DoD awards $510M Task Order to Northrop Grumman for Guided Missile Manufacturing
Contract Overview
Contract Amount: $51,063,062 ($51.1M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2018-12-13
End Date: 2023-07-28
Contract Duration: 1,688 days
Daily Burn Rate: $30.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: OT-5 TASK ORDER
Place of Performance
Location: CHANDLER, MARICOPA County, ARIZONA, 85286
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $51.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: OT-5 TASK ORDER Key points: 1. Significant contract value of $510.6 million awarded to a major defense contractor. 2. Competition method was 'Full and Open', suggesting a potentially competitive bidding process. 3. Contract type is 'Cost Plus Incentive Fee', which can lead to cost overruns if not managed closely. 4. The sector is Guided Missile and Space Vehicle Manufacturing, a critical defense capability.
Value Assessment
Rating: fair
The Cost Plus Incentive Fee (CPIF) contract type allows for shared savings and cost overruns, making direct price comparison difficult without detailed cost breakdowns. The base award amount is $30.25 million, with significant potential for growth.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically drives better pricing. However, the CPIF structure means the final price is contingent on performance and cost management, impacting the certainty of price discovery.
Taxpayer Impact: Taxpayer funds are utilized for this significant defense procurement. The CPIF structure necessitates careful oversight to ensure cost efficiency and prevent excessive spending.
Public Impact
Supports national defense capabilities through the production of guided missiles and space vehicles. Impacts the aerospace and defense manufacturing sector, potentially creating jobs and driving innovation. The long duration (over 4 years) indicates a sustained need for these defense assets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Incentive Fee (CPIF) contract type carries inherent risk of cost overruns.
- Long contract duration may increase exposure to changing economic conditions and technological obsolescence.
- No specific small business participation noted.
Positive Signals
- Awarded under full and open competition, suggesting a robust bidding process.
- Northrop Grumman is an established defense contractor with relevant expertise.
- Contract supports critical national security assets.
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized area of the defense industry. Spending in this sector is driven by national security priorities and technological advancements.
Small Business Impact
The data indicates that this contract was not awarded to small businesses (ss: false, sb: false). There is no specific mention of subcontracting goals or participation by small businesses in this award.
Oversight & Accountability
The Defense Contract Management Agency (DCMA) is responsible for oversight. The CPIF contract type requires diligent monitoring of costs and performance to ensure accountability and value for taxpayer money.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Cost Plus Incentive Fee (CPIF) contract type.
- Long contract duration (over 4 years).
- No explicit small business participation mentioned.
- Potential for cost overruns and scope creep in advanced manufacturing.
- Reliance on a single contractor for a critical defense capability.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, az, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $51.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. OT-5 TASK ORDER
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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $51.1 million.
What is the period of performance?
Start: 2018-12-13. End: 2023-07-28.
What is the projected total cost if all incentives and potential cost overruns are realized under the CPIF structure?
The Cost Plus Incentive Fee (CPIF) structure makes predicting the final cost challenging. While the base award is $30.25 million, the total potential value is $510.6 million. The final cost will depend heavily on Northrop Grumman's ability to meet performance targets and manage costs efficiently, with potential for both savings and overruns shared between the contractor and the government.
What specific risks are associated with the 'Guided Missile and Space Vehicle Manufacturing' sector for a CPIF contract?
Risks in this sector include rapid technological advancements requiring costly R&D, complex manufacturing processes prone to delays and cost overruns, and potential for scope creep as mission requirements evolve. For a CPIF contract, these factors increase the likelihood of exceeding target costs, necessitating robust government oversight to manage incentives and control expenditures effectively.
How does the 'Full and Open Competition' method ensure effectiveness and value for this large defense contract?
Full and open competition theoretically maximizes the number of potential bidders, fostering a competitive environment that drives down prices and encourages innovation. For this contract, it suggests that multiple qualified companies had the opportunity to bid, potentially leading to a more effective solution at a competitive price. However, the CPIF structure requires ongoing monitoring to ensure the initially competitive price remains effective throughout the contract's lifecycle.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 1575 SOUTH PRICE RD, CHANDLER, AZ, 85286
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: $53,729,582
Exercised Options: $53,729,582
Current Obligation: $51,063,062
Actual Outlays: $1,678,454
Subaward Activity
Number of Subawards: 42
Total Subaward Amount: $5,804,846
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA881819D0002
IDV Type: IDC
Timeline
Start Date: 2018-12-13
Current End Date: 2023-07-28
Potential End Date: 2023-07-28 00:00:00
Last Modified: 2023-12-12
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