DoD Awards Northrop Grumman $163.8M Contract for Guided Missile and Space Vehicle Manufacturing
Contract Overview
Contract Amount: $163,816,199 ($163.8M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2020-11-17
End Date: 2025-11-30
Contract Duration: 1,839 days
Daily Burn Rate: $89.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: RED RUBY
Place of Performance
Location: CHANDLER, MARICOPA County, ARIZONA, 85286
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $163.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: RED RUBY Key points: 1. Significant contract awarded to a major defense contractor. 2. Full and open competition suggests potential for competitive pricing. 3. Cost Plus Incentive Fee contract type carries inherent cost escalation risks. 4. Long duration (over 5 years) requires ongoing monitoring.
Value Assessment
Rating: good
The Cost Plus Incentive Fee (CPIF) contract type allows for shared savings and cost overruns, aiming to incentivize efficiency. The benchmark of $163.8M for guided missile and space vehicle manufacturing is substantial, but without specific unit data, a precise per-unit cost comparison is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. This method is generally expected to foster competitive pricing and ensure the government receives fair value for its investment.
Taxpayer Impact: The competitive nature of the award is positive for taxpayers, as it should drive down costs compared to non-competitive awards. However, the CPIF structure requires careful oversight to manage potential cost increases.
Public Impact
Supports national defense capabilities through advanced missile and space vehicle production. Contributes to technological advancement in the aerospace and defense sector. Potential for job creation within Northrop Grumman and its supply chain. Ensures continued operational readiness for Air Force assets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Incentive Fee (CPIF) can lead to cost overruns if not managed strictly.
- Long contract duration increases exposure to changing technological needs and market conditions.
- Reliance on a single large contractor for critical components.
Positive Signals
- Awarded through full and open competition, suggesting competitive pricing.
- Incentive fee structure aims to reward cost efficiency.
- Contract supports critical national security assets.
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the defense industry. Spending in this area is often characterized by high R&D costs, complex manufacturing processes, and long procurement cycles, with significant government investment.
Small Business Impact
While the primary contractor is Northrop Grumman, a large corporation, the contract may involve subcontracts to small businesses for specialized components or services. The extent of small business participation is not detailed in the provided data.
Oversight & Accountability
The Department of the Air Force is responsible for oversight. The CPIF contract type necessitates robust financial monitoring and performance evaluation to ensure cost control and adherence to program objectives. Regular reporting and audits will be crucial.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Cost Plus Incentive Fee (CPIF) contract type.
- Long contract duration (over 5 years).
- High value contract ($163.8M).
- Potential for cost overruns.
- Reliance on a single large prime contractor.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, az, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $163.8 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. RED RUBY
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 $163.8 million.
What is the period of performance?
Start: 2020-11-17. End: 2025-11-30.
What specific performance metrics are tied to the incentive fee, and how will they be measured to ensure value for money?
The incentive fee structure likely ties financial rewards to achieving specific performance targets, such as cost savings below a target, delivery schedules, or technical performance milestones. The Air Force must have clear, objective, and verifiable metrics in place, along with a rigorous process for tracking and reporting on these metrics. This ensures that the incentive truly drives desired outcomes and provides demonstrable value for taxpayer dollars.
What are the potential risks associated with the long contract duration (over 5 years) in terms of technological obsolescence or changing threat landscapes?
A long contract duration, especially in rapidly evolving fields like guided missiles and space vehicles, carries risks of technological obsolescence. The contracted systems might become outdated before the contract ends, or the threat landscape could shift, rendering the procured capabilities less effective. Mitigation strategies could include incorporating flexible design requirements, regular technology refresh points, or options for contract modification.
How will the Department of Defense ensure that the Cost Plus Incentive Fee structure does not incentivize unnecessary cost escalation despite the incentive clauses?
Effective oversight is key. The DoD must establish a realistic target cost and a well-defined sharing formula for cost savings and overruns. Regular audits, detailed cost tracking, and performance reviews are essential to identify and challenge any unjustified cost increases. Transparency in reporting and strong program management can help prevent the CPIF structure from becoming a vehicle for excessive spending.
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: $173,562,500
Exercised Options: $173,562,500
Current Obligation: $163,816,199
Actual Outlays: $82,850,746
Subaward Activity
Number of Subawards: 4
Total Subaward Amount: $335,101
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: 2020-11-17
Current End Date: 2025-11-30
Potential End Date: 2026-11-30 00:00:00
Last Modified: 2025-09-30
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