DoD's $933.77M missile system development contract awarded to Northrop Grumman in 1999 shows long-term, high-value engagement

Contract Overview

Contract Amount: $198,708,489 ($198.7M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 1999-07-28

End Date: 2013-04-18

Contract Duration: 5,013 days

Daily Burn Rate: $39.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: 199910!2100!2310!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0199C0154 !A!*!* !19990728!20030531!933771008!008255408!008255408!N!2S209!NORTHROP GRUMMAN CORPORATION !1580 B WEST NURSERY RD !LINTHICUM HEIG !MD!21090!47150!003!24!LINTHICUM HEIGHTS !ANNE ARUNDEL !MARYLAND !0001!+000011540000!N!N!000000000000!AC27!RDTE/MISSILE AND SPACE SYSTEMS-OP SYSTEM DEVELOP !A2 !MISSILE AND SPACE SYSTEMS !1CNQ!BRLNT ANTI-ARMOR SUBMUNITION !8731!3!*!*!*!B!A!*!D !N!V!1!001!N!1G!C!Y!Z!* !* !N!C!*!Z!Z!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35806

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $198.7 million to NORTHROP GRUMMAN CORPORATION for work described as: 199910!2100!2310!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0199C0154 !A!*!* !19990728!20030531!933771008!008255408!008255408!N!2S209!NORTHROP GRUMMAN CORPORATION !1580 B WEST NURSERY RD !LINTHICUM HEIG !MD!21090!47150!003!24!LINTHICUM HEIGHTS !ANNE A… Key points: 1. Contract awarded in 1999 for missile and space systems development, indicating a long-standing program. 2. Northrop Grumman, a major defense contractor, secured this significant award. 3. The contract type, Cost Plus Incentive, suggests performance-based incentives were part of the agreement. 4. A substantial duration of over 5000 days points to a complex, multi-year project. 5. The contract's value of over $933 million highlights the scale of the missile and space systems sector. 6. Awarded by the Department of the Army, this contract is critical for national defense capabilities.

Value Assessment

Rating: fair

The total award amount of $933.77 million over a period of approximately 13.7 years suggests a significant investment in missile and space systems development. Benchmarking this against similar, long-term R&D contracts in the defense sector is challenging due to the specialized nature of missile systems. However, the Cost Plus Incentive fee structure implies that the final cost could have varied based on performance metrics, making a direct price comparison difficult without detailed performance data. The sheer scale and duration indicate a substantial commitment, but the value-for-money assessment requires deeper insight into the system's effectiveness and the achieved performance against targets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Department of the Army determined that only Northrop Grumman could provide the necessary services or technology for this specific missile and space systems development. Sole-source awards often occur when a contractor possesses unique capabilities, intellectual property, or has been involved in the system's development from its inception, making competition impractical or detrimental to program continuity. The lack of competition means that price discovery through a bidding process was bypassed.

Taxpayer Impact: For taxpayers, a sole-source award means there was no opportunity for competitive bidding to potentially drive down costs. The government relies on negotiation and oversight to ensure a fair price, which can be less effective than market-driven competition.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Army, receiving advanced missile and space systems capabilities. The contract supports the development of critical technologies for national security and defense. Geographic impact is primarily within the United States, supporting defense industrial bases and research facilities. Workforce implications include highly skilled engineers, scientists, and technicians employed by Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Incentive fee structure can lead to cost overruns if not tightly managed.
Long contract duration increases the risk of scope creep and evolving requirements.
Lack of public detail on performance metrics makes value assessment difficult.

Positive Signals

Award to a major defense contractor like Northrop Grumman suggests access to specialized expertise.
Missile and space systems development is critical for national security, implying high strategic importance.
The contract's long duration indicates a sustained commitment to a potentially complex and vital program.

Sector Analysis

This contract falls within the Research, Development, Test, and Evaluation (RDTE) sector, specifically focusing on missile and space systems. The defense industry, particularly in advanced weapons systems, is characterized by high R&D investment, long development cycles, and significant government funding. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of such systems, but the scale of this award is indicative of major defense programs. The market is dominated by a few large prime contractors capable of undertaking such complex endeavors.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans within the provided data. As a sole-source award to a large prime contractor, the focus is likely on Northrop Grumman's direct capabilities. However, large defense contracts often involve a tiered subcontracting structure where small businesses may participate indirectly, though this specific contract's details do not highlight such opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Given the nature of RDTE contracts, especially those with Cost Plus Incentive fee structures, rigorous oversight of technical progress, cost expenditure, and performance metrics is crucial. The Defense Contract Audit Agency (DCAA) and potentially the Department of Defense Inspector General would have oversight responsibilities concerning financial and performance audits to ensure accountability and prevent fraud.

Related Government Programs

Missile Defense Systems
Space Systems Development
Advanced Weapons Research
Department of Defense RDTE Programs
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Long contract duration
Cost Plus Incentive fee structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $198.7 million to NORTHROP GRUMMAN CORPORATION. 199910!2100!2310!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0199C0154 !A!*!* !19990728!20030531!933771008!008255408!008255408!N!2S209!NORTHROP GRUMMAN CORPORATION !1580 B WEST NURSERY RD !LINTHICUM HEIG !MD!21090!47150!003!24!LINTHICUM HEIGHTS !ANNE ARUNDEL !MARYLAND !0001!+000011540000!N!N!000000000000!AC27!RDTE/MISSILE AND SPACE SYSTEMS-OP SYSTEM DEVELOP !A2 !MISSILE AND SPACE SYSTEMS !1CNQ!BRLNT ANTI-ARMOR SUBMUNITION !8731!3!*!*!*!B!A!*!D !N!V!1!0

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN 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 $198.7 million.

What is the period of performance?

Start: 1999-07-28. End: 2013-04-18.

What specific missile and space systems were developed under this contract?

The provided data indicates the contract's purpose was 'RDTE/MISSILE AND SPACE SYSTEMS-OP SYSTEM DEVELOP' and specifically mentions 'BRLNT ANTI-ARMOR SUBMUNITION'. This suggests the contract was for research, development, testing, and evaluation related to advanced missile systems, potentially including anti-armor submunitions and their operational systems. However, the exact technical specifications, system names, or the specific operational capabilities developed are not detailed in the summary data. Further investigation into contract line item numbers (CLINs) and associated technical documentation would be required to ascertain the precise systems and technologies involved.

How did Northrop Grumman's performance compare to the incentive targets in this Cost Plus Incentive contract?

The provided data does not include specific performance metrics or the final fee awarded to Northrop Grumman under this Cost Plus Incentive (CPI) contract. CPI contracts are designed with incentive targets for cost, performance, or schedule, where the contractor's fee varies based on how well they meet or exceed these targets. To assess performance, one would need access to the contract's baseline targets, the contractor's actual performance data against those targets, and the final fee determination. Without this detailed information, it's impossible to evaluate whether Northrop Grumman achieved excellent, good, or merely acceptable performance relative to the incentives.

What is the historical spending trend for missile and space systems development within the Department of the Army?

The Department of the Army consistently allocates significant funding towards Research, Development, Test, and Evaluation (RDTE) for missile and space systems, reflecting their critical role in national defense strategy. Historical spending trends show a sustained, often increasing, investment in this area, driven by evolving threats, technological advancements, and the need for modernization. While this specific $933.77 million contract from 1999 represents a substantial single award, the Army's overall RDTE budget for such systems typically runs into billions of dollars annually. Analyzing multi-year budget appropriations and contract awards provides a clearer picture of the long-term investment trajectory and priorities in this domain.

What are the potential risks associated with a sole-source award for advanced missile systems development?

Sole-source awards for complex projects like advanced missile systems development carry inherent risks. Primarily, the absence of competition can lead to higher costs for the government, as there is less pressure on the contractor to offer the most competitive pricing. There's also a risk of complacency from the contractor, potentially impacting innovation or efficiency. Furthermore, reliance on a single source can create vulnerabilities if the contractor faces financial instability, technical challenges, or strategic shifts. Ensuring robust government oversight, stringent negotiation, and clear performance metrics becomes paramount to mitigate these risks and achieve program objectives effectively.

How does the duration of this contract (over 5000 days) impact its overall value and risk profile?

A contract duration exceeding 5000 days (approximately 13.7 years) for missile and space systems development signifies a long-term, complex undertaking. This extended timeline allows for in-depth research, iterative development, and thorough testing, which is often necessary for cutting-edge defense technologies. However, it also introduces significant risks. Requirements can change substantially over such a long period due to evolving threats, technological advancements, or shifts in strategic priorities, potentially leading to scope creep and cost overruns. Managing such a protracted program requires continuous oversight, adaptive planning, and strong contract management to ensure the final product remains relevant and cost-effective.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

Contractor Details

Address: 1580 B WEST NURSERY RD, LINTHICUM HEIG, MD

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline