Northrop Grumman awarded $28.1M for KC-135 LAIRCM Pods, with engineering services dominating costs

Contract Overview

Contract Amount: $28,113,275 ($28.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-01-25

End Date: 2023-06-30

Contract Duration: 886 days

Daily Burn Rate: $31.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CET 20-057, KC-135 LAIRCM GEN 3 POD LIMITED PRODUCTION THE PURPOSE OF THIS TASK IS TO ANALYZE, FABRICATE, PROCURE, INTEGRATE, TEST, PRODUCE AND DELIVER AIRCRAFT GROUP A/GROUP B EQUIPMENT, PARTS, AND DATA TO SUPPORT THE LAIRCM G3 POD SYSTEM

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $28.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: CET 20-057, KC-135 LAIRCM GEN 3 POD LIMITED PRODUCTION THE PURPOSE OF THIS TASK IS TO ANALYZE, FABRICATE, PROCURE, INTEGRATE, TEST, PRODUCE AND DELIVER AIRCRAFT GROUP A/GROUP B EQUIPMENT, PARTS, AND DATA TO SUPPORT THE LAIRCM G3 POD SYSTEM Key points: 1. Value for money appears fair, with a significant portion allocated to engineering and integration services. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. Risk indicators are moderate, given the complexity of integrating advanced pod systems onto aircraft. 4. Performance context shows a multi-year effort for production and delivery. 5. Sector positioning is within defense avionics and electronic warfare systems.

Value Assessment

Rating: fair

The contract value of $28.1 million for the KC-135 LAIRCM GEN 3 POD LIMITED PRODUCTION appears reasonable given the scope of work, which includes analysis, fabrication, procurement, integration, testing, production, and delivery of complex aircraft equipment and data. Benchmarking against similar advanced avionics integration projects suggests that costs for engineering services and specialized hardware are typically substantial. The firm fixed-price structure provides cost certainty for the government, though it places the risk of cost overruns on the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not detailed, but this procurement method generally fosters price discovery and encourages competitive pricing. The use of full and open competition is a positive sign for achieving value for taxpayer dollars.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it is expected to drive down costs through a robust bidding process, ensuring the government receives competitive pricing for advanced defense systems.

Public Impact

The primary beneficiaries are the U.S. Air Force, enhancing the survivability of KC-135 aircraft. Services delivered include the development and production of the LAIRCM (Large Aircraft Infrared Countermeasures) Gen 3 Pod system. The geographic impact is primarily within the United States, focusing on defense manufacturing and integration facilities. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in advanced aerospace systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during integration and testing.
Reliance on a single prime contractor for complex system integration could pose supply chain risks.
Ensuring timely delivery of specialized components for advanced electronic warfare systems can be challenging.

Positive Signals

Firm fixed-price contract provides cost predictability for the government.
Full and open competition suggests a competitive environment that can drive value.
The contract supports a critical defensive capability for a key military aircraft platform.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and aircraft survivability systems. The market for such advanced defense technologies is characterized by high barriers to entry due to specialized expertise, R&D investment, and stringent qualification requirements. Comparable spending benchmarks in this area often involve multi-million dollar contracts for system development, integration, and production, reflecting the complexity and criticality of the technologies involved.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Northrop Grumman, as the prime contractor, may engage small businesses as subcontractors for specialized components or services. However, the primary contract award does not directly benefit small businesses through a set-aside mechanism. The subcontracting plan, if any, would determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of Defense, specifically the Defense Microelectronics Activity, which awarded the contract. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods and services. Transparency is generally maintained through contract award databases, though detailed performance metrics may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Survivability Equipment
Electronic Warfare Systems
Avionics Integration
Defense Production Contracts
Airborne Countermeasures

Risk Flags

Potential for schedule slippage due to integration complexity.
Supply chain risks for specialized electronic components.
Cost growth potential if unforeseen technical issues arise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. CET 20-057, KC-135 LAIRCM GEN 3 POD LIMITED PRODUCTION THE PURPOSE OF THIS TASK IS TO ANALYZE, FABRICATE, PROCURE, INTEGRATE, TEST, PRODUCE AND DELIVER AIRCRAFT GROUP A/GROUP B EQUIPMENT, PARTS, AND DATA TO SUPPORT THE LAIRCM G3 POD SYSTEM

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 (Defense Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $28.1 million.

What is the period of performance?

Start: 2021-01-25. End: 2023-06-30.

What is the historical spending trend for the KC-135 LAIRCM program?

Analyzing historical spending for the KC-135 LAIRCM program requires access to detailed contract databases beyond this single award. This specific contract, valued at approximately $28.1 million, represents a portion of the overall program cost. To understand the trend, one would need to aggregate all previous and subsequent contracts related to the LAIRCM system for the KC-135 platform. Factors influencing spending trends include program maturity (development vs. sustainment), technological upgrades, quantity procurements, and changes in threat assessments. Without a broader dataset, it's difficult to establish a definitive historical spending pattern, but this award indicates ongoing investment in the system's limited production phase.

How does the cost of this LAIRCM pod production compare to similar defense electronics contracts?

Benchmarking the cost of this $28.1 million contract requires comparing it to similar contracts for advanced electronic warfare systems or aircraft pod integration. The contract's scope includes analysis, fabrication, procurement, integration, testing, production, and delivery, with a significant portion likely attributed to engineering services (NAICS code 541330). Contracts for complex defense systems often range from tens to hundreds of millions of dollars, depending on the technology's sophistication, quantity, and integration challenges. Given the limited production nature and the specific capabilities of the Gen 3 LAIRCM pod, the price appears within a plausible range for specialized defense hardware and associated engineering services. A more precise comparison would necessitate identifying contracts with identical or highly similar technical requirements and production volumes.

What are the primary risks associated with the integration and production of the LAIRCM Gen 3 Pod?

The primary risks associated with integrating and producing the LAIRCM Gen 3 Pod include technical complexity, supply chain disruptions, and schedule delays. Integrating advanced electronic warfare systems onto existing aircraft platforms like the KC-135 can present unforeseen engineering challenges, potentially leading to cost overruns or performance issues. The supply chain for specialized electronic components and sub-assemblies is another risk area; reliance on specific vendors or global supply chain vulnerabilities could impact production timelines. Furthermore, the testing and validation phases are critical and can uncover issues requiring significant rework. Schedule delays are a common risk in complex defense programs, potentially impacting operational readiness and increasing overall program costs.

What is Northrop Grumman's track record with similar large-scale defense electronics integration projects?

Northrop Grumman has a substantial track record in delivering large-scale defense electronics and integrated systems for various military platforms. The company is a major player in electronic warfare, avionics, and aerospace manufacturing. They have been involved in numerous complex programs, including the development and production of countermeasures systems, radar systems, and communication suites for different branches of the U.S. military and international allies. Their experience with integrated systems suggests a strong capability in managing the technical, logistical, and production challenges inherent in projects like the KC-135 LAIRCM Gen 3 Pod. Past performance on similar contracts would be a key factor considered during the competitive bidding process for this award.

How does the 'limited production' designation impact the overall cost and timeline of this contract?

The 'limited production' designation typically implies that this contract is not for full-rate manufacturing but rather for a smaller quantity of units, often for initial fielding, testing, or specialized roles. This can influence costs in several ways: unit costs might be higher compared to full-rate production due to less economy of scale, but the overall contract value remains lower. It often signifies a phase after initial development and testing but before or alongside potential larger production runs. The timeline is generally shorter than for full-rate production, focusing on delivering the specified limited quantity within the contract period. This phase allows for refinement of manufacturing processes based on initial production runs before committing to larger volumes.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ072715R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1580A W NURSERY RD, LINTHICUM HEIGHTS, MD, 21090

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: $28,113,275

Exercised Options: $28,113,275

Current Obligation: $28,113,275

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $559,669

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0004

IDV Type: IDC

Timeline