DoD's $118M NATO AWACS contract awarded to Northrop Grumman for search and detection systems

Contract Overview

Contract Amount: $118,233,813 ($118.2M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2006-11-03

End Date: 2015-12-22

Contract Duration: 3,336 days

Daily Burn Rate: $35.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NATO AWACS LAIRCM PROGRAM

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $118.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NATO AWACS LAIRCM PROGRAM Key points: 1. Contract awarded for critical airborne early warning and control systems. 2. Sole-source award raises questions about price discovery and potential overpayment. 3. Long contract duration (3336 days) suggests a need for sustained support. 4. Fixed-price contract type aims to control costs, but initial pricing needs scrutiny. 5. The contract supports advanced sensor and navigation systems for military aircraft. 6. Geographic location of performance is Illinois.

Value Assessment

Rating: questionable

Benchmarking the value of this $118 million contract is challenging without specific details on the systems procured and their technological sophistication. However, the sole-source nature of the award, coupled with a long performance period, suggests a potential for higher-than-market pricing. Without competitive bids, it's difficult to ascertain if the government secured the best possible value. Further analysis would require comparing the unit costs of similar systems or the total cost against the capabilities delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution is obtained. It also raises concerns about potential vendor lock-in.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, the government cannot be certain it received the lowest possible price for these specialized systems.

Public Impact

The primary beneficiaries are the Department of the Air Force and NATO allies relying on advanced airborne surveillance capabilities. The contract delivers critical search, detection, navigation, and guidance systems for military aircraft. Services are likely delivered to support global military operations and intelligence gathering. The contract has implications for the aerospace and defense industry workforce, particularly in specialized manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long contract duration may lead to cost overruns if not managed effectively.
Lack of transparency in sole-source justification requires scrutiny.

Positive Signals

Firm fixed-price contract type provides cost certainty.
Contract supports critical national defense and allied security capabilities.
Northrop Grumman is a major defense contractor with established expertise.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of advanced systems for military aircraft. The market for such specialized equipment is often characterized by high barriers to entry, significant R&D investment, and a limited number of qualified suppliers. Spending in this area is driven by national security requirements and technological advancements in surveillance and command and control systems.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the specialized nature of the systems and the sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless they are subcontractors. Further investigation into Northrop Grumman's subcontracting plan would be necessary to assess any indirect benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the terms of the firm fixed-price contract, including delivery schedules and performance specifications. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight.

Related Government Programs

NATO AWACS Program
Airborne Early Warning and Control Systems
Aerospace Systems Manufacturing
Defense Electronics and Communication Equipment

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.2 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. NATO AWACS LAIRCM PROGRAM

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 $118.2 million.

What is the period of performance?

Start: 2006-11-03. End: 2015-12-22.

What specific systems or components are being procured under this contract, and what is their technological significance?

This contract, valued at approximately $118 million, is for the NATO AWACS (Airborne Warning and Control System) program, specifically related to LAIRCM (Large Aircraft Infrared Countermeasures) systems. The North American Industry Classification System (NAICS) code 334511 indicates the manufacturing of Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. These systems are critical for military aircraft survivability and operational effectiveness, providing threat detection and countermeasures against infrared-guided missiles. The technological significance lies in their advanced sensor technology and rapid response capabilities, essential for protecting high-value assets in contested airspace.

How does the $118 million contract value compare to similar procurements for airborne surveillance or countermeasures systems?

Directly comparing the $118 million value of this sole-source contract to similar procurements is challenging without detailed specifications of the systems acquired and their scope. However, large-scale airborne electronic warfare and surveillance systems can range from tens of millions to hundreds of millions of dollars per platform or upgrade. Given that this is a definitive contract with a long duration (3336 days), the total value spread over time might be considered reasonable for advanced, specialized defense technology. Nevertheless, the absence of competition means a precise value-for-money assessment against market alternatives is not feasible.

What are the primary risks associated with a sole-source award for critical defense systems like those for the NATO AWACS program?

The primary risk associated with a sole-source award for critical defense systems is the potential for inflated pricing due to a lack of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the most cost-effective outcome. Other risks include reduced innovation, as the sole provider may have less incentive to improve offerings, and potential vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, sole-source contracts can sometimes face greater public and congressional scrutiny regarding their justification and fairness.

What is the historical spending pattern for the NATO AWACS LAIRCM program or similar systems procured by the Department of Defense?

Historical spending on the NATO AWACS program and related systems like LAIRCM is substantial, reflecting the ongoing need for advanced airborne command and control and self-protection capabilities. While specific figures for this exact contract's predecessors are not detailed here, the Department of Defense consistently invests billions annually in airborne surveillance, electronic warfare, and aircraft survivability systems. Programs like AWACS and their associated upgrades or specialized systems are long-term, high-value endeavors. Spending patterns are typically driven by evolving threat landscapes, technological advancements, and international alliance requirements, often resulting in multi-year, multi-billion dollar commitments across various programs.

What is Northrop Grumman's track record in delivering complex aerospace and defense systems, particularly for international partners like NATO?

Northrop Grumman has a long and extensive track record of delivering complex aerospace and defense systems, including airborne platforms, sensors, and electronic warfare suites, to the U.S. Department of Defense and numerous international partners, including NATO allies. They are a major prime contractor on numerous high-profile programs, such as the B-2 bomber, E-2D Hawkeye, and various satellite systems. Their experience with large, integrated defense systems suggests a strong capability to manage complex procurements like the NATO AWACS LAIRCM program. However, as with any large defense contractor, specific program performance can vary, and scrutiny of delivery timelines, cost performance, and technical execution is always warranted.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $118,233,813

Exercised Options: $118,233,813

Current Obligation: $118,233,813

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline