DoD Awards Northrop Grumman $3.1B for Next Gen Overhead Persistent Infrared Satellites
Contract Overview
Contract Amount: $3,098,415,967 ($3.1B)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2018-06-25
End Date: 2031-04-11
Contract Duration: 4,673 days
Daily Burn Rate: $663.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: R&D
Official Description: NEXT GENERATION OVERHEAD PERSISTENT INFRARED POLAR SPACE VEHICLES 1 AND 2 STUDY.
Place of Performance
Location: REDONDO BEACH, LOS ANGELES County, CALIFORNIA, 90278
Plain-Language Summary
Department of Defense obligated $3.10 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: NEXT GENERATION OVERHEAD PERSISTENT INFRARED POLAR SPACE VEHICLES 1 AND 2 STUDY. Key points: 1. Significant investment in advanced satellite technology for national security. 2. Sole-source award to Northrop Grumman raises questions about competition and price. 3. Long contract duration (2018-2031) suggests a complex, multi-phase project. 4. Research and Development focus indicates early-stage, potentially high-risk development.
Value Assessment
Rating: questionable
The contract value of $3.1B is substantial for R&D. Without competitive benchmarks or detailed cost breakdowns, assessing its value is difficult. The 'Cost Plus Incentive Fee' structure suggests potential for cost overruns if not managed tightly.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award to Northrop Grumman. This limits price discovery and may result in a higher cost to taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition for a contract of this magnitude could lead to suboptimal pricing and reduced value for taxpayer funds.
Public Impact
Enhances national security surveillance capabilities with advanced satellite technology. Potential for technological breakthroughs in infrared sensing and space systems. Long-term commitment of significant federal funds for a critical defense program. Impacts the aerospace and defense sector, particularly in satellite development.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- High contract value with limited transparency.
- Long contract duration increases risk.
- Cost-plus contract type can lead to overruns.
Positive Signals
- Addresses critical national security needs.
- Invests in advanced technological capabilities.
- Supports a major defense contractor.
Sector Analysis
This contract falls under Research and Development in Physical, Engineering, and Life Sciences. Spending in this sector is crucial for technological advancement but often carries higher risk and less predictable outcomes compared to established service contracts.
Small Business Impact
The contract was awarded to Northrop Grumman Systems Corporation, a large business. There is no indication of subcontracting opportunities for small businesses within the provided data.
Oversight & Accountability
The long duration and sole-source nature of this contract warrant close oversight from the Department of the Air Force to ensure cost control, adherence to schedule, and achievement of program objectives.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- High dollar value
- R&D focus implies uncertainty
Tags
research-and-development-in-the-physical, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $3.10 billion to NORTHROP GRUMMAN SYSTEMS CORPORATION. NEXT GENERATION OVERHEAD PERSISTENT INFRARED POLAR SPACE VEHICLES 1 AND 2 STUDY.
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 $3.10 billion.
What is the period of performance?
Start: 2018-06-25. End: 2031-04-11.
What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or circumstances. Without further documentation, it's unclear why this contract wasn't competed. Agencies must demonstrate that fair and reasonable pricing was achieved through market research, cost analysis, or other methods, especially when competition is absent.
How will the government mitigate the risks associated with a Cost Plus Incentive Fee contract over a 13-year period?
Mitigation strategies for CPIF contracts over long durations include robust performance metrics, clear incentive targets tied to cost, schedule, and performance, and continuous government monitoring. Regular reviews and potential contract modifications will be essential to manage evolving risks and ensure alignment with program goals.
What are the key performance indicators and milestones for this R&D contract, and how will their achievement be measured?
Key performance indicators and milestones for R&D contracts are often tied to technological readiness levels, prototype development, and successful testing phases. The specific metrics for these 'Next Generation Overhead Persistent Infrared' vehicles would need to be detailed in the contract's Statement of Work and monitored closely by the Air Force.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Product/Service Code: RESEARCH AND DEVELOPMENT › Space 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: 1 SPACE PARK BLVD, REDONDO BEACH, CA, 90278
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: $4,141,839,387
Exercised Options: $4,141,839,386
Current Obligation: $3,098,415,967
Actual Outlays: $29,236,699
Subaward Activity
Number of Subawards: 599
Total Subaward Amount: $1,492,924,498
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-06-25
Current End Date: 2031-04-11
Potential End Date: 2031-04-11 00:00:00
Last Modified: 2025-12-11
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