DoD's Northrop Grumman Awarded $121M for ICBM Software Sustainment, Facing Potential Cost Overruns

Contract Overview

Contract Amount: $121,452,381 ($121.5M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-09-01

End Date: 2026-08-31

Contract Duration: 1,825 days

Daily Burn Rate: $66.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 625TH STRATEGIC OPERATIONS SQUADRON AND INTERCONTINENTAL BALLISTIC MISSILE OPERATIONAL SOFTWARE SUSTAINMENT PROGRAM/ CONTRACTOR LOGISTICS SUPPORT

Place of Performance

Location: HILL AFB, DAVIS County, UTAH, 84056

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $121.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 625TH STRATEGIC OPERATIONS SQUADRON AND INTERCONTINENTAL BALLISTIC MISSILE OPERATIONAL SOFTWARE SUSTAINMENT PROGRAM/ CONTRACTOR LOGISTICS SUPPORT Key points: 1. Contract awarded to Northrop Grumman for critical ICBM software sustainment. 2. Significant contract value of $121.45M over 5 years. 3. Potential for cost overruns due to Cost Plus Award Fee structure. 4. Engineering Services sector, NAICS 541330, with limited small business participation.

Value Assessment

Rating: questionable

The Cost Plus Award Fee (CPAF) structure, while incentivizing performance, carries inherent risk of cost escalation. Benchmarking against similar complex software sustainment contracts is difficult without more granular cost data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the CPAF structure may not fully optimize price discovery compared to fixed-price contracts.

Taxpayer Impact: Taxpayer funds are being utilized for a critical national security program. The CPAF structure necessitates close monitoring to ensure cost efficiency and prevent unnecessary expenditure.

Public Impact

Ensures the operational readiness of Intercontinental Ballistic Missiles, a key component of national defense. Supports advanced engineering and software sustainment services for complex military systems. Potential impact on defense budget allocation due to contract value and fee structure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Positive Signals

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting complex defense systems. Spending benchmarks for ICBM software sustainment are highly specialized and not readily comparable to broader engineering services.

Small Business Impact

The contract indicates no small business participation (SB=false). This suggests that the prime contractor, Northrop Grumman, is handling the entirety of the work, potentially limiting opportunities for smaller, specialized firms in this domain.

Oversight & Accountability

The Department of the Air Force is the contracting agency. Oversight will be crucial to manage the CPAF structure effectively, ensuring performance targets are met without excessive cost growth and that funds are used judiciously.

Related Government Programs

Risk Flags

Tags

engineering-services, department-of-defense, ut, delivery-order, 100m-plus

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $121.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 625TH STRATEGIC OPERATIONS SQUADRON AND INTERCONTINENTAL BALLISTIC MISSILE OPERATIONAL SOFTWARE SUSTAINMENT PROGRAM/ CONTRACTOR LOGISTICS SUPPORT

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 $121.5 million.

What is the period of performance?

Start: 2021-09-01. End: 2026-08-31.

What specific performance metrics are tied to the award fee, and how are they measured to ensure fair compensation and prevent contractor overreach?

The specific performance metrics for the award fee are not detailed in the provided data. However, typical metrics for such contracts include system availability, reliability, response times for critical issues, and successful implementation of software updates. The Air Force's contracting officers would be responsible for defining, monitoring, and evaluating these metrics against pre-defined targets to determine the award fee amount.

Given the CPAF structure, what mechanisms are in place to mitigate the risk of cost overruns and ensure the government receives the best value?

Mitigation strategies for CPAF contracts typically involve robust government oversight, detailed cost tracking, and clearly defined performance objectives linked to the award fee. The government must actively manage the contract, scrutinize contractor expenditures, and ensure that the award fee is genuinely earned through exceptional performance rather than simply incurred costs. Regular audits and performance reviews are essential.

How does the sustainment of this ICBM operational software contribute to the overall effectiveness and readiness of the U.S. strategic deterrent?

The operational software sustainment is fundamental to the effectiveness and readiness of the U.S. strategic deterrent. It ensures the reliability, security, and functionality of the command and control systems for Intercontinental Ballistic Missiles. Without continuous updates, maintenance, and modernization, these critical systems could degrade, compromising their ability to function when needed and thus weakening the nation's nuclear deterrence posture.

Industry Classification

NAICS: Professional, Scientific, and Technical ServicesArchitectural, Engineering, and Related ServicesEngineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

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

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

Financial Breakdown

Contract Ceiling: $145,863,486

Exercised Options: $130,768,889

Current Obligation: $121,452,381

Subaward Activity

Number of Subawards: 65

Total Subaward Amount: $457,611,318

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821421D0002

IDV Type: IDC

Timeline

Start Date: 2021-09-01

Current End Date: 2026-08-31

Potential End Date: 2026-08-31 00:00:00

Last Modified: 2026-01-15

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