DoD awards $87M+ to Northrop Grumman for infrared countermeasures, raising questions about competition and value

Contract Overview

Contract Amount: $87,111,561 ($87.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-31

End Date: 2021-08-31

Contract Duration: 762 days

Daily Burn Rate: $114.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 5 YEAR IDIQ CONTRACT FOR COMMON INFRARED COUNTERMEASURE (CIRCRM) HARDWARE AND SERVICES

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $87.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 5 YEAR IDIQ CONTRACT FOR COMMON INFRARED COUNTERMEASURE (CIRCRM) HARDWARE AND SERVICES Key points: 1. Contract awarded without competition, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a critical need for these specialized defense systems. 3. Sole-source award warrants scrutiny of pricing and justification for lack of competition. 4. Performance period of over two years indicates a substantial, ongoing requirement. 5. Northrop Grumman's established role in defense contracting suggests a strong incumbent advantage. 6. Focus on hardware and services points to a comprehensive solution for countermeasure needs.

Value Assessment

Rating: questionable

The contract's value of over $87 million over two years for common infrared countermeasures hardware and services is substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price structure offers some cost certainty, but the lack of competition raises concerns about whether the government achieved the best possible value. Further analysis of the specific components and services procured would be needed for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Northrop Grumman Systems Corporation. The justification for this approach is not provided in the data. Sole-source awards typically occur when only one vendor can meet the requirement, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition means that the government did not benefit from multiple bids, which could have driven down prices and spurred innovation.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing the requirement, there is a risk that the price is not optimized, leading to less efficient use of public funds.

Public Impact

The Department of Defense, specifically the Department of the Army, is the primary beneficiary, receiving critical infrared countermeasure capabilities. The contract delivers essential hardware and services to enhance the survivability of military platforms against infrared-guided threats. The geographic impact is likely global, supporting military operations wherever these platforms are deployed. Workforce implications include specialized roles in manufacturing, engineering, and support for advanced defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award raises concerns about the government's ability to secure the best possible price.
Limited transparency into the justification for not competing the contract.
Potential for incumbent contractor lock-in, reducing future competitive opportunities.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Northrop Grumman is an established defense contractor with relevant expertise.
Contract addresses a critical defense need for advanced countermeasure technology.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on electronic warfare and defense systems manufacturing. The market for infrared countermeasures is specialized, driven by military requirements for platform survivability. Spending in this area is significant globally, with major defense contractors vying for these high-value, technology-intensive contracts. This award to Northrop Grumman aligns with their established position in providing advanced defense solutions.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit mention of subcontracting plans for small businesses. Given the specialized nature of infrared countermeasures and the sole-source award to a large prime contractor, the direct impact on the small business ecosystem may be limited unless Northrop Grumman actively engages small businesses for specific components or services. Further investigation into subcontracting would be necessary to assess the full impact.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods and services. Transparency is limited by the sole-source nature of the award; however, contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) programs
Tactical Aircraft Modernization
Electronic Warfare Systems
Military Aircraft Survivability Equipment

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency in procurement justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $87.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 5 YEAR IDIQ CONTRACT FOR COMMON INFRARED COUNTERMEASURE (CIRCRM) HARDWARE AND SERVICES

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 $87.1 million.

What is the period of performance?

Start: 2019-07-31. End: 2021-08-31.

What is Northrop Grumman's track record with similar Department of Defense contracts, particularly for infrared countermeasures?

Northrop Grumman Systems Corporation has a long and extensive history of contracting with the Department of Defense, including significant work in aerospace, defense electronics, and advanced systems. They are a major player in the defense industrial base, known for developing and producing a wide range of military hardware and software. Specifically, they have been involved in various electronic warfare programs and countermeasure systems. Their track record includes numerous large-scale contracts for aircraft components, surveillance systems, and defense technologies. While this specific contract is for Common Infrared Countermeasure (CIRCM) hardware and services, Northrop Grumman's broader experience in related fields suggests they possess the technical capability and manufacturing capacity to fulfill such a requirement. However, the absence of competition for this particular award means that performance and pricing cannot be directly compared to other Northrop Grumman CIRCM contracts that may have been competed.

How does the $87 million contract value compare to historical spending on infrared countermeasures by the DoD?

The $87.1 million awarded to Northrop Grumman over approximately two years for Common Infrared Countermeasure (CIRCM) hardware and services represents a significant investment. To contextualize this, historical spending on CIRCM and related countermeasure systems by the Department of Defense has been substantial, driven by the continuous need to protect military platforms from evolving threats. For instance, the Army's CIRCM program itself has seen billions allocated over its lifecycle for development, procurement, and sustainment. Comparing this specific award requires looking at the annual procurement rates for similar systems. Without knowing the exact scope and unit costs within this $87 million IDIQ, a direct year-over-year spending comparison is difficult. However, this figure is consistent with the substantial budgets allocated for advanced electronic warfare and survivability equipment, reflecting the high cost of sophisticated defense technologies and the ongoing modernization efforts within the military.

What are the primary risks associated with a sole-source award for critical defense systems like infrared countermeasures?

The primary risks associated with a sole-source award for critical defense systems like infrared countermeasures are multifaceted. Firstly, the most significant risk is the potential for inflated pricing. Without competitive bidding, the government loses the leverage to negotiate the best possible price, potentially leading to higher costs for taxpayers. Secondly, there's a risk of reduced innovation and efficiency. When a single contractor is guaranteed the business, the incentive to invest in process improvements or develop more cost-effective solutions may diminish. Thirdly, a sole-source award can create a dependency on a single supplier, making the government vulnerable to supply chain disruptions or future price increases. Lastly, it raises concerns about transparency and fairness in the procurement process, potentially limiting opportunities for other capable companies and hindering the growth of a competitive defense industrial base.

How effective are infrared countermeasures in protecting military assets, and what is the expected impact of this contract on operational capabilities?

Infrared countermeasures (IRCM) are highly effective in protecting military assets, particularly aircraft, from heat-seeking missiles, which pose a significant threat in modern warfare. These systems work by detecting incoming missile threats and deploying countermeasures, such as flares or directed energy, to decoy or jam the missile's guidance system. The Common Infrared Countermeasure (CIRCM) system, specifically, is designed to provide a robust, next-generation capability against a wide spectrum of infrared threats. This contract, valued at over $87 million for hardware and services, is expected to equip numerous military platforms with these advanced survivability systems. Its impact on operational capabilities will be substantial, enhancing the safety of aircrews and increasing the mission readiness and effectiveness of deployed forces by reducing vulnerability to missile attacks. This ensures that aircraft can operate more safely in contested environments.

What is the typical duration and value range for contracts of this nature (common infrared countermeasures hardware and services)?

Contracts for common infrared countermeasures (CIRCM) hardware and services typically vary significantly in duration and value, depending on the scope, quantity, and specific requirements of the military branch. These can range from shorter-term, fixed-price contracts for specific hardware procurements or upgrades to longer-term Indefinite Delivery/Indefinite Quantity (IDIQ) contracts that cover multiple years of supply, sustainment, and support services. The $87.1 million value over approximately two years for this Northrop Grumman contract falls within the mid-to-high range for such procurements, reflecting the advanced technology and critical nature of IRCM systems. Larger, multi-year IDIQ contracts for CIRCM programs can extend for five to ten years and be worth billions of dollars, encompassing full-system development, integration, testing, and sustainment across various platforms. Shorter, more focused contracts might be in the tens of millions.

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: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

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: $87,111,561

Exercised Options: $87,111,561

Current Obligation: $87,111,561

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ19D0110

IDV Type: IDC

Timeline