DoD's $468M Northrop Grumman Contract for Guided Missiles: Sole-Source Award with Significant Duration
Contract Overview
Contract Amount: $468,382,792 ($468.4M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2004-03-30
End Date: 2012-09-30
Contract Duration: 3,106 days
Daily Burn Rate: $150.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: REDONDO BEACH, LOS ANGELES County, CALIFORNIA, 90278
Plain-Language Summary
Department of Defense obligated $468.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. The contract awarded to Northrop Grumman Systems Corporation for guided missile manufacturing represents a substantial investment. 2. As a sole-source award, the competitive landscape is limited, potentially impacting price discovery. 3. The long duration of the contract (3106 days) raises questions about long-term value and adaptability. 4. The sector is critical for national defense, but the lack of competition warrants scrutiny.
Value Assessment
Rating: questionable
The contract's total award value is $468,382,791.78. Without comparable sole-source contracts or detailed cost breakdowns, assessing its value against similar procurements is difficult. The 'Cost Plus Award Fee' structure suggests performance incentives, but the overall pricing assessment is hampered by the lack of competitive benchmarking.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process. The justification for sole-sourcing is crucial for understanding the necessity of this approach.
Taxpayer Impact: The lack of competition in this large, long-term contract likely results in a higher cost to taxpayers than if it had been competitively bid.
Public Impact
Taxpayers are funding a significant defense contract without the benefit of competitive bidding. The long contract duration means sustained financial commitment from the government. The focus on guided missiles highlights a key area of defense spending. The sole-source nature raises concerns about government's procurement strategy for critical defense assets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of competition
- Cost-plus contract type
Positive Signals
- Critical defense capability
- Award to established defense contractor
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is often characterized by high R&D costs, specialized manufacturing, and long procurement cycles. Benchmarks are difficult due to the specialized nature and frequent sole-source awards.
Small Business Impact
There is no indication that small businesses were involved in this contract, as it was awarded directly to Northrop Grumman Systems Corporation. The lack of subcontracting information prevents an assessment of small business participation.
Oversight & Accountability
The 'st' field indicates 'CA' (California), suggesting the contract was managed by the Defense Contract Management Agency in California. Oversight would involve monitoring Northrop Grumman's performance and costs throughout the contract's extensive duration.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- Long contract duration (3106 days) increases risk of cost escalation and obsolescence.
- Cost-plus contract type can lead to higher costs if not managed effectively.
- Lack of transparency on justification for sole-sourcing.
- No indication of small business participation.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $468.4 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. See the official description on USAspending.
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 $468.4 million.
What is the period of performance?
Start: 2004-03-30. End: 2012-09-30.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for sole-sourcing is critical for understanding why competition was bypassed. Typically, sole-source awards are made when only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, or urgent needs. Without this justification, it's difficult to assess if the government adequately explored competitive options or if this represented a missed opportunity for cost savings.
How does the 'Cost Plus Award Fee' structure ensure cost control and value for money over the contract's 3106-day duration?
The 'Cost Plus Award Fee' (CPAF) structure allows the contractor to recover allowable costs plus a fee that is composed of a base fee and an award amount. The award amount is earned based on meeting or exceeding performance objectives. While CPAF can incentivize performance, it also carries inherent risks of cost overruns if not rigorously managed. The long duration necessitates continuous oversight to ensure the award fee criteria remain relevant and that costs are controlled effectively.
What are the long-term strategic implications of a sole-source, multi-year contract for guided missile manufacturing for national defense readiness?
A sole-source, multi-year contract for critical defense assets like guided missiles can ensure a stable supply chain and maintain essential manufacturing capabilities. However, it also carries risks, such as potential technological stagnation if innovation is not sufficiently incentivized, and a lack of market pressure to drive down costs. This can impact long-term defense readiness if the capabilities become outdated or excessively expensive.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
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 AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: GARY HAWKINS, REDONDO BEACH, CA, 90278
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $54,875,300
Exercised Options: $60,188,015
Current Obligation: $468,382,792
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2004-03-30
Current End Date: 2012-09-30
Potential End Date: 2012-09-30 00:00:00
Last Modified: 2023-09-29
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