DoD awards $48.4M for LINK 16 UH-1Y/AH-1Z-B Kits to Northrop Grumman, a sole-source contract

Contract Overview

Contract Amount: $48,357,881 ($48.4M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-08-29

End Date: 2026-11-30

Contract Duration: 823 days

Daily Burn Rate: $58.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LINK 16 UH-1Y/AH-1Z- B KIT

Place of Performance

Location: WOODLAND HILLS, LOS ANGELES County, CALIFORNIA, 91367

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $48.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LINK 16 UH-1Y/AH-1Z- B KIT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract is for a firm-fixed-price delivery order, providing cost certainty. 3. The contract duration is 823 days, extending through November 2026. 4. The award is for specialized communication equipment, critical for military operations. 5. The North American Industry Classification System (NAICS) code 334220 indicates a focus on wireless communications manufacturing. 6. The contract is not set aside for small businesses, suggesting a focus on large prime contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging due to its sole-source nature and specialized equipment. Without competitive bids, it's difficult to ascertain if the $48.4 million represents optimal value for money. The firm-fixed-price structure offers predictability but doesn't inherently guarantee the lowest possible cost. Further analysis would require comparing this award to historical sole-source procurements of similar communication kits or assessing the contractor's cost structure if publicly available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically employed when only one vendor possesses the necessary capabilities, technology, or security clearances to fulfill the requirement. The lack of competition means that taxpayers do not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple offers were considered.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for this specialized equipment, as there was no market pressure to drive down prices.

Public Impact

The primary beneficiaries are the U.S. military units operating UH-1Y/AH-1Z helicopters, who will receive upgraded communication capabilities. The services delivered include the provision of LINK 16 communication kits, essential for secure and efficient data sharing between aircraft and ground stations. The geographic impact is primarily within military operational theaters where these helicopter platforms are deployed. Workforce implications may include specialized manufacturing and integration roles within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in cost breakdown for specialized equipment.
Potential for cost overruns if initial estimates are inaccurate, despite fixed-price structure.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a known contractor (Northrop Grumman) suggests reliance on established capabilities.
Specialized nature of the equipment may necessitate a sole-source approach for critical national security needs.

Sector Analysis

The defense electronics manufacturing sector is characterized by high barriers to entry, significant R&D investment, and a strong reliance on government contracts. Companies like Northrop Grumman are key players, often holding proprietary technologies and long-standing relationships with defense agencies. Spending in this area is driven by the need for advanced communication, navigation, and surveillance systems to maintain military superiority. Comparable spending benchmarks would involve analyzing other sole-source awards for similar integrated communication systems within the DoD.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Northrop Grumman suggests that the primary focus is on leveraging established large-scale manufacturing and integration capabilities. This approach may limit direct opportunities for small businesses to participate in this specific procurement, although they might be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the firm-fixed-price contract terms, which obligate the contractor to deliver specified goods within the agreed-upon price. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Tactical Data Links
Avionics Modernization Programs
Helicopter Upgrade Programs
Defense Communications Systems

Risk Flags

Sole-source award
Lack of competition
Specialized defense equipment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LINK 16 UH-1Y/AH-1Z- B KIT

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 $48.4 million.

What is the period of performance?

Start: 2024-08-29. End: 2026-11-30.

What is the specific technical capability provided by the LINK 16 UH-1Y/AH-1Z-B Kit, and why is it critical for these helicopter platforms?

The LINK 16 UH-1Y/AH-1Z-B Kit provides a secure, jam-resistant, digital data communication system that allows these helicopters to exchange tactical information in real-time with other LINK 16-equipped platforms, including other aircraft, ground units, and command centers. This capability is critical for enhancing situational awareness, improving battlefield coordination, enabling precision targeting, and facilitating cooperative mission execution. For platforms like the UH-1Y Venom and AH-1Z Viper, which are often employed in complex combat environments, seamless and reliable data sharing is paramount for mission success and crew survivability. The 'B Kit' designation likely refers to a specific version or upgrade of this system.

What are the typical justifications for sole-source awards in the defense sector for specialized equipment like communication kits?

Sole-source awards in the defense sector for specialized equipment are typically justified when only one responsible source is available or capable of meeting the government's requirements. Common justifications include: unique or proprietary technology held by a single contractor, the need for compatibility with existing fielded systems where only one vendor can provide the necessary interface, urgent and compelling needs where competition would cause unacceptable delays, or when the cost of competition would outweigh the benefits. For advanced communication systems, a contractor might possess unique intellectual property, specialized manufacturing processes, or critical security clearances that make them the only viable option.

How does the firm-fixed-price (FFP) contract type mitigate risk for the government in this sole-source award?

The firm-fixed-price (FFP) contract type is beneficial for the government, especially in sole-source situations, because it shifts the majority of the cost risk to the contractor. Under an FFP contract, the contractor agrees to a total price for the specified goods or services, and is responsible for completing the work within that price, regardless of their actual costs. This provides the government with cost certainty and predictability, making budgeting easier. While the initial price might be higher in a sole-source scenario compared to a competed contract, the FFP structure prevents cost overruns from impacting the government's budget, assuming the scope of work is well-defined and managed.

What is the significance of NAICS code 334220 (Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing) in the context of this contract?

The NAICS code 334220, 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing,' indicates that the primary business activity of the contractor, Northrop Grumman Systems Corporation, in relation to this contract, is the manufacturing of equipment used for wireless communication. This aligns directly with the nature of the LINK 16 communication kits, which are sophisticated wireless devices essential for military data exchange. This classification helps categorize the contract within the broader industrial landscape, allowing for comparisons with other government spending on similar types of manufactured goods and technologies.

What are the potential long-term implications for the UH-1Y and AH-1Z helicopter fleets with this LINK 16 kit upgrade?

The integration of the LINK 16 UH-1Y/AH-1Z-B Kit signifies a crucial modernization effort for these helicopter platforms. The long-term implications include enhanced operational effectiveness, improved interoperability with joint and coalition forces, and increased survivability in contested environments. By enabling real-time data sharing, these helicopters can better coordinate attacks, receive updated threat intelligence, and navigate more safely. This upgrade ensures that the UH-1Y and AH-1Z fleets remain relevant and capable assets in the face of evolving military requirements and technological advancements, potentially extending their service life and operational utility.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001922R0038

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 21240 BURBANK BLVD, WOODLAND HILLS, CA, 91367

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: $48,357,881

Exercised Options: $48,357,881

Current Obligation: $48,357,881

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $408,078

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001924D0123

IDV Type: IDC

Timeline