DoD's $11.7B GBSD contract with Northrop Grumman faces scrutiny over cost and competition

Contract Overview

Contract Amount: $11,719,559,923 ($11.7B)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2020-09-08

End Date: 2029-03-10

Contract Duration: 3,105 days

Daily Burn Rate: $3.8M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: GROUND-BASED STRATEGIC DETERRENT (GBSD) ENGINEERING AND MANUFACTURING DEVELOPMENT (EMD) AND EARLY PRODUCTION AND DEPLOYMENT (P&D)

Place of Performance

Location: ROY, WEBER County, UTAH, 84067

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $11.72 billion to NORTHROP GRUMMAN SYSTEMS CORP for work described as: GROUND-BASED STRATEGIC DETERRENT (GBSD) ENGINEERING AND MANUFACTURING DEVELOPMENT (EMD) AND EARLY PRODUCTION AND DEPLOYMENT (P&D) Key points: 1. The Ground-Based Strategic Deterrent (GBSD) program represents a significant investment in national defense infrastructure. 2. Northrop Grumman is the sole provider, raising concerns about lack of competition and potential cost overruns. 3. The contract's cost-plus incentive fee structure may incentivize higher spending. 4. The long duration of the contract (over 5 years) increases exposure to evolving technological and geopolitical risks.

Value Assessment

Rating: questionable

The $11.7 billion awarded is for engineering, manufacturing, and early production, with a long-term outlook suggesting substantial future costs. Benchmarking is difficult due to the unique, high-stakes nature of strategic deterrence systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and negotiation leverage for the government, potentially leading to higher costs than a competitive process.

Taxpayer Impact: The lack of competition and sole-source nature of this large contract raises concerns about taxpayer value and the potential for inflated costs over its lifecycle.

Public Impact

Modernization of the U.S. nuclear triad, ensuring strategic deterrence. Potential for significant long-term spending on sustainment and upgrades. Impact on the aerospace and defense industrial base, particularly in specialized manufacturing. Geopolitical implications of maintaining and updating strategic missile capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Cost-plus contract type can incentivize spending.
Long contract duration increases risk.
Lack of transparency in pricing due to sole-source.

Positive Signals

Addresses critical national security need.
Utilizes a major defense contractor with relevant experience.
Incentive fee structure aims to control costs.

Sector Analysis

The GBSD program falls within the Defense sector, specifically Guided Missile and Space Vehicle Manufacturing. Spending in this niche area is characterized by high R&D costs, long development cycles, and significant government oversight due to national security implications.

Small Business Impact

The data indicates this is a large prime contract awarded to Northrop Grumman, a major defense corporation. There is no explicit information provided regarding subcontracting opportunities for small businesses within this specific contract award.

Oversight & Accountability

The Department of the Air Force is the contracting agency. Oversight will be critical given the sole-source nature and significant cost. Mechanisms like the Government Accountability Office (GAO) and internal DoD audits will be essential for accountability.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competitive pressure.
Cost-plus contract type can lead to cost overruns.
Long program duration increases risk of obsolescence and cost escalation.
High dollar value of the contract presents significant financial risk.
Lack of transparency in pricing due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.72 billion to NORTHROP GRUMMAN SYSTEMS CORP. GROUND-BASED STRATEGIC DETERRENT (GBSD) ENGINEERING AND MANUFACTURING DEVELOPMENT (EMD) AND EARLY PRODUCTION AND DEPLOYMENT (P&D)

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

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 $11.72 billion.

What is the period of performance?

Start: 2020-09-08. End: 2029-03-10.

What is the projected total lifecycle cost of the GBSD program, and how does it compare to previous ICBM modernization efforts?

The current contract is for Engineering and Manufacturing Development (EMD) and early Production & Deployment (P&D), totaling $11.7 billion. However, the full lifecycle cost for the GBSD program is estimated to be significantly higher, potentially exceeding $100 billion over its operational life. Comparisons to previous ICBM modernization efforts are complex due to inflation and evolving technological requirements, but this program is considered one of the most expensive defense acquisition programs.

Given the sole-source nature, what mechanisms are in place to ensure Northrop Grumman is providing the best possible value and managing costs effectively?

While sole-source awards limit direct price competition, the government employs several oversight mechanisms. These include detailed contract surveillance, performance metrics, and the Cost Plus Incentive Fee (CPIF) structure, which links contractor profit to achieving specific cost, schedule, and performance targets. Regular audits and reviews by the Department of Defense and potentially the Government Accountability Office (GAO) are also crucial for cost control and value assessment.

How will the GBSD program's success be measured, particularly in terms of its effectiveness in maintaining strategic deterrence against evolving threats?

The effectiveness of the GBSD program will be measured by its ability to field a reliable, safe, and secure strategic deterrent system capable of surviving and responding to future threats. Key metrics will include system availability, operational readiness rates, successful test launches, and the system's resilience against potential adversary countermeasures. Ultimately, its success is tied to maintaining the credibility of the U.S. nuclear triad and deterring strategic attacks.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 5770 S MISSILE WAY, ROY, UT, 84067

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

Financial Breakdown

Contract Ceiling: $13,360,972,364

Exercised Options: $13,360,972,364

Current Obligation: $11,719,559,923

Subaward Activity

Number of Subawards: 4037

Total Subaward Amount: $27,449,190,862

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline