NASA awards Northrop Grumman $584M for satellite system development and integration through 2029

Contract Overview

Contract Amount: $584,348,960 ($584.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: National Aeronautics and Space Administration

Start Date: 2011-09-13

End Date: 2029-03-01

Contract Duration: 6,379 days

Daily Burn Rate: $91.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: THE CONTRACTOR SHALL PROVIDE ALL PERSONNEL, FACILITIES, EQUIPMENT, MATERIAL, AND SERVICES NECESSARY TO DESIGN, DEVELOP, MANUFACTURE, INTEGRATE, TEST, AND DELIVER THE HARDWARE, DOCUMENTATION, AND SERVICES SPECIFIED HEREIN. THE CONTRACTOR SHALL ALSO PROVIDE SUPPORT, AS REQUIRED, FOR PRE-DELIVERY MISSION INTEGRATION ACTIVITIES, SUCH AS NPP MISSION OPERATIONS REVIEW AND JPSS DELTA-PDR. DOCUMENTATION AND OTHER TASKS SHOULD BE IN ACCORDANCE WITH THE REQUIREMENTS OF THIS SOW AND THE APPLICABLE DOCUMENTATION REFERENCED IN SECTION 2.3 HEREIN. COMPLIANCE WITH THE REQUIREMENTS STATED HEREIN, SHALL BE THE RESPONSIBILITY OF THE CONTRACTOR.

Place of Performance

Location: AZUSA, LOS ANGELES County, CALIFORNIA, 91702

State: California Government Spending

Plain-Language Summary

National Aeronautics and Space Administration obligated $584.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: THE CONTRACTOR SHALL PROVIDE ALL PERSONNEL, FACILITIES, EQUIPMENT, MATERIAL, AND SERVICES NECESSARY TO DESIGN, DEVELOP, MANUFACTURE, INTEGRATE, TEST, AND DELIVER THE HARDWARE, DOCUMENTATION, AND SERVICES SPECIFIED HEREIN. THE CONTRACTOR SHALL ALSO PROVIDE SUPPORT, AS REQUIRED, FO… Key points: 1. Contract focuses on comprehensive system development, manufacturing, integration, and testing. 2. Significant long-term commitment with an estimated completion date in March 2029. 3. The contract type, Cost Plus Award Fee (CPA), incentivizes performance while allowing for cost reimbursement. 4. Northrop Grumman has a substantial role in critical national security and scientific endeavors. 5. The scope includes extensive documentation and support for pre-delivery mission integration activities. 6. This award represents a major investment in advanced aerospace technology and capabilities.

Value Assessment

Rating: good

The contract value of $584.3 million over its duration appears substantial, reflecting the complexity and long-term nature of developing and integrating advanced satellite systems. Benchmarking this against similar large-scale aerospace development contracts is challenging without more specific details on the system's technological advancements and mission scope. However, the Cost Plus Award Fee (CPA) structure suggests a mechanism for achieving value by incentivizing contractor performance beyond minimum requirements, potentially leading to better outcomes than a fixed-price contract for such an R&D-intensive project. The award fee component allows for adjustments based on performance, aiming for a balance between cost control and achieving desired technical and schedule objectives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that NASA determined Northrop Grumman was the only responsible source capable of fulfilling the requirements. This often occurs in cases involving highly specialized technology, existing system integration, or national security considerations where transitioning to another contractor would be impractical or excessively costly. The lack of competition means that price discovery through a bidding process was bypassed, and NASA relied on negotiation and its own cost/technical expertise to establish a fair price.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the absence of market pressure may reduce incentives for aggressive cost reduction by the contractor. However, for highly specialized or unique requirements, it may be the most effective way to secure necessary capabilities.

Public Impact

The primary beneficiaries are NASA and potentially other government agencies relying on the data and capabilities provided by the satellite systems developed under this contract. Services delivered include the design, development, manufacturing, integration, testing, and delivery of complex hardware and associated documentation. The contract supports critical pre-delivery mission integration activities, ensuring operational readiness. This contract underpins advancements in space exploration, Earth observation, and potentially national security through sophisticated satellite technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness for taxpayers.
Cost Plus Award Fee (CPA) contracts can sometimes lead to cost overruns if not managed stringently.
Long contract duration (over 17 years) increases exposure to potential scope creep or evolving technological requirements.
Complexity of integrating multiple systems requires robust oversight to ensure successful delivery.

Positive Signals

Northrop Grumman's established expertise in aerospace and defense systems suggests a high likelihood of technical success.
The CPA structure provides incentives for performance, potentially leading to superior system quality and mission outcomes.
Long-term nature of the contract allows for sustained focus and development of specialized capabilities.
NASA's oversight is crucial for managing the complexity and ensuring alignment with mission objectives.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing and integration of advanced navigation, guidance, and control systems for aeronautical and nautical applications. This sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Spending in this area is driven by national security needs, scientific exploration, and technological advancement. Comparable spending benchmarks would involve other large-scale satellite development programs or complex defense system integrations, which often run into hundreds of millions or billions of dollars.

Small Business Impact

The data provided does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. Given the nature of the work, which involves complex system integration and manufacturing, it is likely that a significant portion of the work may be performed by the prime contractor or its large subcontractors. Further analysis would be needed to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is primarily the responsibility of the National Aeronautics and Space Administration (NASA). As a Cost Plus Award Fee (CPA) contract, NASA will be closely monitoring the contractor's costs, performance against technical milestones, and adherence to schedule. The award fee component necessitates regular evaluations of Northrop Grumman's performance relative to defined criteria. Transparency would be facilitated through contract reporting requirements and potentially through NASA's public contract databases, though specific details of performance evaluations may be sensitive.

Related Government Programs

NASA Satellite Development Programs
National Security Space Launch Program
Advanced Navigation Systems
Aerospace System Integration
Defense Contractor Support Services

Risk Flags

Sole-source award
Long contract duration
Cost Plus Award Fee structure requires careful oversight

Frequently Asked Questions

What is this federal contract paying for?

National Aeronautics and Space Administration awarded $584.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. THE CONTRACTOR SHALL PROVIDE ALL PERSONNEL, FACILITIES, EQUIPMENT, MATERIAL, AND SERVICES NECESSARY TO DESIGN, DEVELOP, MANUFACTURE, INTEGRATE, TEST, AND DELIVER THE HARDWARE, DOCUMENTATION, AND SERVICES SPECIFIED HEREIN. THE CONTRACTOR SHALL ALSO PROVIDE SUPPORT, AS REQUIRED, FOR PRE-DELIVERY MISSION INTEGRATION ACTIVITIES, SUCH AS NPP MISSION OPERATIONS REVIEW AND JPSS DELTA-PDR. DOCUMENTATION AND OTHER TASKS SHOULD BE IN ACCORDANCE WITH THE REQUIREMENTS OF THIS SOW AND THE APPLICABLE DOCUMENT

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).

What is the total obligated amount?

The obligated amount is $584.3 million.

What is the period of performance?

Start: 2011-09-13. End: 2029-03-01.

What is Northrop Grumman's track record with NASA on similar large-scale satellite development and integration contracts?

Northrop Grumman Systems Corporation has a long and extensive history of working with NASA and other government agencies on complex aerospace projects, including satellite development, spacecraft manufacturing, and mission support. They have been a key contractor for numerous NASA missions, contributing to programs like the James Webb Space Telescope (JWST) and various Earth-observing satellites. Their experience spans the entire lifecycle of space systems, from initial design and development through integration, testing, and launch support. This deep experience suggests a strong understanding of NASA's requirements, processes, and technical standards, which is crucial for the successful execution of a long-term, high-value contract like the one awarded for satellite system development and integration. Their established presence and past performance provide a foundation of confidence for NASA in awarding this significant sole-source contract.

How does the Cost Plus Award Fee (CPA) structure compare to other contract types for this kind of R&D-intensive work?

Cost Plus Award Fee (CPA) contracts are often employed for research and development (R&D) or complex system integration efforts where the final scope and technical outcomes are not fully defined at the outset, or where innovation and performance beyond minimum requirements are highly desired. Unlike fixed-price contracts, CPA reimburses the contractor for allowable costs incurred. The 'Award Fee' component allows the government to award additional profit (or fee) based on subjective performance evaluations against pre-defined criteria, incentivizing the contractor to exceed expectations in areas like technical achievement, schedule adherence, and cost management. This contrasts with Cost Plus Incentive Fee (CPIF) contracts, which use a formulaic approach to share cost savings or overruns, or Firm Fixed Price (FFP) contracts, which place most of the risk on the contractor but may stifle innovation or lead to scope limitations. For a project involving advanced satellite systems, CPA offers flexibility and incentivizes high performance, balancing risk between the government and contractor.

What are the primary risks associated with the long duration (2011-2029) of this contract?

The extended duration of this contract, spanning from 2011 to 2029 (approximately 18 years), presents several key risks. Firstly, technological obsolescence is a significant concern; the systems being developed may become outdated before or shortly after delivery, given the rapid pace of innovation in aerospace. Secondly, requirements creep is a substantial risk, as mission objectives or operational needs may evolve over such a long period, leading to scope changes and potential cost increases if not managed carefully. Thirdly, contractor performance stability over nearly two decades can be a factor; key personnel may leave, or the contractor's strategic focus could shift. Finally, economic uncertainties and potential budget fluctuations within NASA over such a long timeframe could impact funding stability. Robust contract management, change control processes, and regular re-evaluation of requirements are essential to mitigate these risks.

How does the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code inform the nature of this contract?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' precisely defines the industrial sector and the core activities covered by this contract. It indicates that the contract is focused on the development, production, and integration of sophisticated hardware and systems used for locating, tracking, and directing aircraft, spacecraft, and vessels. This includes components like radar, GPS receivers, inertial navigation systems, flight control computers, and related instrumentation. The classification suggests a high degree of technological complexity, precision engineering, and adherence to stringent performance standards, typical of defense and aerospace applications. It implies that the contractor is involved in manufacturing physical equipment and integrating these components into larger functional systems.

What are the potential implications of this contract on future spending patterns for similar satellite systems?

This contract, awarded to Northrop Grumman for a significant value and long duration, could set a precedent for future spending on similar advanced satellite systems. If the systems developed prove successful and critical to NASA's objectives, it may signal a continued reliance on large, integrated contracts for complex space hardware. The sole-source nature, while potentially raising cost concerns, might also be seen as necessary for specific, highly specialized capabilities, influencing how future unique requirements are procured. Furthermore, the success or challenges encountered under this CPA contract could inform NASA's approach to contract type selection for future R&D-intensive aerospace projects. It highlights the substantial, long-term financial commitments required for cutting-edge space technology development.

Can the 'definitive contract' designation provide insight into the contract's structure and flexibility?

The designation of this award as a 'definitive contract' indicates that it is a fixed-price or cost-reimbursed contract that, when signed, represents a final agreement between the parties. Unlike basic ordering agreements or indefinite-delivery/indefinite-quantity (IDIQ) contracts, a definitive contract typically specifies all the details, including scope, price, and delivery terms, and is not subject to further negotiation on these core elements. In this case, it's a Cost Plus Award Fee (CPA) definitive contract, meaning the total price is not fixed upfront but is determined by the allowable costs incurred plus any award fee earned. The 'definitive' nature suggests that the fundamental requirements and the overall framework for the project were well-established and agreed upon at the time of award, providing a clear, albeit potentially evolving, path forward for the project over its long duration.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: SPACE VEHICLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: JPSS

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 1100 W HOLLYVALE ST, AZUSA, CA, 91702

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: $624,303,449

Exercised Options: $612,395,857

Current Obligation: $584,348,960

Actual Outlays: $171,088,520

Subaward Activity

Number of Subawards: 5448

Total Subaward Amount: $2,997,610,368

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline