DoD awards $880M contract for Integrated Air and Missile Defense Battle Command System to Northrop Grumman

Contract Overview

Contract Amount: $879,779,236 ($879.8M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-03-13

End Date: 2026-12-15

Contract Duration: 2,834 days

Daily Burn Rate: $310.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: POLAND FMS THE INTEGRATED AIR AND MISSILE DEFENSE (IAMD) BATTLE COMMAND SYSTEM (IBCS).

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35805

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $879.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: POLAND FMS THE INTEGRATED AIR AND MISSILE DEFENSE (IAMD) BATTLE COMMAND SYSTEM (IBCS). Key points: 1. Contract awarded for a critical defense system, highlighting the importance of advanced command and control capabilities. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited innovation. 3. Long contract duration suggests a sustained need for system development and sustainment. 4. The firm-fixed-price structure aims to control costs, but requires careful monitoring for scope creep. 5. This contract supports a key ally, indicating its strategic importance in international defense cooperation. 6. The specific Product Service Code is missing, hindering detailed analysis of the services procured.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without comparable awards. The firm-fixed-price type suggests an attempt to cap costs, but the total value of nearly $880 million over several years indicates a significant investment. Without competitive bidding, it's difficult to definitively assess if the pricing reflects optimal value for money. Further analysis would require access to cost breakdowns and historical pricing for similar systems.

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. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. While this can ensure access to specialized expertise, it limits the potential for cost savings and innovation that competition can drive. The lack of bidders means taxpayers did not benefit from a price discovery process.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to reduce costs. This necessitates robust oversight to ensure fair pricing.

Public Impact

The primary beneficiary is the U.S. Department of the Army, which will receive the Integrated Air and Missile Defense (IAMD) Battle Command System. The system is intended for use by Poland, enhancing their air and missile defense capabilities. This contract supports the modernization of allied defense infrastructure, contributing to regional security. The contract is expected to support jobs within Northrop Grumman's operations, particularly in Alabama where the awardee is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Lack of detailed Product Service Code hinders specific service analysis.
Long contract duration increases risk of cost overruns if not managed effectively.
Potential for vendor lock-in due to specialized nature of the system.

Positive Signals

Firm-fixed-price contract structure provides cost certainty.
Award to a major defense contractor suggests established capabilities.
Supports a key NATO ally, enhancing interoperability and collective security.
Contract addresses a critical defense need for integrated air and missile defense.

Sector Analysis

The Integrated Air and Missile Defense (IAMD) Battle Command System falls within the broader defense electronics and command and control systems sector. This sector is characterized by high R&D investment, long product cycles, and significant government procurement. The market is dominated by a few large defense contractors. Spending in this area is driven by evolving geopolitical threats and the need for advanced technological solutions to counter them. Comparable spending benchmarks are difficult to establish due to the specialized nature of IAMD systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the specialized technology involved, it is unlikely that significant subcontracting opportunities for small businesses will be mandated. However, Northrop Grumman may engage small businesses as part of its supply chain, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which shifts some risk to the contractor. Transparency is limited due to the sole-source nature, but contract awards are generally reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Command and Control Systems
Foreign Military Sales
Air Defense Systems
North Atlantic Treaty Organization (NATO) Support

Risk Flags

Sole-source award
Lack of detailed Product Service Code
Potential for cost overruns due to long duration
Limited transparency in pricing due to sole-source nature

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $879.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. POLAND FMS THE INTEGRATED AIR AND MISSILE DEFENSE (IAMD) BATTLE COMMAND SYSTEM (IBCS).

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 Army).

What is the total obligated amount?

The obligated amount is $879.8 million.

What is the period of performance?

Start: 2019-03-13. End: 2026-12-15.

What is the track record of Northrop Grumman Systems Corporation in delivering complex defense systems, particularly those related to air and missile defense?

Northrop Grumman Systems Corporation has a substantial track record in delivering complex defense systems for the U.S. Department of Defense and allied nations. They are a major player in areas such as aerospace, defense electronics, and information systems. Specifically in air and missile defense, the company has been involved in developing and integrating various components and systems, including radar, command and control, and interceptor technologies. Their experience spans decades, encompassing numerous large-scale programs. However, like many large defense contractors, they have faced scrutiny and challenges on specific programs related to cost, schedule, and performance. A detailed review of their past performance on similar sole-source or competitively awarded IAMD programs would be necessary for a comprehensive assessment.

How does the $879.8 million contract value compare to similar Integrated Air and Missile Defense (IAMD) Battle Command System procurements, either domestically or internationally?

Direct comparison of this $879.8 million contract value for the IAMD Battle Command System (IBCS) is challenging due to its sole-source nature and specific application for Poland. Typically, large-scale defense system procurements, especially those involving command and control architecture, can range from hundreds of millions to billions of dollars over their lifecycle. The value reflects the complexity, technology, and sustainment required for such a critical defense capability. Without publicly available data on comparable sole-source awards for similar systems or detailed breakdowns of the IBCS components and services included in this contract, a precise benchmark is difficult. However, given the strategic importance and technological sophistication of IAMD systems, a contract value in the high hundreds of millions is not unusual for a multi-year effort.

What are the primary risks associated with a sole-source award for a critical defense system like the IAMD Battle Command System?

The primary risks associated with a sole-source award for a critical defense system like the IAMD Battle Command System are centered around cost and innovation. Without competition, there is less pressure on the contractor to offer the most competitive pricing, potentially leading to higher costs for the government and taxpayers. Furthermore, the absence of multiple bidders can stifle innovation, as the sole provider may have less incentive to explore more efficient or advanced solutions. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single supplier, making future transitions or upgrades more complex and expensive. Effective contract management, rigorous oversight, and clear performance metrics are crucial to mitigate these risks.

What is the expected effectiveness and performance of the IAMD Battle Command System (IBCS) based on its intended role and technological capabilities?

The Integrated Air and Missile Defense (IAMD) Battle Command System (IBCS) is designed to be a revolutionary system that integrates various sensors and effectors into a single, cohesive network. Its intended role is to provide commanders with a unified, 360-degree view of the battlespace, enabling faster and more effective decision-making against a wide range of aerial threats, including ballistic missiles, cruise missiles, and aircraft. The system's architecture is intended to be flexible and scalable, allowing for the integration of diverse existing and future defense assets. Its effectiveness hinges on its ability to fuse data from disparate sources, provide accurate threat assessments, and enable precise engagement coordination. Successful implementation and interoperability with allied systems, like in the case of Poland, are key to achieving its intended performance and enhancing overall air and missile defense capabilities.

How has federal spending on air and missile defense systems evolved over the past decade, and where does this contract fit within that trend?

Federal spending on air and missile defense (AMD) systems has generally seen a significant increase over the past decade, driven by evolving global threats, including the proliferation of ballistic and cruise missiles, and the rise of sophisticated aerial adversaries. This trend reflects a strategic priority for national security and that of allies. Investments span research and development, procurement of interceptors, advanced radar systems, and sophisticated command and control platforms like the IBCS. This specific $879.8 million contract for the IAMD Battle Command System to support Poland fits within this broader trend of increased investment in AMD capabilities. It underscores the U.S. commitment to bolstering both its own defenses and those of its key allies through foreign military sales and cooperative development programs, aiming to maintain a technological edge in a dynamic threat environment.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

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: 213 WYNN DR, HUNTSVILLE, AL, 35805

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $881,790,267

Exercised Options: $881,790,267

Current Obligation: $879,779,236

Subaward Activity

Number of Subawards: 1890

Total Subaward Amount: $5,701,387,075

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline