DoD awards Northrop Grumman $26.3M contract for missile parts, raising cost concerns
Contract Overview
Contract Amount: $26,336,801 ($26.3M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2001-06-11
End Date: 2006-05-01
Contract Duration: 1,785 days
Daily Burn Rate: $14.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94086
Plain-Language Summary
Department of Defense obligated $26.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: Key points: 1. Contract value of $26.3M for specialized missile components. 2. Northrop Grumman Systems Corporation is the sole awardee. 3. Potential cost overruns due to Cost Plus Fixed Fee structure. 4. Sector: Defense manufacturing of guided missile parts.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type can lead to higher costs if not managed tightly. Without a clear benchmark for the 'Other Guided Missile and Space Vehicle Parts' category, assessing value is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Although advertised as full and open competition, the award went to a single entity. This suggests either a highly specialized requirement or potential issues in the solicitation process that limited broader participation.
Taxpayer Impact: The CPFF structure carries a risk of taxpayer funds exceeding initial estimates if costs escalate without corresponding value increases.
Public Impact
Taxpayers may face higher costs than anticipated due to the CPFF contract type. Limited visibility into the specific components and their necessity for national security. Potential for cost overruns impacting future defense budget allocations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type
- Lack of clear per-unit cost benchmark
- Potential for cost escalation
Positive Signals
- Awarded to a known defense contractor
- Contract duration of nearly 5 years
Sector Analysis
This contract falls within the defense manufacturing sector, specifically for guided missile parts. Spending in this area is critical for national security but requires stringent oversight to ensure cost-effectiveness.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as both the 'ss' (small business set-aside) and 'sb' (small business) flags are false.
Oversight & Accountability
Oversight is crucial for CPFF contracts to prevent cost creep. The Defense Contract Management Agency's role is to monitor expenditures and ensure compliance with contract terms.
Related Government Programs
- Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Cost Plus Fixed Fee contract type increases risk of cost overruns.
- Lack of specific per-unit cost data makes value assessment difficult.
- Potential for cost escalation impacting budget.
- Sole awardee despite 'full and open competition' raises questions about the process.
- Long contract duration (1785 days) increases exposure to cost fluctuations.
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.3 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 $26.3 million.
What is the period of performance?
Start: 2001-06-11. End: 2006-05-01.
What specific cost drivers contributed to the final contract value, and how were they validated?
The contract's Cost Plus Fixed Fee (CPFF) structure means costs are reimbursed plus a fixed fee. Detailed cost breakdowns, including labor, materials, and overhead, would have been submitted by Northrop Grumman and reviewed by the DoD. Validation involves auditing these costs against established rates and project milestones to ensure reasonableness and necessity.
How did the 'full and open competition' process result in a single awardee for this specialized defense component?
A full and open competition might yield a single awardee if only one company possesses the unique technical capabilities, intellectual property, or security clearances required for the specific missile parts. Alternatively, the solicitation's requirements could have been so narrowly defined that only one bidder met all criteria, or other bidders may have been disqualified on technical grounds.
What measures are in place to ensure the effectiveness and timely delivery of these critical missile components under a CPFF contract?
Effectiveness and timely delivery are typically ensured through performance metrics, milestone tracking, and regular progress reviews mandated by the contract. For CPFF contracts, the fixed fee incentivizes completion, but the DoD must actively monitor progress and quality to mitigate risks associated with cost reimbursement and ensure the components meet stringent defense specifications.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
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: 2
Pricing Type: COST PLUS FIXED FEE (U)
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 401 E HENDY AVE, SUNNYVALE, CA, 94088
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2001-06-11
Current End Date: 2006-05-01
Potential End Date: 2006-05-01 00:00:00
Last Modified: 2024-03-07
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