DoD awards $44.9M contract for guided missile and space vehicle manufacturing to Northrop Grumman

Contract Overview

Contract Amount: $44,866,913 ($44.9M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2023-02-27

End Date: 2026-02-27

Contract Duration: 1,096 days

Daily Burn Rate: $40.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SIAW RAAPID PROTOTYPE ACQUISITION

Place of Performance

Location: NORTHRIDGE, LOS ANGELES County, CALIFORNIA, 91324

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $44.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: SIAW RAAPID PROTOTYPE ACQUISITION Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market exploration. 2. Significant investment in advanced manufacturing capabilities for critical defense systems. 3. Long-term contract duration (3 years) suggests a need for sustained production and development. 4. Focus on guided missile and space vehicle manufacturing indicates a strategic priority for national security. 5. Geographic concentration in California for contract performance. 6. Potential for follow-on work or related contracts given the specialized nature of the services.

Value Assessment

Rating: questionable

The contract's value of $44.9 million for guided missile and space vehicle manufacturing appears substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition raises concerns about whether the government secured the best possible value. Further analysis of the specific deliverables and the contractor's historical performance on similar projects would be needed to provide a more definitive assessment of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified contractors. While sole-source awards can be justified in specific circumstances, such as when only one contractor possesses the necessary unique capabilities or when urgency precludes competition, they limit price discovery and can potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from a competitive environment. The absence of multiple bids prevents the government from leveraging market forces to secure the most economical price for these critical defense components.

Public Impact

The Department of the Air Force benefits from the acquisition of advanced guided missile and space vehicle manufacturing capabilities. This contract supports the development and production of critical components for national defense and space exploration initiatives. The contract's performance is located in California, potentially impacting the local aerospace and defense workforce. The successful execution of this contract contributes to the U.S. technological superiority in space and missile defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Long-term contract duration may not allow for flexibility if requirements change.
Concentration of work in a single geographic location could pose supply chain risks.

Positive Signals

Award to a known, established contractor with expertise in guided missile and space vehicle manufacturing.
Contract supports critical national security and defense objectives.
Clear performance period (3 years) provides a defined scope for the contractor.
Firm Fixed Price contract type shifts some cost risk to the contractor.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical segment of the aerospace and defense industry. This contract falls under the broader category of defense manufacturing, which is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. The market is dominated by a few large, established players like Northrop Grumman. Spending in this sector is driven by national security priorities, technological advancements, and geopolitical factors. Comparable spending benchmarks are difficult to establish due to the proprietary nature of much of this technology and the unique specifications of each program.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Northrop Grumman voluntarily engages them for subcontracting. The absence of a competitive solicitation means opportunities for small businesses to participate in this specific contract are limited. Future analysis could explore Northrop Grumman's broader subcontracting practices within its portfolio.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. As a sole-source award, the justification and approval process would have been subject to internal review. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. The firm fixed price contract type provides some level of cost control, but performance monitoring remains crucial.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Aerospace Defense Contracts
Northrop Grumman Defense Contracts
Department of Defense Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to non-competitive pricing
Limited transparency in procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.9 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. SIAW RAAPID PROTOTYPE ACQUISITION

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 $44.9 million.

What is the period of performance?

Start: 2023-02-27. End: 2026-02-27.

What specific guided missile and space vehicle capabilities is Northrop Grumman being contracted to provide?

The contract data indicates the award is for 'SIAW RAAPID PROTOTYPE ACQUISITION' within the 'Guided Missile and Space Vehicle Manufacturing' NAICS code (336414). While the specific details of the 'SIAW RAAPID PROTOTYPE ACQUISITION' are not publicly detailed in this summary, it strongly suggests a focus on the development and production of a prototype for a specific missile system, potentially related to air warfare or a similar application. The 'RAAPID' acronym might denote a specific program or technology initiative. The contract's duration of three years and firm fixed price structure imply a defined scope of work aimed at delivering a functional prototype or a limited production run of a guided missile or space vehicle component, rather than ongoing operational support or large-scale manufacturing.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The provided data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. The specific justification for this sole-source determination is not detailed in the provided data. Common reasons for sole-source awards include situations where only one responsible source can provide the required supplies or services, such as when a unique capability, technology, or intellectual property is held by a single entity. Other justifications can include urgent and compelling needs where competition is impractical, or when the contract is a follow-on to a previously competed effort where the original contractor's proprietary data is essential. Without further documentation, the exact rationale remains unknown, but it implies a belief by the Department of the Air Force that Northrop Grumman was the only viable option for this specific acquisition.

How does the $44.9 million contract value compare to similar government procurements in this sector?

Benchmarking the $44.9 million contract value against similar government procurements is challenging without more specific details about the 'SIAW RAAPID PROTOTYPE ACQUISITION' and the exact nature of the guided missile and space vehicle manufacturing involved. However, contracts in the guided missile and space vehicle sector can range widely from tens of millions to billions of dollars, depending on the complexity, quantity, and technological maturity. Given that this is described as a 'RAAPID PROTOTYPE ACQUISITION,' the $44.9 million figure might be considered moderate to substantial for a prototype phase, especially if it involves advanced technologies or significant development efforts. Sole-source awards often lack the transparent pricing data available in competitive bids, making direct comparisons difficult. Further investigation into the specific system being prototyped and its intended capabilities would be necessary for a more accurate comparison.

What are the potential risks associated with a sole-source contract of this magnitude?

Sole-source contracts, especially those of significant value like $44.9 million, carry inherent risks. The primary risk is the potential for inflated pricing, as the absence of competition removes the downward pressure that multiple bids would typically exert. This can lead to the government paying more than necessary. Another risk is reduced innovation; without the stimulus of competition, the contractor may have less incentive to explore novel or more cost-effective solutions. Furthermore, sole-source awards can raise concerns about fairness and equal opportunity for other capable businesses. There's also a risk that the government may not fully understand the market landscape or alternative solutions if only one vendor is considered.

What is Northrop Grumman's track record with the Department of Defense, particularly in missile and space systems?

Northrop Grumman Systems Corporation is a major defense contractor with an extensive and long-standing track record of performance with the Department of Defense (DoD) and various military branches, including the Air Force. The company has a significant presence in missile defense, strategic systems, aerospace, and space technology. They are known for developing and producing a wide range of complex systems, including intercontinental ballistic missiles (ICBMs), tactical missiles, satellites, and other advanced aerospace platforms. Their history includes numerous large-scale contracts for research, development, testing, and production of critical defense hardware. While specific performance metrics for every contract are not publicly available, Northrop Grumman is generally considered a capable and experienced provider of these types of sophisticated defense systems.

What are the implications of the firm fixed price (FFP) contract type for this acquisition?

The contract is awarded under a Firm Fixed Price (FFP) type. This means that the price is set and not subject to adjustment based on the contractor's cost experience. For the government, FFP contracts offer the most certainty regarding the final price, shifting the majority of the cost risk to the contractor. If Northrop Grumman's costs exceed the agreed-upon price, the contractor absorbs the loss. Conversely, if their costs are lower than anticipated, the contractor retains the profit. This contract type is generally preferred when the scope of work is well-defined and the risks are understood, as is often the case with prototype development where specific deliverables are expected. It incentivizes the contractor to control costs and perform efficiently to maximize profit.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 9401 CORBIN AVE, NORTHRIDGE, CA, 91324

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

Financial Breakdown

Contract Ceiling: $44,866,913

Exercised Options: $44,866,913

Current Obligation: $44,866,913

Subaward Activity

Number of Subawards: 33

Total Subaward Amount: $9,758,435

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA865622D0029

IDV Type: IDC

Timeline