Northrop Grumman awarded $334M for AN/APR-39 C/D(V)2 production, a sole-source contract with a long duration

Contract Overview

Contract Amount: $334,433,478 ($334.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2017-09-21

End Date: 2024-07-31

Contract Duration: 2,505 days

Daily Burn Rate: $133.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: AN/APR-39 C/D(V)2 PRODUCTION CONTRACT FPIF CLINS

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $334.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: AN/APR-39 C/D(V)2 PRODUCTION CONTRACT FPIF CLINS Key points: 1. This contract represents a significant investment in advanced electronic warfare capabilities for the Department of Defense. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market alternatives. 3. The contract's extended duration of over 2500 days suggests a long-term need for these systems. 4. Performance incentives are included, indicating a focus on achieving specific quality and delivery targets. 5. The absence of small business set-asides raises questions about opportunities for smaller firms in this supply chain. 6. The primary contractor, Northrop Grumman, is a major defense industrial base player with extensive experience in this domain.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. However, the fixed-price incentive structure suggests an attempt to control costs while incentivizing performance. Given the specialized nature of the AN/APR-39 C/D(V)2 system, direct comparisons to similar contracts are difficult. Further analysis would require access to cost breakdowns and historical pricing data to assess if the negotiated price represents a fair value for the capabilities delivered.

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 a specific technology or capability is only available from a single source, or when there are compelling reasons to award to a particular contractor, such as follow-on work. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are U.S. military branches requiring advanced threat detection and electronic warfare capabilities. The contract delivers production of the AN/APR-39 C/D(V)2 system, crucial for aircraft survivability. The geographic impact is national, supporting defense readiness across various operational theaters. Workforce implications include sustained employment at Northrop Grumman facilities and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs.
Long contract duration could mask inefficiencies or scope creep over time.
Lack of small business participation may reduce opportunities for smaller innovative firms.
Dependence on a single supplier for critical EW components poses supply chain risks.

Positive Signals

Fixed-price incentive contract structure aims to balance cost control with performance.
Northrop Grumman's established expertise in EW systems suggests a high likelihood of successful delivery.
The AN/APR-39 system is a proven and critical component for aircraft survivability.

Sector Analysis

The AN/APR-39 C/D(V)2 system falls within the broader defense electronics and aerospace manufacturing sector. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Market size for electronic warfare systems is substantial, driven by evolving threat landscapes and military modernization efforts. This contract represents a specific, high-value procurement within this specialized niche, contributing to the overall health and technological advancement of the defense industrial base.

Small Business Impact

This contract does not appear to include specific small business set-asides. The sole-source nature of the award inherently limits opportunities for small businesses to directly compete for the prime contract. However, Northrop Grumman may engage small businesses as subcontractors. An analysis of their subcontracting plan would be necessary to determine the extent of small business participation and its impact on the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA). Accountability measures are embedded within the contract's fixed-price incentive structure, which ties contractor profit to performance metrics. Transparency is generally limited for sole-source procurements, but contract awards and modifications are typically reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Electronic Warfare Systems
Aircraft Survivability Equipment
Defense Production Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $334.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. AN/APR-39 C/D(V)2 PRODUCTION CONTRACT FPIF CLINS

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $334.4 million.

What is the period of performance?

Start: 2017-09-21. End: 2024-07-31.

What is the historical spending trend for the AN/APR-39 C/D(V)2 system prior to this award?

Historical spending data for the AN/APR-39 C/D(V)2 system prior to this specific award is not directly available in the provided data. However, the contract's start date of 2017 and end date of 2024, with a duration of 2505 days, suggests a continuous production effort. The total award amount of $334,433,477.93 indicates a significant and ongoing investment. To understand historical trends, one would need to examine previous contract awards for this system, potentially including earlier versions or different production phases, and analyze their associated dollar values and durations. This would reveal if spending has been consistent, increasing, or decreasing over time.

How does the per-unit cost of the AN/APR-39 C/D(V)2 compare to similar threat detection systems?

A direct per-unit cost comparison for the AN/APR-39 C/D(V)2 is not feasible with the provided data. The contract value is a total award amount for a production run, not a per-unit price. Furthermore, the system is specialized, making direct comparisons to 'similar' systems difficult without detailed technical specifications and market intelligence. To perform such a comparison, one would need to identify systems with comparable functionalities (e.g., radar warning receivers, missile approach warning systems) from other manufacturers, obtain their pricing data (which is often proprietary or contract-specific), and then normalize for differences in capabilities, features, and production volumes. The sole-source nature of this award further complicates benchmarking.

What are the specific performance metrics and incentives tied to this contract?

The provided data indicates this is a Fixed Price Incentive (FPI) contract, which inherently includes performance metrics and incentives. However, the specific details of these metrics (e.g., delivery schedules, quality standards, reliability targets) and the associated incentive or penalty structures are not detailed in the summary data. Typically, FPI contracts establish a target cost, target profit, and a price ceiling. The final price paid by the government is determined by the contractor's actual costs, with profit adjusting based on cost variances, up to the ceiling. To understand the precise incentives, one would need to review the contract's Statement of Work (SOW) and the specific clauses detailing cost-sharing ratios and target/ceiling prices.

What is Northrop Grumman's track record with producing the AN/APR-39 system or similar electronic warfare components?

Northrop Grumman Systems Corporation has a well-established and extensive track record in the defense sector, particularly in electronic warfare (EW) and avionics systems. They are a major developer and manufacturer of various radar warning receivers, electronic countermeasures, and other situational awareness technologies for military platforms. The AN/APR-39 system itself has been in development and production for many years, with Northrop Grumman being a key player in its evolution through different variants (like the C/D(V)2). Their long-standing presence and continued awards for such critical systems suggest a history of successful production, integration, and performance, although specific contract performance details would require deeper analysis of past awards and program reviews.

Are there any known risks associated with the supply chain for the AN/APR-39 C/D(V)2 components?

Given the specialized nature of advanced defense electronics, potential supply chain risks for the AN/APR-39 C/D(V)2 are plausible, although not explicitly detailed in the summary data. These risks could include reliance on single-source suppliers for critical sub-components, geopolitical instability affecting raw material availability, or obsolescence of certain electronic parts. The long duration of the contract (over 2500 days) increases the potential for supply chain disruptions over time. Northrop Grumman, as a major defense contractor, likely has robust supply chain management processes in place to mitigate such risks, including supplier qualification, risk assessments, and contingency planning. However, the sole-source nature of the prime contract does not inherently guarantee a diversified or resilient supply chain for all its constituent parts.

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

Solicitation ID: N0001915R0002

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $343,142,065

Exercised Options: $340,147,859

Current Obligation: $334,433,478

Actual Outlays: $20,349,003

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $-335,938

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline