DoD awards $10B+ contract for Minuteman III sustainment and technical services to Northrop Grumman

Contract Overview

Contract Amount: $10,009,419,769 ($10.0B)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 1998-07-01

End Date: 2025-11-30

Contract Duration: 10,014 days

Daily Burn Rate: $999.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200506!000026!5700!FA8214!OO-ALC/PKME/LMKE !F4261098C0001 !A!N! !Y! !P01502!20041213!20050701!001563738!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!888 S 2000 E !CLEARFIELD !UT!84015!13850!011!49!CLEARFIELD !DAVIS !UTAH !-000001960000!N!N!000000000000!L014!TECH REP SVCS/GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !302 !MINUTEMAN III GRP !541330!E! !3! ! !C! ! !20200930!B! ! !A! !A!N!L!2!002!B! !Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: ROY, WEBER County, UTAH, 84067

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $10.01 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200506!000026!5700!FA8214!OO-ALC/PKME/LMKE !F4261098C0001 !A!N! !Y! !P01502!20041213!20050701!001563738!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!888 S 2000 E !CLEARFIELD !UT!84015!13850!011!49!CLEARFIELD !DAVI… Key points: 1. Contract value exceeds $10 billion, indicating a significant long-term investment in critical defense infrastructure. 2. The award to Northrop Grumman, a major defense contractor, suggests a focus on established expertise for complex systems. 3. The contract duration extends to late 2025, implying ongoing needs for missile system support. 4. The 'Engineering Services' and 'Technical Representative Services/Guided Missiles' classifications highlight the specialized nature of the work. 5. The contract type is 'Cost Plus Award Fee,' which incentivizes performance but requires careful oversight to manage costs. 6. The presence of two offers suggests some level of competition, though the specifics of the bidding process warrant review.

Value Assessment

Rating: good

The contract value of over $10 billion for sustainment and technical services for the Minuteman III program is substantial. Benchmarking this against similar long-term sustainment contracts for major weapon systems is crucial. While specific per-unit costs are not provided, the 'Cost Plus Award Fee' structure suggests that pricing is tied to performance metrics, which can be a value driver if managed effectively. However, the overall cost necessitates rigorous oversight to ensure taxpayer funds are used efficiently for maintaining critical strategic assets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The data shows two offers were received. While this suggests some level of competition, the exact number of proposals and the evaluation process would provide a clearer picture of the competitive landscape. A robust competition is generally expected to drive better pricing and innovation.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it aims to secure the best value through a wide range of potential providers, potentially leading to more competitive pricing and improved service delivery.

Public Impact

The primary beneficiaries are the Department of Defense and the United States Air Force, ensuring the continued operational readiness of the Minuteman III intercontinental ballistic missile (ICBM) system. Services delivered include technical support, sustainment, and potentially upgrades or maintenance for a critical component of the nation's nuclear deterrent. The geographic impact is national, as the Minuteman III system is deployed across several states, requiring support that may extend to those locations. Workforce implications include the potential for highly skilled engineering, technical, and support roles within Northrop Grumman and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts require diligent monitoring to ensure costs remain within reasonable bounds and that award fees are justified by performance.
The long duration of the contract necessitates ongoing performance reviews and potential adjustments to ensure continued value.
The complexity of maintaining an aging ICBM system presents inherent technical and operational risks that must be actively managed.

Positive Signals

Awarding to a prime contractor with extensive experience in missile systems like Northrop Grumman suggests a strong foundation for technical execution.
The 'full and open competition' award basis indicates an effort to leverage market capabilities and potentially achieve competitive pricing.
The contract's extended period suggests a strategic commitment to ensuring the long-term viability of a critical national security asset.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on aerospace and defense services related to strategic missile systems. The market for such specialized sustainment and technical support is typically dominated by a few large, experienced defense contractors. Spending in this area is driven by national security requirements and the lifecycle management of aging but critical weapon platforms. Comparable spending benchmarks would involve other major weapon system sustainment contracts within the DoD.

Small Business Impact

The provided data does not indicate a small business set-aside for this contract, nor does it explicitly detail subcontracting plans. Given the nature and scale of the work, it is likely that Northrop Grumman will engage numerous small and medium-sized businesses as subcontractors for specialized components and services. A robust subcontracting plan would be essential to ensure opportunities for the small business ecosystem within this large prime contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Defense, likely through the Air Force's contracting and program management offices. Accountability measures would be embedded within the 'Cost Plus Award Fee' structure, linking contractor performance to financial incentives. Transparency would be facilitated through contract reporting requirements and potentially through oversight by the Government Accountability Office (GAO) and the Department of Defense Inspector General (DoDIG) for audits and investigations.

Related Government Programs

Minuteman III ICBM Sustainment Program
Strategic Deterrent Systems Support
Aerospace Engineering Services
Guided Missile Systems Maintenance
Defense Contract Management

Risk Flags

Potential for cost overruns in Cost Plus Award Fee contracts.
Risk of component obsolescence in aging weapon systems.
Ensuring consistent performance and availability of critical strategic assets.
Managing the long-term sustainment of complex, high-risk technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.01 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200506!000026!5700!FA8214!OO-ALC/PKME/LMKE !F4261098C0001 !A!N! !Y! !P01502!20041213!20050701!001563738!004179453!016435559!N!NORTHROP GRUMMAN SPACE & MISSI!888 S 2000 E !CLEARFIELD !UT!84015!13850!011!49!CLEARFIELD !DAVIS !UTAH !-000001960000!N!N!000000000000!L014!TECH REP SVCS/GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !302 !MINUTEMAN III GRP !541330!E! !3! ! !C! ! !202

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 Air Force).

What is the total obligated amount?

The obligated amount is $10.01 billion.

What is the period of performance?

Start: 1998-07-01. End: 2025-11-30.

What is Northrop Grumman's track record with the Minuteman III program and similar complex defense systems?

Northrop Grumman has a long-standing history with the Minuteman III program, serving as a key contractor for its sustainment and modernization efforts. The company has extensive experience in developing, manufacturing, and supporting large-scale aerospace and defense systems, including other strategic missile programs and space systems. Their involvement often spans decades, building deep institutional knowledge and technical expertise. This historical performance is a critical factor in their continued selection for such vital, long-term contracts, suggesting a proven capability to meet the stringent requirements of maintaining the nation's nuclear deterrent.

How does the 'Cost Plus Award Fee' (CPAF) structure compare to other contract types for long-term sustainment, and what are the implications for value?

Cost Plus Award Fee (CPAF) contracts reimburse the contractor for allowable costs plus a fixed fee that is adjusted based on performance against pre-defined metrics. This differs from fixed-price contracts, where the price is set regardless of costs, and cost-reimbursement contracts without award fees. CPAF aims to incentivize contractor performance by offering potential bonuses for exceeding expectations, which can drive better quality and efficiency. However, it also requires robust government oversight to ensure costs are reasonable and that award fees are objectively justified. For long-term sustainment, CPAF can be effective if performance metrics are well-defined and measurable, aligning contractor incentives with government objectives for readiness and cost control, thereby potentially enhancing value compared to simpler cost-reimbursement models.

What are the primary risks associated with sustaining an aging system like the Minuteman III, and how might this contract address them?

Sustaining an aging system like the Minuteman III presents several primary risks, including component obsolescence, degradation of materials over time, the need for specialized technical expertise that may be diminishing, and the potential for unforeseen failures. This contract likely addresses these risks through provisions for research and development into obsolescence solutions, proactive maintenance schedules, and the requirement for continuous technical support from experienced personnel. The 'Cost Plus Award Fee' structure can incentivize the contractor to identify and mitigate risks effectively, as successful risk management often contributes to meeting performance targets. Furthermore, the long contract duration allows for strategic planning and investment in sustainment strategies over the system's remaining lifecycle.

Can we benchmark the per-unit cost or total cost of ownership for the Minuteman III sustainment against comparable ICBM programs?

Benchmarking the per-unit cost or total cost of ownership for the Minuteman III sustainment against comparable ICBM programs is challenging due to the unique nature of each system, varying lifecycles, and differences in sustainment strategies and reporting. Direct comparisons are often difficult as specific cost breakdowns, operational tempos, and upgrade cycles differ significantly between programs like the Minuteman III, the Trident II (D5) submarine-launched ballistic missile, or potential future ICBMs. Publicly available data on the exact per-unit sustainment cost for specific missile systems is rarely disclosed in detail. However, the overall $10 billion+ contract value over several years indicates a substantial investment, reflecting the high cost associated with maintaining the readiness and security of a strategic nuclear deterrent.

What is the historical spending trend for Minuteman III sustainment and related services over the past decade?

Historical spending on Minuteman III sustainment and related services over the past decade has been substantial, reflecting the ongoing need to maintain this critical component of the U.S. nuclear triad. While precise year-over-year figures fluctuate based on specific modernization efforts, sustainment needs, and contract awards, the overall trend indicates consistent, significant investment. The Air Force has allocated billions of dollars annually towards ensuring the Minuteman III's readiness, including sustainment, modernization programs (like the Ground Based Strategic Deterrent replacement), and operational support. This contract, valued at over $10 billion, represents a continuation of this long-term financial commitment to the ICBM force.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 6006 WARDLEIGH RD BLDG 1575, HILL AIR FORCE BASE, UT, 84056

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,651,609,889

Exercised Options: $1,645,365,837

Current Obligation: $10,009,419,769

Actual Outlays: $191,183

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline