DoD awards $66.9M for AN/APR-39 Radar Signal Detecting Sets to Northrop Grumman, a sole-source contract

Contract Overview

Contract Amount: $66,872,733 ($66.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2024-10-31

End Date: 2028-02-15

Contract Duration: 1,202 days

Daily Burn Rate: $55.6K/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 $66.9 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 cost-plus-incentive-fee basis, allowing for shared cost savings and potential for higher profit if targets are met. 2. The contract is a sole-source award, raising questions about price discovery and potential for overpayment. 3. The duration of the contract is 1202 days, indicating a long-term need for these systems. 4. The award is for production of Radar Signal Detecting Sets, a critical component for military operations. 5. Northrop Grumman is a major defense contractor with extensive experience in this product area. 6. The contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, suggesting a pre-existing relationship and established pricing structure.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The cost-plus-incentive-fee structure introduces variability, but the absence of competition limits the ability to assess if the pricing reflects market rates or if taxpayers are receiving the best possible value. Further analysis of historical pricing for similar systems and Northrop Grumman's profit margins would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. While sole-source awards can be justified for unique capabilities or urgent needs, they reduce transparency and limit the government's ability to secure the most favorable pricing.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This limits the government's negotiating power and potentially reduces the overall value for money.

Public Impact

The primary beneficiaries are the Department of the Army, which will receive critical radar signal detecting sets to enhance situational awareness and survivability. The services delivered include the production and delivery of advanced radar signal detecting systems, essential for modern warfare. The geographic impact is primarily within the United States, where Northrop Grumman's facilities are located, and potentially at deployment sites globally. Workforce implications include continued employment for engineers, technicians, and manufacturing personnel at Northrop Grumman's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Cost-plus-incentive-fee structure can lead to cost overruns if not managed effectively.
Lack of transparency in pricing due to sole-source nature.
Reliance on a single contractor for critical defense systems.

Positive Signals

Northrop Grumman is an established provider with proven expertise in radar systems.
Cost-plus-incentive-fee structure can incentivize efficiency and cost control.
Long-term contract indicates a sustained need and potential for stable production.
Delivery order under an IDIQ suggests a streamlined process for a known requirement.

Sector Analysis

The defense electronics sector is characterized by high research and development costs, long product lifecycles, and significant government procurement. Companies like Northrop Grumman operate within a market dominated by a few large prime contractors. Spending in this area is driven by the need for advanced technological capabilities to maintain military superiority. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of radar systems, but overall defense electronics procurement represents a substantial portion of the DoD budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Northrop Grumman, is a large defense corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses are unlikely to be the primary recipients of this award, though they may participate as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The cost-plus-incentive-fee (CPIF) structure necessitates close monitoring of costs and performance to ensure the government receives value. Accountability measures are embedded in the incentive clauses of the CPIF contract, which reward the contractor for meeting or exceeding cost and performance targets. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and payment data are generally subject to review by oversight bodies and potentially the Government Accountability Office (GAO) if disputes arise.

Related Government Programs

AN/APR Series Radar Systems
Defense Electronic Warfare Systems
Military Radar and Navigation Equipment Manufacturing
Northrop Grumman Defense Contracts
Department of the Army Procurement

Risk Flags

Sole-source award
Lack of competitive bidding
Cost-plus contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.9 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 $66.9 million.

What is the period of performance?

Start: 2024-10-31. End: 2028-02-15.

What is the track record of Northrop Grumman in delivering similar radar systems to the DoD?

Northrop Grumman Systems Corporation has a long and established history of developing and producing advanced electronic warfare and radar systems for the U.S. military. They are a major defense contractor with significant expertise in areas such as signal intelligence, electronic countermeasures, and radar technology. The AN/APR-39 family of systems, which this contract pertains to, has been a staple in U.S. and allied aircraft for decades, with Northrop Grumman being a key player in its evolution and production. Their track record includes numerous successful deliveries and upgrades of similar systems, indicating a high level of technical capability and program execution experience. However, like many large defense programs, specific program performance metrics, including on-time delivery and cost performance for past contracts, would require deeper dives into historical contract data and performance reports.

How does the cost-plus-incentive-fee (CPIF) structure typically impact final contract costs compared to other contract types?

The Cost-Plus-Incentive-Fee (CPIF) contract type is designed to encourage both contractor efficiency and government cost savings. Under a CPIF agreement, the final profit is adjusted based on whether the final costs are above or below the negotiated target cost. If the contractor achieves cost savings below the target, both the contractor and the government share in the savings, with the contractor receiving a higher profit. Conversely, if costs exceed the target, the contractor's profit is reduced, and in some cases, the government may also share in the excess costs. This structure aims to align the contractor's financial interests with the government's objective of controlling costs, making it potentially more cost-effective than a simple cost-plus-fixed-fee (CPFF) contract where profit is fixed regardless of cost. However, it requires robust government oversight to ensure accurate cost accounting and effective negotiation of targets and sharing ratios.

What are the primary risks associated with sole-source defense contracts like this one?

Sole-source defense contracts carry several inherent risks for the government and taxpayers. The most significant risk is the lack of price competition, which can lead to inflated prices as the contractor faces no pressure to offer the most competitive bid. This absence of competition can reduce the government's negotiating leverage and potentially result in paying more than necessary for goods or services. Another risk is reduced innovation; without competitive pressures, a sole-source contractor may have less incentive to invest in developing more efficient or advanced solutions. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future. Finally, the lack of transparency in the procurement process can raise concerns about fairness and the efficient use of public funds.

What is the strategic importance of the AN/APR-39 RADAR SIGNAL DETECTING SET (RSDS) for the Department of the Army?

The AN/APR-39 RADAR SIGNAL DETECTING SET (RSDS) is a crucial electronic warfare (EW) system that provides aircrews with vital threat warning information. Its primary function is to detect and identify radar signals emitted by enemy air defense systems, such as surface-to-air missiles (SAMs) and anti-aircraft artillery (AAA). By providing timely and accurate threat warnings, the AN/APR-39 significantly enhances the survivability of aircraft operating in hostile airspace. It allows pilots to take evasive maneuvers, employ countermeasures, or reroute to avoid engagement. In modern conflict scenarios, where sophisticated integrated air defense systems are prevalent, the AN/APR-39 is indispensable for enabling air superiority, close air support, reconnaissance, and other critical aviation missions for the Department of the Army.

How does the contract's duration (1202 days) align with typical procurement cycles for complex defense systems?

A contract duration of 1202 days, approximately 3.3 years, is relatively standard for the production and delivery phase of complex defense systems like radar signal detecting sets. These systems often involve intricate manufacturing processes, rigorous testing, and integration into larger platforms (e.g., aircraft). The lead times for specialized components, the need for quality assurance at multiple stages, and the potential for phased deliveries contribute to extended production timelines. Furthermore, defense procurement often involves multi-year strategies to ensure a steady supply of critical equipment. A duration of this length suggests a sustained production requirement and allows the contractor sufficient time to ramp up production, manage the supply chain, and meet the delivery schedule without undue pressure, while also providing the government with a predictable supply.

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: $66,872,733

Exercised Options: $66,872,733

Current Obligation: $66,872,733

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $882,285

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