procurements to assess value for money.

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

The primary risks associated with a sole-source award of this magnitude include potential for inflated pricing due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and vendor lock-in. Taxpayers may bear a higher cost than necessary. There's also a risk that the government's negotiating leverage is diminished, potentially leading to less favorable terms. Furthermore, if the contractor faces production issues or significant cost increases, the government has limited recourse without a competitive alternative. Robust contract oversight and performance management are critical to mitigate these risks.

How effective are infrared countermeasures in addressing current and future aerial threats?

Infrared countermeasures (IRCM) are a critical component of modern aircraft survivability, designed to protect against heat-seeking missiles. They function by detecting incoming threats and deploying countermeasures, such as flares or directed energy, to decoy or jam the missile's guidance system. Their effectiveness is continually challenged by advancements in missile technology. While IRCM significantly enhances survivability against many legacy and current threats, the evolving nature of aerial warfare, including the development of more sophisticated missile seekers and countermeasures-resistant technologies, necessitates ongoing research, development, and sustainment to maintain their efficacy. This contract's focus on sustainment and engineering suggests an effort to keep these systems relevant.

What is the historical spending trend for aircraft countermeasures within the Department of Defense?

Spending on aircraft countermeasures, including infrared systems, has been a consistent and significant part of the Department of Defense's budget for decades. This spending fluctuates based on geopolitical threats, technological advancements, and the fielding of new aircraft platforms requiring updated protection. Historically, the DoD has allocated billions of dollars towards electronic warfare and aircraft survivability equipment. Contracts for these systems often involve large, multi-year commitments, frequently awarded to major defense contractors. The trend reflects a continuous effort to counter evolving threats, often leading to substantial, long-term investments in specialized technologies like IRCM.

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

While the provided data does not detail specific performance metrics or Key Performance Indicators (KPIs) for this contract, firm fixed-price contracts generally imply that the contractor is responsible for meeting defined technical specifications, delivery schedules, and quality standards. For sustainment and engineering requirements, KPIs would typically relate to system availability, response times for support, successful integration of upgrades, and adherence to maintenance schedules. The Department of the Air Force would have established these metrics within the contract's statement of work. Regular performance reviews and audits would be conducted to ensure compliance and assess the effectiveness of the countermeasures.

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: $146,099,074

Exercised Options: $146,099,074

Current Obligation: $146,099,074

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $338,662

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