Northrop Grumman awarded $11.39M for Conventional Ballistic Missile Systems Engineering & Technology

Contract Overview

Contract Amount: $11,392,373 ($11.4M)

Contractor: Northrop Grumman Space & Mission Systems Corp.

Awarding Agency: Department of Defense

Start Date: 2007-06-08

End Date: 2010-01-31

Contract Duration: 968 days

Daily Burn Rate: $11.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONVENTIONAL BALLISTIC MISSILE SYSTEMS ENG'G & TECHNOLOGY

Place of Performance

Location: SAN BERNARDINO, SAN BERNARDINO County, CALIFORNIA, 92408

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $11.4 million to NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP. for work described as: CONVENTIONAL BALLISTIC MISSILE SYSTEMS ENG'G & TECHNOLOGY Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The duration of 968 days indicates a long-term need for these specialized engineering services. 4. The award was made by the Department of Defense, highlighting its critical role in national security. 5. The North American Industry Classification System (NAICS) code 541330 points to engineering services, a key sector for defense. 6. The contract was awarded to Northrop Grumman, a major defense contractor with a significant track record.

Value Assessment

Rating: fair

The contract value of $11.39 million for engineering and technology services related to ballistic missile systems appears moderate given the specialized nature of the work. Benchmarking against similar complex defense engineering contracts is difficult without more specific service details. However, the Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost control, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure can sometimes lead to higher final costs compared to fixed-price contracts if not meticulously overseen.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple bidders were likely considered. The presence of three bids suggests a competitive environment, which generally benefits price discovery and can lead to more favorable terms for the government. The specific details of the bidding process, such as the number of proposals received and the evaluation criteria, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, potentially driving down costs and ensuring the government receives the best value for its investment.

Public Impact

The primary beneficiaries are the Department of Defense and its associated branches requiring advanced ballistic missile system engineering and technology. Services delivered include critical engineering and technological development for conventional ballistic missile systems. The geographic impact is likely concentrated within the United States, supporting domestic defense capabilities. Workforce implications include employment for highly skilled engineers, scientists, and technical personnel within Northrop Grumman and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored.
Long contract duration (968 days) requires sustained oversight to ensure continued value and performance.
Reliance on a single large contractor for critical defense systems may limit future competition or innovation.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Northrop Grumman is a well-established defense contractor with extensive experience in complex systems.
The contract addresses a critical national security need for ballistic missile systems engineering.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on engineering services for advanced weapon systems. The market for such specialized engineering is dominated by a few large, established defense contractors. Spending in this area is driven by national security priorities and technological advancements in missile defense and offense. Comparable spending benchmarks would typically involve other large-scale, long-term engineering development contracts for complex military platforms.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is there explicit information regarding subcontracting plans for small businesses. Given the specialized nature of conventional ballistic missile systems engineering, it is possible that the prime contractor, Northrop Grumman, may engage small businesses for specific components or support services. However, the primary awardee is a large corporation, and the direct impact on the small business ecosystem is not immediately apparent from the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and oversight bodies, potentially including the Defense Contract Management Agency (DCMA). The CPFF structure necessitates rigorous financial oversight to ensure allowable costs are reasonable and allocable. Transparency is typically managed through contract reporting requirements and performance reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Ballistic Missile Defense Systems
Strategic Weapons Systems
Aerospace Engineering Services
Defense Research and Development
Advanced Technology Development

Risk Flags

Cost Plus Fixed Fee contract type carries inherent cost overrun risk.
Long contract duration requires sustained oversight.
Complexity of ballistic missile systems engineering presents technical risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.4 million to NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP.. CONVENTIONAL BALLISTIC MISSILE SYSTEMS ENG'G & TECHNOLOGY

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $11.4 million.

What is the period of performance?

Start: 2007-06-08. End: 2010-01-31.

What is Northrop Grumman's track record with similar Cost Plus Fixed Fee (CPFF) contracts, particularly within the Department of Defense?

Northrop Grumman, as a major defense contractor, has a long history of engaging in Cost Plus Fixed Fee (CPFF) contracts with the Department of Defense across various complex programs. CPFF contracts are common for research, development, and complex system integration where costs are difficult to predict precisely. While CPFF contracts offer flexibility, they also carry a higher risk of cost overruns if not managed with stringent oversight. Northrop Grumman's performance on such contracts would be assessed based on their ability to meet program milestones within projected cost ceilings and their adherence to contractual requirements. Historical data from contract databases and government audit reports would provide a more detailed picture of their performance, including any instances of cost variances or disputes.

How does the $11.39 million contract value compare to other engineering services contracts for ballistic missile systems?

The $11.39 million value for this specific contract appears to be for a defined scope of engineering and technology services related to conventional ballistic missile systems. Without granular details on the specific deliverables, it's challenging to make a direct comparison. However, major defense programs involving ballistic missile systems often involve multi-billion dollar contracts spanning many years for development, production, and sustainment. This $11.39 million award might represent a specific phase, a particular technology development, or a specialized engineering support task within a larger umbrella program. Benchmarking would require identifying contracts with similar service descriptions, contract types (CPFF), and durations.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for advanced engineering services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. Because the contractor is reimbursed for allowable costs plus a fixed fee, there is less financial incentive for them to control expenses compared to fixed-price contracts. If the government's oversight is insufficient, or if unforeseen technical challenges arise that significantly increase costs, the final expenditure can exceed initial estimates. For advanced engineering services, such as those for ballistic missile systems, the inherent complexity and potential for unknown technical hurdles amplify this risk. Effective risk mitigation relies on robust government oversight, clear definition of allowable costs, and strong negotiation of the fixed fee.

What is the typical duration for engineering services contracts of this nature within the defense sector?

Engineering services contracts within the defense sector, particularly those involving complex systems like ballistic missile technology, often have durations ranging from several months to several years. A contract duration of 968 days (approximately 2.65 years) is not uncommon for significant research, development, or sustainment engineering efforts. Longer durations allow for the phased development, testing, and integration of sophisticated technologies. However, extended periods also necessitate continuous government oversight to ensure performance remains on track and that the contract continues to represent good value for money throughout its lifecycle.

How does the 'full and open competition' award method impact the overall cost-effectiveness for taxpayers?

Awarding contracts through 'full and open competition' is generally considered beneficial for taxpayers. This method allows all responsible sources, regardless of size or type, to submit bids. The increased number of potential bidders typically fosters a more competitive environment, driving down prices and encouraging innovation as companies vie for the contract. This process helps ensure that the government is obtaining the best possible value for its investment by selecting the offer that provides the optimal balance of price, technical merit, and other factors. It reduces the likelihood of paying inflated prices that might occur under less competitive procurement methods.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 862 E HOSPITALITY LN, SAN BERNARDINO, CA, 92408

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $12,018,835

Exercised Options: $12,018,835

Current Obligation: $11,392,373

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline