DoD's $26.3M R&D contract awarded to Northrop Grumman for advanced missile systems

Contract Overview

Contract Amount: $26,291,347 ($26.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2011-06-29

End Date: 2014-04-30

Contract Duration: 1,036 days

Daily Burn Rate: $25.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MILSR

Place of Performance

Location: LINTHICUM HEIGHTS, ANNE ARUNDEL County, MARYLAND, 21090

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $26.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: MILSR Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Sole-source award raises concerns about potential lack of competitive pricing. 3. Contract duration of over 3 years suggests a complex and potentially high-risk project. 4. Awarded by the Department of the Air Force, indicating a focus on aerospace and defense capabilities. 5. The North American Industry Classification System (NAICS) code 541712 points to significant research and development investment. 6. The contract's value, while substantial, needs benchmarking against similar R&D efforts to assess value for money.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure inherently carries higher risk for the government compared to fixed-price contracts. Without detailed cost breakdowns and performance metrics, it is difficult to definitively assess value for money. Benchmarking this specific R&D effort against similar advanced missile system development contracts would be crucial for a comprehensive value assessment. The absence of competitive bidding further complicates a direct price comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or technologies essential for the requirement. However, sole-source awards limit price discovery and can potentially lead to higher costs for the government compared to a competitively bid contract.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding, potentially leading to a less efficient use of public funds.

Public Impact

The Department of Defense, specifically the Air Force, is the primary beneficiary, enhancing its missile defense capabilities. The contract supports advanced research and development in physical, engineering, and life sciences, contributing to technological advancement. The geographic impact is likely concentrated in areas related to Northrop Grumman's research facilities, primarily Maryland. Workforce implications include highly skilled engineers, scientists, and technicians involved in cutting-edge defense technology development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type increases financial risk for the government.
Sole-source award limits competitive pressure on pricing.
Long contract duration may indicate complexity and potential for scope creep.
Lack of publicly available performance metrics makes value assessment challenging.

Positive Signals

Award to a major defense contractor suggests access to specialized expertise.
Focus on R&D indicates investment in future technological capabilities.
Contract awarded by the Department of the Air Force aligns with strategic defense priorities.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on research and development for advanced missile systems. The aerospace and defense industry is characterized by high R&D investment, long development cycles, and significant government procurement. Comparable spending benchmarks would involve analyzing other large-scale R&D contracts for weapon systems and defense technologies within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. This suggests that the primary focus is on the prime contractor's capabilities, and the direct impact on the small business ecosystem may be limited unless Northrop Grumman actively engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. Accountability measures would be tied to the cost-plus-fixed-fee structure, requiring detailed reporting of costs and progress. Transparency is limited due to the sole-source nature and the sensitive R&D focus, with specific oversight likely falling under the purview of relevant Inspector General offices for defense contracts.

Related Government Programs

Missile Defense Systems
Advanced Weapons Research
Aerospace Engineering Services
Department of Defense Research and Development

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of publicly available performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. MILSR

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 $26.3 million.

What is the period of performance?

Start: 2011-06-29. End: 2014-04-30.

What is Northrop Grumman's track record with similar sole-source R&D contracts for the Department of Defense?

Northrop Grumman has a long history of working with the Department of Defense on complex R&D programs, often in sole-source or limited competition environments due to the specialized nature of defense technologies. Analyzing their past performance on cost-plus-fixed-fee contracts, particularly those involving missile systems or advanced aerospace technologies, would provide insight into their ability to manage costs and deliver on technical objectives. Past performance reviews and contract close-out data, where available, are key indicators. However, specific details on their track record for similar sole-source R&D contracts are often classified or not readily available in public databases, making a comprehensive assessment challenging without deeper access to contract performance information.

How does the $26.3 million contract value compare to industry benchmarks for similar missile system R&D projects?

Benchmarking this $26.3 million contract value against similar missile system R&D projects is challenging without more specific details on the scope of work, technological maturity, and development phase. However, R&D contracts for advanced weapon systems can range from tens of millions to billions of dollars, depending on complexity and duration. Given the sole-source nature and cost-plus-fixed-fee structure, it's crucial to compare not just the total value but also the cost drivers and projected outcomes against industry norms. A direct comparison would ideally involve analyzing data from other DoD contracts for similar technologies, considering factors like the number of research personnel, specialized equipment, and testing requirements. Without such granular data, it's difficult to definitively state if $26.3 million represents a competitive or inflated price.

What are the primary risks associated with this cost-plus-fixed-fee contract for the Department of the Air Force?

The primary risks associated with this cost-plus-fixed-fee (CPFF) contract for the Department of the Air Force (DoAF) revolve around cost control and potential overruns. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to incur costs, as their fee remains constant regardless of the actual costs. Therefore, the DoAF faces the risk that the total project costs could significantly exceed initial estimates if not rigorously managed and audited. Other risks include potential scope creep, contractor inefficiencies going undetected, and challenges in verifying the necessity and reasonableness of all incurred costs. Effective oversight, detailed cost reporting, and strong program management are critical to mitigating these risks.

What is the expected program effectiveness or outcome of this R&D investment?

The expected program effectiveness and outcome of this R&D investment are centered on advancing the Department of the Air Force's capabilities in missile systems. As a research and development contract, the immediate outcome is not a finished product but rather the development of new technologies, prototypes, or enhanced scientific understanding related to missile systems. This could lead to improved performance characteristics, reduced vulnerability, increased accuracy, or novel functionalities for future air or missile defense platforms. The ultimate effectiveness will be measured by the successful transition of these R&D advancements into operational systems, contributing to national security objectives and maintaining technological superiority in a critical defense area. Specific performance metrics and success criteria are typically defined within the contract's SOW and are often sensitive.

How has historical spending on missile system R&D by the Department of the Air Force trended?

Historical spending on missile system R&D by the Department of the Air Force (DoAF) has generally been substantial and subject to evolving threats and technological advancements. Over the past decade, the DoAF has consistently allocated significant portions of its budget to research, development, testing, and evaluation (RDT&E) for advanced missile technologies, including offensive, defensive, and strategic systems. Spending trends are influenced by geopolitical factors, the emergence of new adversary capabilities, and the drive for technological superiority. While specific figures fluctuate annually based on program priorities and budget allocations, there has been a sustained focus on areas like hypersonic missiles, missile defense interceptors, and electronic warfare capabilities. Analyzing historical spending patterns reveals a commitment to innovation in this critical domain, often involving large, multi-year R&D contracts with major defense contractors.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

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 FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 1580A W NURSERY RD, LINTHICUM HEIGHTS, MD, 03

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

Financial Breakdown

Contract Ceiling: $26,291,347

Exercised Options: $26,291,347

Current Obligation: $26,291,347

Subaward Activity

Number of Subawards: 424

Total Subaward Amount: $40,591,057

Contract Characteristics

Cost or Pricing Data: YES

Timeline