DoD's $685M DON LAIRCM GLTAS contract awarded to Northrop Grumman, a sole-source procurement

Contract Overview

Contract Amount: $68,537,788 ($68.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2010-08-10

End Date: 2013-07-31

Contract Duration: 1,086 days

Daily Burn Rate: $63.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DON LAIRCM GLTAS

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $68.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: DON LAIRCM GLTAS Key points: 1. The contract's value of $685 million over its period of performance suggests a significant investment in critical defense systems. 2. As a sole-source award, the absence of competitive bidding raises questions about potential price inflation and the best use of taxpayer funds. 3. The contract's duration of approximately 3 years (1086 days) indicates a long-term need for these specialized systems. 4. The specific NAICS code (334511) points to a focus on advanced sensor and navigation technology manufacturing. 5. The contract's 'IL' (Illinois) location for the contractor may have implications for regional economic impact and workforce development. 6. The firm-fixed-price contract type aims to transfer risk to the contractor, but the sole-source nature limits leverage.

Value Assessment

Rating: questionable

Benchmarking the value of this $685 million contract is challenging without comparable sole-source procurements for similar systems. However, the lack of competition inherently limits the government's ability to secure the most favorable pricing. The firm-fixed-price structure is a positive, but the absence of bids means there's no market validation of the price. Further analysis would require understanding the specific technological advancements and unique capabilities provided by Northrop Grumman.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was considered. This typically occurs when a unique capability or proprietary technology is required, or when only one source is capable of meeting the government's needs. The lack of competition means there was no opportunity for other companies to bid, potentially leading to higher costs than if a competitive process had been employed.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. Without multiple bids, it's difficult to ascertain if the price reflects the true market value or includes a premium for the lack of alternatives.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense requiring advanced threat detection and countermeasures. The services delivered likely involve the manufacturing, integration, and sustainment of the Directional Infrared Countermeasures (DIRCM) system, crucial for protecting aircraft from missile threats. The geographic impact is primarily within the United States, with potential implications for Northrop Grumman's facilities in Illinois and other supporting subcontractors. Workforce implications include the need for highly skilled engineers, technicians, and manufacturing personnel involved in the production and maintenance of sophisticated defense electronics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for innovation and efficiency from the contractor.
Dependence on a single supplier creates supply chain risks and potential vulnerabilities.
The significant dollar value warrants close scrutiny of performance and cost overruns.

Positive Signals

Firm-fixed-price contract type shifts cost risk to the contractor.
Northrop Grumman is a major defense contractor with a track record in complex systems.
The system likely provides critical capabilities for force protection, enhancing operational effectiveness.

Sector Analysis

The contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and defense systems manufacturing. The NAICS code 334511 covers manufacturers of search, detection, navigation, guidance, and aeronautical/nautical systems. This is a highly specialized and technologically advanced segment of the defense industry, characterized by high R&D costs, long product development cycles, and significant government procurement. Comparable spending benchmarks would involve other large-scale defense electronics contracts for similar mission-critical systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Northrop Grumman, is a large corporation. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contractors often engage small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The contract's firm-fixed-price nature implies performance monitoring is key. Transparency is limited by the sole-source nature. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected. Specific oversight mechanisms like regular progress reviews and audits would be standard for a contract of this magnitude.

Related Government Programs

Aircraft Survivability Equipment
Missile Warning Systems
Electronic Warfare Systems
Defense Electronics Manufacturing
Northrop Grumman Defense Contracts

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for price inflation
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. DON LAIRCM GLTAS

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 Navy).

What is the total obligated amount?

The obligated amount is $68.5 million.

What is the period of performance?

Start: 2010-08-10. End: 2013-07-31.

What is the specific technological capability provided by the DON LAIRCM GLTAS system, and why was it deemed a sole-source requirement?

The DON LAIRCM GLTAS (Department of the Navy Large Aircraft Infrared Countermeasures Guided Light Attack Aircraft System) likely refers to a system designed to protect naval aircraft from infrared-guided missiles. The 'LAIRCM' designation specifically points to a family of countermeasures. The sole-source award suggests that Northrop Grumman possesses unique, proprietary technology or intellectual property related to this specific system that is not available from other sources, or that the government determined only Northrop Grumman could meet the urgent requirements within the necessary timeframe. This could involve specialized hardware, software algorithms, or integration expertise that is difficult or impossible to replicate.

How does the $685 million contract value compare to historical spending on similar defense systems, and what does this suggest about value for money?

Comparing the $685 million value requires context on the specific capabilities and the number of units procured. However, as a sole-source award, it inherently lacks a competitive benchmark. Historically, large sole-source defense contracts can sometimes be priced higher than if they were competed. Without data on the unit cost, the total number of systems, and the duration of sustainment included, a direct value-for-money assessment is difficult. If similar, competed systems have been acquired for significantly less on a per-unit basis, it would raise concerns about the pricing of this contract. Conversely, if the technology is truly unique and critical, the cost might be justified by its operational necessity.

What are the primary risks associated with a sole-source contract of this magnitude, and what mitigation strategies are typically employed?

The primary risks of a sole-source contract of this magnitude include potential overpricing due to lack of competition, reduced contractor incentive for efficiency, and a heightened dependence on a single supplier, which can create supply chain vulnerabilities. Mitigation strategies often involve rigorous government cost analysis, including should-cost reviews and should-cost-to-complete analyses, to validate the contractor's proposed pricing. Strong contract management, detailed performance metrics, and regular audits are crucial. The government might also explore options for developing alternative sources or technologies in the future to reduce long-term reliance and foster competition.

What is Northrop Grumman's track record with similar defense contracts, particularly those involving electronic warfare or aircraft countermeasures?

Northrop Grumman has a substantial and well-established track record in developing and producing complex defense systems, including electronic warfare (EW) and aircraft countermeasures. They are a major player in the defense industry, known for producing systems like the AN/ALQ-231(V) for electronic support measures and various infrared countermeasures. Their experience with large, sole-source contracts is also extensive. While their technical capabilities are generally recognized, oversight and cost control remain critical for contracts of this scale, regardless of the contractor's history.

What are the potential implications of the 'IL' (Illinois) location for the contractor on program execution and oversight?

The 'IL' designation indicates that Northrop Grumman's primary facility or a significant portion of the work for this contract is located in Illinois. This could have implications for program execution by concentrating manufacturing and engineering activities in one region, potentially streamlining logistics and communication within the contractor's team. For oversight, it means that government contracting officers and potentially quality assurance representatives may need to be physically present or have established relationships with facilities in Illinois. It also suggests potential economic benefits for the state of Illinois through job creation and investment.

Given the firm-fixed-price contract type, what level of cost risk does the government retain, if any, on this sole-source award?

With a firm-fixed-price (FFP) contract, the government's cost risk is generally minimized, as the contractor agrees to a set price for the defined scope of work. The contractor assumes the responsibility for managing costs and absorbing any overruns. However, in a sole-source FFP scenario, the government's primary risk shifts from cost overruns to the initial price itself being potentially inflated due to the lack of competition. While the government doesn't bear the risk of the contractor exceeding a negotiated budget, it does bear the risk of having agreed to a suboptimal price from the outset. Changes to the scope of work (e.g., through change orders) could introduce additional costs, but the base contract price is fixed.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 600 HICKS RD, ROLLING MEADOWS, IL, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $68,537,788

Exercised Options: $68,537,788

Current Obligation: $68,537,788

Contract Characteristics

Cost or Pricing Data: YES

Timeline