DoD awards $106M to Northrop Grumman for AN/APR-39 Radar Signal Detecting Set Production

Contract Overview

Contract Amount: $105,993,890 ($106.0M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-12-22

End Date: 2026-10-31

Contract Duration: 1,044 days

Daily Burn Rate: $101.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: AN/APR-39 RADAR SIGNAL DETECTING SET (RSDS) PRODUCTION

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $106.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: AN/APR-39 RADAR SIGNAL DETECTING SET (RSDS) PRODUCTION Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract type is Cost Plus Incentive Fee (CPIF), which can incentivize cost control but also carries inherent risk. 3. The duration of over 3 years suggests a significant ongoing need for this equipment. 4. The specific product, AN/APR-39 RSDS, is a critical component for threat detection in military operations. 5. Northrop Grumman's extensive experience in defense systems likely positions them as a capable provider. 6. The absence of small business set-asides or subcontracting requirements warrants further investigation into broader economic impact.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging due to its sole-source nature and the specialized equipment involved. The Cost Plus Incentive Fee (CPIF) structure means the final cost is not fixed and depends on performance and cost control. While CPIF can align contractor and government interests, it requires robust oversight to ensure costs remain reasonable. Without competitive bids, it's difficult to definitively assess if the pricing reflects fair market value or if there's an opportunity for cost savings through competition.

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 only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the best possible value. It also raises concerns about whether alternative solutions or more cost-effective options were adequately explored.

Taxpayer Impact: Taxpayers may be exposed to higher costs 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 U.S. Army benefits from the continued production of critical radar signal detecting sets, enhancing situational awareness and survivability for its personnel. The contract ensures the delivery of advanced electronic warfare capabilities essential for modern military operations. The primary geographic impact is within the United States, where Northrop Grumman's facilities are located, supporting domestic manufacturing and employment. The contract supports a specialized workforce within Northrop Grumman, including engineers, technicians, and manufacturing personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential taxpayer savings.
Cost Plus Incentive Fee (CPIF) contract type requires diligent oversight to manage costs effectively.
Lack of small business participation or set-asides may limit broader economic benefits.
Specific performance metrics and incentive structures within the CPIF need careful monitoring to ensure optimal outcomes.

Positive Signals

Northrop Grumman is a well-established defense contractor with proven expertise in radar and electronic warfare systems.
The AN/APR-39 RSDS is a critical system for military threat detection, indicating a high level of technological necessity.
The CPIF contract structure, if managed well, can incentivize efficiency and cost control by the contractor.
The extended contract duration suggests a stable, long-term need for this capability, providing predictability for the supplier.

Sector Analysis

The defense electronics sector is characterized by high technological barriers to entry, significant R&D investment, and long product lifecycles. Companies like Northrop Grumman are major players, often holding proprietary technologies. Spending in this area is driven by national security requirements and the constant need to stay ahead of evolving threats. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of the equipment, but the overall defense electronics market is substantial, with billions invested annually in radar, electronic warfare, and related systems.

Small Business Impact

This contract does not appear to include any specific small business set-asides. The prime contractor, Northrop Grumman, is a large aerospace and defense company. While large defense contracts often involve subcontracting, the absence of explicit set-aside provisions means that opportunities for small businesses are not guaranteed and would depend on Northrop Grumman's internal subcontracting strategy. Further analysis would be needed to determine if and how small businesses are involved in the supply chain for this specific contract.

Oversight & Accountability

Oversight for this Cost Plus Incentive Fee (CPIF) contract will primarily fall under the Department of the Army's contracting and program management offices. Robust oversight is crucial for CPIF contracts to ensure that costs are reasonable, performance targets are met, and incentives are appropriately applied. Transparency will depend on the level of detail made public regarding cost breakdowns, performance metrics, and earned value management. The Inspector General's office for the Department of Defense may also conduct audits or investigations if specific concerns arise regarding waste, fraud, or abuse.

Related Government Programs

AN/APR-39 Radar Signal Detecting Set (RSDS)
Electronic Warfare Systems
Threat Detection Systems
Department of the Army Procurement
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Cost Plus Incentive Fee contract type requires careful management
Lack of public competition data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.0 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. AN/APR-39 RADAR SIGNAL DETECTING SET (RSDS) PRODUCTION

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 $106.0 million.

What is the period of performance?

Start: 2023-12-22. End: 2026-10-31.

What is the historical spending trend for the AN/APR-39 RSDS program?

Historical spending data for the AN/APR-39 RSDS program prior to this $106 million award is not directly available in the provided data. However, the contract's duration (1044 days, approximately 3 years) and the nature of defense procurement suggest that this is likely part of an ongoing sustainment or production effort. Typically, such systems have multi-year production runs and sustainment contracts. To understand the full historical spending, one would need to access historical contract databases and search for previous awards related to the AN/APR-39 system, potentially from different contract vehicles or fiscal years, and analyze the cumulative expenditure over time.

How does the Cost Plus Incentive Fee (CPIF) structure typically work, and what are its implications for this contract?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and receives a target fee, but the final fee is adjusted based on performance against pre-determined targets (e.g., cost, schedule, or technical performance). For this AN/APR-39 RSDS contract, the CPIF structure means Northrop Grumman is incentivized to control costs and meet performance objectives to earn a higher fee. However, it also requires significant government oversight to ensure costs are reasonable and that the incentive targets are appropriate and achievable. The government bears the risk of cost overruns if targets are not met, but the contractor shares in savings if costs are below target, or incurs a reduced fee if costs exceed target or performance suffers.

What are the key performance indicators (KPIs) likely being used for this CPIF contract?

While specific KPIs are not detailed in the provided data, for a CPIF contract involving the production of complex defense hardware like the AN/APR-39 RSDS, typical KPIs would likely include: 1. Cost Performance: Meeting or exceeding targets for production costs per unit or total program cost. 2. Schedule Adherence: Delivering units by the specified milestones and final delivery dates. 3. Quality and Reliability: Meeting stringent technical specifications, defect rates, and operational reliability standards for the radar signal detecting sets. 4. Technical Performance: Achieving specific performance metrics related to the system's detection range, accuracy, processing speed, or integration capabilities. The incentive fee would be adjusted based on performance against these, and potentially other, defined metrics.

What is Northrop Grumman's track record with similar radar and electronic warfare systems?

Northrop Grumman has a long and extensive track record in developing, producing, and sustaining advanced radar, electronic warfare, and other sophisticated defense systems for various branches of the U.S. military and international allies. They are a major prime contractor on numerous programs involving airborne and ground-based radar, electronic support measures, electronic countermeasures, and integrated electronic warfare suites. Their experience spans decades and includes systems deployed on a wide range of platforms, from fighter jets and bombers to naval vessels and ground vehicles. This deep expertise suggests a high likelihood of successful execution for the AN/APR-39 RSDS contract, although specific performance on past, similar contracts would require further detailed investigation.

Given the sole-source nature, what steps can the government take to ensure fair pricing?

Even in sole-source procurements, the government has mechanisms to ensure fair and reasonable pricing. This includes conducting thorough price and cost analyses, often requiring the contractor to submit detailed cost proposals. The government may use historical pricing data from previous contracts (if available and relevant), benchmark against similar commercial items or services (where applicable), and utilize should-cost estimates. Negotiation plays a key role, where contracting officers challenge contractor proposals and seek justification for costs. Furthermore, the use of specific contract types, like CPIF, can build in incentives for cost efficiency. Robust oversight and auditing by government agencies, including the Defense Contract Audit Agency (DCAA), are also critical to verifying cost allowability and reasonableness.

What is the strategic importance of the AN/APR-39 RSDS to the Department of the Army?

The AN/APR-39 Radar Signal Detecting Set (RSDS) is a crucial component of the U.S. Army's electronic warfare (EW) and situational awareness capabilities. Its primary function is to detect, identify, and locate radar threats in the electromagnetic spectrum. In modern combat environments, where adversaries increasingly rely on radar for surveillance, targeting, and air defense, the AN/APR-39 provides essential early warning. This allows friendly forces to take evasive action, employ countermeasures, or adjust tactics to mitigate threats, thereby enhancing survivability and mission effectiveness. Its continued production and fielding are vital for maintaining the Army's operational advantage and protecting personnel and assets from radar-guided threats.

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

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $105,993,890

Exercised Options: $105,993,890

Current Obligation: $105,993,890

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $839,618

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ23D0058

IDV Type: IDC

Timeline