Northrop Grumman awarded $150.7M for Common Infrared Countermeasures (CIRCM) system production, a sole-source contract

Contract Overview

Contract Amount: $150,694,299 ($150.7M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-11-15

End Date: 2026-09-30

Contract Duration: 1,050 days

Daily Burn Rate: $143.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COMMON INFRARED COUNTERMEASURES (CIRCM) SYSTEM FOR PRODUCTION OF B-KIT HARDWARE - DELIVERY ORDER 04

Place of Performance

Location: ROLLING MEADOWS, COOK County, ILLINOIS, 60008

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $150.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: COMMON INFRARED COUNTERMEASURES (CIRCM) SYSTEM FOR PRODUCTION OF B-KIT HARDWARE - DELIVERY ORDER 04 Key points: 1. Contract awarded to a single, established provider suggests limited market exploration for potential cost savings. 2. The firm-fixed-price structure shifts performance risk to the contractor, but price competitiveness is unverified. 3. Delivery order for B-Kit hardware indicates a specific component within a larger, ongoing defense system. 4. Long contract duration (1050 days) requires careful monitoring of performance and potential cost overruns. 5. Sole-source award raises questions about the government's ability to secure the best possible value. 6. The contract is part of a broader Department of the Army initiative for aircraft survivability.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The $150.7 million award for CIRCM B-Kit hardware production lacks direct comparison points. While firm-fixed-price contracts aim for cost certainty, the absence of competition means the government cannot definitively assess if this price represents optimal value for money compared to what multiple bidders might offer. Further analysis would require understanding the specific technological advancements and production complexities involved, and comparing them to industry standards for similar advanced defense systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or existing system integration, they limit the government's ability to leverage market competition to drive down prices and encourage innovation from a wider range of suppliers. The lack of competition here means potential cost efficiencies that could arise from a bidding process are not realized.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, it's difficult to ascertain if the awarded price reflects the lowest achievable cost for this critical defense hardware.

Public Impact

The primary beneficiaries are the Department of the Army, enhancing the survivability of its aircraft fleet. The contract delivers essential B-Kit hardware for the Common Infrared Countermeasures (CIRCM) system. This system is crucial for protecting military aircraft from infrared-guided missile threats. The contract supports advanced manufacturing capabilities within the defense industrial base. Work is anticipated to occur in Illinois, potentially impacting the local workforce in that state.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for taxpayers.
Lack of competition may reduce incentives for the contractor to optimize efficiency.
Long contract duration increases exposure to potential scope creep or unforeseen cost increases.
Absence of small business subcontracting goals noted, potentially limiting opportunities for smaller firms.

Positive Signals

Award to an established contractor with likely expertise in CIRCM systems ensures continuity.
Firm-fixed-price contract shifts cost overrun risk to the contractor.
Contract supports a critical defense capability aimed at enhancing aircraft survivability.
Delivery order is part of a larger, ongoing program, indicating strategic alignment.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, complex supply chains, and significant government procurement. The Common Infrared Countermeasures (CIRCM) system falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry code (NAICS 334511). This market often involves specialized, high-value components where a few large contractors dominate. Spending on such advanced defense systems is substantial, with billions allocated annually to maintain and upgrade military aviation capabilities. This contract represents a specific procurement within that larger ecosystem, focusing on a critical electronic warfare component.

Small Business Impact

This contract was not set aside for small businesses, and there is no explicit indication of small business subcontracting requirements. The award to Northrop Grumman, a large defense contractor, suggests that the primary focus is on leveraging existing capabilities for a specialized system. This approach may limit direct opportunities for small businesses to participate in this specific contract, although they might be involved further down the supply chain. The absence of set-aside provisions means that the direct economic impact on the small business ecosystem from this particular award is likely minimal.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, scrutiny may focus on the justification for non-competition and the reasonableness of the price. Transparency is facilitated by contract databases, but detailed performance metrics and cost breakdowns may not be publicly available. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Common Infrared Countermeasures (CIRCM) Program
Aircraft Survivability Equipment (ASE)
Department of Defense Procurement
Northrop Grumman Defense Contracts
Military Aviation Systems

Risk Flags

Sole-source award lacks competitive justification.
Potential for uncompetitive pricing.
Long contract duration increases risk exposure.
Limited transparency on cost breakdown.
No explicit small business subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $150.7 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. COMMON INFRARED COUNTERMEASURES (CIRCM) SYSTEM FOR PRODUCTION OF B-KIT HARDWARE - DELIVERY ORDER 04

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 $150.7 million.

What is the period of performance?

Start: 2023-11-15. End: 2026-09-30.

What is the historical spending trend for the Common Infrared Countermeasures (CIRCM) system, and how does this award compare?

Analyzing historical spending for the CIRCM program is crucial for context. While specific figures for the entire CIRCM program are not provided in this data snippet, this $150.7 million delivery order for B-Kit hardware production represents a significant investment. Typically, CIRCM systems involve substantial development and production costs due to their advanced technological nature. Previous awards for CIRCM components, integration, or full systems would provide a benchmark. A trend of increasing or stable spending might indicate sustained demand and program maturity, while significant fluctuations could signal program changes, budget adjustments, or evolving threat assessments. Without comparative historical data for this specific B-Kit production, it's difficult to definitively state if this award is higher or lower than expected, but its scale suggests a critical production phase.

What is Northrop Grumman's track record with the CIRCM system or similar defense electronics?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in aerospace and defense electronics, including electronic warfare systems. They have been a key player in the development and production of the CIRCM system, often serving as the prime contractor or a significant component supplier. Their track record with CIRCM likely involves successful integration, testing, and delivery of previous system versions or components. Beyond CIRCM, Northrop Grumman produces a wide array of advanced systems, such as radar, avionics, and other electronic warfare solutions for various military platforms. This established expertise suggests a high probability of successful execution for this delivery order, although it also underscores the rationale behind the sole-source award due to their specialized knowledge and existing role in the program.

What are the primary risks associated with this sole-source contract for the CIRCM B-Kit hardware?

The primary risk associated with this sole-source contract is the lack of price competition. Without multiple bidders, the government cannot be assured that the negotiated price represents the best value achievable in a competitive market. This could lead to higher costs for taxpayers. Another risk is potential contractor complacency; without competitive pressure, there might be less incentive for Northrop Grumman to aggressively pursue cost efficiencies or accelerate delivery timelines beyond contractual minimums. Furthermore, reliance on a single source can create supply chain vulnerabilities. If Northrop Grumman faces production issues, delays, or quality control problems, the entire CIRCM program could be significantly impacted, as alternative suppliers are not readily available. Finally, the long duration increases the risk of scope creep or unforeseen technological obsolescence.

How does the firm-fixed-price (FFP) contract type mitigate or introduce risks for this CIRCM hardware delivery?

The Firm-Fixed-Price (FFP) contract type is generally favored by the government as it shifts the majority of cost risk to the contractor, Northrop Grumman. This means that the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. If production costs exceed estimates, Northrop Grumman absorbs the loss. Conversely, if they manage costs effectively, they retain the profit. This structure provides budget certainty for the Department of the Army. However, FFP contracts can introduce risks if the initial price is not well-negotiated, especially in a sole-source environment. If the baseline price is too high due to lack of competition, the government pays a premium. Additionally, contractors under FFP may be incentivized to cut corners on quality or performance to protect their profit margin, necessitating robust government oversight and quality assurance measures.

What is the strategic importance of the CIRCM system and its B-Kit hardware for the Department of the Army?

The Common Infrared Countermeasures (CIRCM) system is strategically vital for the Department of the Army as it provides a critical defense layer against modern infrared-guided missiles, which pose a significant threat to rotary-wing and other aircraft. The B-Kit hardware represents a foundational component or sub-assembly necessary for the installation and operation of the CIRCM system on various aircraft platforms. Ensuring a reliable supply of this hardware is essential for maintaining and enhancing the survivability of the Army's aviation assets in contested environments. The CIRCM system contributes directly to mission success by reducing the vulnerability of aircrews and aircraft, thereby preserving combat power and enabling operations in high-threat areas. This contract ensures the continued availability of this crucial technology.

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: 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: $150,694,299

Exercised Options: $150,694,299

Current Obligation: $150,694,299

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $1,417,324

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ21D0028

IDV Type: IDC

Timeline