DoD's $760M contract with Northrop Grumman for aviation and missile command systems shows significant long-term investment

Contract Overview

Contract Amount: $760,618,249 ($760.6M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2004-08-03

End Date: 2013-12-31

Contract Duration: 3,437 days

Daily Burn Rate: $221.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200411!004355!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0159 !A!N! !N! ! !20040803!20100930!614227643!004179453!016435559!N!NORTHROP GRUMMAN SPACE&MISSI!1800 GLENN CURTISS DRIVE !CARSON !CA!90746!11530!037!06!CARSON !LOS ANGELES !CALIFORNIA!+000001994000!N!N!000000000000!AD91!RDTE/OTHER DEFENSE-BASIC RESEARCH !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !000 !* !334290!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!J!2!003!B! !Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!D!N! ! ! ! ! ! !0001! !

Place of Performance

Location: CARSON, LOS ANGELES County, CALIFORNIA, 90746

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $760.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 200411!004355!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0159 !A!N! !N! ! !20040803!20100930!614227643!004179453!016435559!N!NORTHROP GRUMMAN SPACE&MISSI!1800 GLENN CURTISS DRIVE !CARSON !CA!90746!11530!037!06!CARSON !LOS AN… Key points: 1. This contract represents a substantial, long-term commitment by the Department of Defense, indicating critical needs in aviation and missile command systems. 2. The extensive duration of the contract (over 9 years) suggests a complex and ongoing requirement for the services or products provided. 3. Northrop Grumman's selection points to their established capabilities in advanced defense technologies. 4. The contract's value, exceeding $760 million, positions it as a major award within the defense sector. 5. Analysis of the contract's performance and value realization is crucial given its scale and duration. 6. The specific nature of 'RDTE/OTHER DEFENSE-BASIC RESEARCH' suggests investment in innovation and future capabilities.

Value Assessment

Rating: fair

The total award value of $760,618,248.75 over a period of approximately 9.5 years results in an average annual spend of roughly $80 million. Without specific deliverables or comparable contracts for similar advanced defense research and development, it is difficult to definitively benchmark the value for money. However, the scale of the award suggests a significant undertaking. The firm-fixed-price nature of the contract provides some cost certainty for the government, but the long duration could introduce risks if requirements evolve significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a competitive environment, though the specific details of the bidding process and the other bidder's proposal are not provided. Full and open competition is generally expected to yield better pricing and innovation.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and the assurance that the government sought the best value through a transparent bidding process.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation and missile command operations, ensuring advanced technological capabilities. The contract supports research, development, testing, and evaluation (RDTE) for critical defense systems. Geographic impact is likely concentrated around Northrop Grumman's facilities in California and potentially DoD research centers. The contract supports a highly specialized workforce within the aerospace and defense industry, particularly in R&D roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases the risk of scope creep or evolving technological requirements not being fully met by the initial agreement.
The substantial value could be subject to cost overruns if not managed meticulously, despite the firm-fixed-price structure.
Reliance on a single contractor for such a critical and long-term R&D effort could pose risks if performance issues arise.
The 'Other Defense-Basic Research' classification is broad and may obscure specific performance metrics or technological advancements.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Northrop Grumman is a major defense contractor with a proven track record in complex systems.
The firm-fixed-price contract type offers predictability in costs for the government.
The significant investment signals a commitment to maintaining and advancing national defense capabilities.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on research, development, testing, and evaluation (RDTE) for missile and aviation command systems. This is a highly specialized area characterized by long development cycles, significant R&D investment, and stringent performance requirements. The market is dominated by a few large, established defense contractors. Comparable spending benchmarks are difficult to ascertain without knowing the specific technologies involved, but multi-year, multi-hundred-million-dollar contracts are common for major defense platforms and R&D initiatives.

Small Business Impact

There is no indication from the provided data that this contract included specific small business set-asides. Given the nature of advanced defense R&D and the prime contractor (Northrop Grumman), it is likely that any small business involvement would be through subcontracting opportunities. The scale and technical complexity may limit direct small business participation as prime contractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. Inspector General (IG) oversight is standard for defense contracts of this magnitude, particularly concerning R&D expenditures. Transparency is typically managed through contract reporting mechanisms and program reviews, though specific details of R&D progress may be classified or sensitive.

Related Government Programs

Missile Defense Systems
Aviation Systems Development
Advanced Weapons Research
Defense Research and Development
Northrop Grumman Defense Contracts

Risk Flags

Long contract duration may increase risk of requirement changes.
Complexity of R&D in defense sector presents inherent uncertainties.
Potential for cost growth if scope is not tightly managed.
Reliance on a single contractor for critical R&D.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $760.6 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 200411!004355!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0159 !A!N! !N! ! !20040803!20100930!614227643!004179453!016435559!N!NORTHROP GRUMMAN SPACE&MISSI!1800 GLENN CURTISS DRIVE !CARSON !CA!90746!11530!037!06!CARSON !LOS ANGELES !CALIFORNIA!+000001994000!N!N!000000000000!AD91!RDTE/OTHER DEFENSE-BASIC RESEARCH !C9E!ALL OTHER SUPPLIES AND EQUIPMENT !000 !* !334290!E! !3! ! ! ! ! !99990

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 Army).

What is the total obligated amount?

The obligated amount is $760.6 million.

What is the period of performance?

Start: 2004-08-03. End: 2013-12-31.

What specific aviation and missile command systems or technologies are being developed or supported under this contract?

The provided data classifies the contract under 'RDTE/OTHER DEFENSE-BASIC RESEARCH' and the North American Industry Classification System (NAICS) code 334290, 'Other Communications Equipment Manufacturing'. This suggests the contract likely involves research and development related to advanced command, control, communication, and intelligence (C3I) systems for aviation and missile platforms, potentially including components for guidance, targeting, or networked operations. However, the specific systems are not detailed in the summary data. Further investigation into contract line item numbers (CLINs) or associated technical documentation would be required to identify the precise technologies.

How does the $760 million total award value compare to similar R&D contracts in the defense sector for aviation and missile systems?

The $760 million total award value over approximately 9.5 years is substantial, averaging around $80 million annually. This level of investment is consistent with major research and development programs for advanced defense capabilities. For context, significant platform development programs (e.g., new aircraft, missile systems) can range from billions to tens of billions of dollars over their lifecycle. This contract appears to be a significant, but not top-tier, R&D investment, likely focused on specific technological advancements or foundational research rather than full system acquisition. Benchmarking requires comparing it to contracts with similar R&D scope and technological maturity within the DoD's aviation and missile portfolios.

What are the key performance indicators (KPIs) or milestones associated with this contract, and how has Northrop Grumman performed against them?

The provided summary data does not include specific Key Performance Indicators (KPIs) or milestones for this contract. For 'RDTE/OTHER DEFENSE-BASIC RESEARCH' contracts, KPIs often relate to technological readiness levels (TRLs), successful prototype development, system integration milestones, or the achievement of specific research objectives. Performance assessment would typically be documented in contract performance reports, milestone reviews, and potentially through government quality assurance or technical representative feedback. Without access to these internal DoD reports, a detailed performance analysis is not possible from the summary data alone.

What is the historical spending pattern for aviation and missile command systems R&D within the Department of the Army and Department of Defense?

The Department of the Army, as part of the DoD, consistently allocates significant portions of its budget to Research, Development, Test, and Evaluation (RDT&E) for aviation and missile systems. Historical spending patterns show a continuous investment in areas like air defense, strategic missile capabilities, rotary and fixed-wing aircraft modernization, and associated command and control technologies. Budgets fluctuate based on strategic priorities, threat assessments, and technological advancements. Contracts like this one, valued in the hundreds of millions over several years, are typical for sustaining and advancing these critical R&D efforts within the broader defense RDT&E landscape.

What is Northrop Grumman's track record with similar large-scale, long-duration R&D contracts for the Department of Defense?

Northrop Grumman has an extensive track record of managing large-scale, long-duration Research, Development, Test, and Evaluation (RDT&E) contracts for the Department of Defense across various domains, including aerospace, missile defense, and C4ISR systems. They are a prime contractor on numerous complex programs, such as the B-21 bomber, James Webb Space Telescope (as a major subcontractor), and various satellite and missile programs. Their history includes both successes and challenges typical of large, complex defense R&D efforts. Performance on this specific contract would need to be evaluated against their broader portfolio and specific program outcomes.

Are there any identified risks or concerns related to the technology being developed or the contractor's ability to deliver on this specific contract?

Without specific technical details or performance reports, identifying unique risks for this contract is challenging. General risks associated with long-term defense R&D include technological obsolescence, integration challenges with existing systems, potential cost growth (even in FFP contracts if scope changes), and contractor performance issues. Northrop Grumman's size and experience mitigate some risks, but the complexity of advanced aviation and missile systems inherently carries technical and programmatic uncertainties. A thorough risk assessment would require access to program-specific documentation and ongoing government oversight.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W31P4Q04R0239

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 1800 GLENN CURTISS DRIVE, CARSON, CA, 90746

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline