Northrop Grumman awarded $20M for Airborne Launch Control System sustainment, raising value-for-money questions

Contract Overview

Contract Amount: $20,067,213 ($20.1M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2015-09-29

End Date: 2021-08-31

Contract Duration: 2,163 days

Daily Burn Rate: $9.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: GROUND SUBSYSTEM SUPPORT CONTRACT, AIRBORNE LAUNCH CONTROL SYSTEM SUSTAINMENT, IGF::CT::IGF

Place of Performance

Location: ROY, WEBER County, UTAH, 84067

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $20.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: GROUND SUBSYSTEM SUPPORT CONTRACT, AIRBORNE LAUNCH CONTROL SYSTEM SUSTAINMENT, IGF::CT::IGF Key points: 1. Contract awarded to a single, large incumbent provider, potentially limiting competitive pricing. 2. The cost-plus-fixed-fee structure may incentivize cost escalation over efficiency. 3. Long contract duration (over 5 years) suggests a need for ongoing sustainment but also potential for price creep. 4. Limited public data on performance metrics makes a comprehensive value assessment challenging. 5. The contract falls within engineering services, a sector with significant government spending. 6. Lack of small business participation noted, with no set-aside or subcontracting requirements specified.

Value Assessment

Rating: fair

The contract's value of approximately $20 million over five years for sustainment services appears reasonable on the surface for specialized defense systems. However, without detailed performance metrics or comparisons to similar sustainment contracts for comparable systems, it is difficult to definitively benchmark its value. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or sustainment, can sometimes lead to higher costs than fixed-price contracts if not managed tightly. Benchmarking against industry standards for engineering services of this nature would require more granular data on labor hours, material costs, and overhead.

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 were theoretically allowed to compete. However, the specific number of bidders and the details of the solicitation process are not provided. For complex, specialized systems like an airborne launch control system, the pool of qualified bidders might be limited, potentially leading to less aggressive pricing even with open competition. The fact that Northrop Grumman was awarded the contract suggests they were the most competitive offeror based on the evaluation criteria at the time.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through market forces. However, the actual savings realized depend on the number and capability of competing firms and the effectiveness of the evaluation process.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the operational readiness of critical airborne launch control systems. Services delivered include sustainment, maintenance, and potentially upgrades to ensure the longevity and effectiveness of the system. The geographic impact is likely national, supporting strategic air command assets wherever they are deployed. Workforce implications include specialized engineering and technical roles within Northrop Grumman and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Positive Signals

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which encompasses firms providing engineering consulting and services. The defense sector relies heavily on such services for the design, development, sustainment, and modernization of complex military platforms and systems. Spending in this sector is substantial, driven by national security requirements. Comparable spending benchmarks would typically involve analyzing other sustainment contracts for major defense systems, looking at cost per operational hour or per system supported.

Small Business Impact

This contract does not appear to have been awarded as a small business set-aside, nor is there information indicating significant subcontracting to small businesses. The prime contractor, Northrop Grumman, is a large aerospace and defense company. The absence of small business participation could mean missed opportunities for smaller, specialized firms to contribute to this critical defense program and potentially limit the broader economic benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which ensures contractors meet performance, cost, and schedule requirements. Accountability measures are embedded within the contract's terms and conditions, including reporting requirements and payment milestones tied to performance. Transparency is often limited for defense contracts due to security classifications, but contract awards and basic details are usually publicly available through systems like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Risk Flags

Tags

defense, engineering-services, northrop-grumman, department-of-defense, full-and-open-competition, cost-plus-fixed-fee, sustainment, airborne-launch-control-system, utah, delivery-order

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.1 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. GROUND SUBSYSTEM SUPPORT CONTRACT, AIRBORNE LAUNCH CONTROL SYSTEM SUSTAINMENT, IGF::CT::IGF

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 $20.1 million.

What is the period of performance?

Start: 2015-09-29. End: 2021-08-31.

What is Northrop Grumman's track record with similar sustainment contracts for critical defense systems?

Northrop Grumman has a long history of supporting complex defense systems, including strategic weapons platforms. Their track record typically involves extensive experience in aerospace engineering, systems integration, and lifecycle sustainment. For airborne launch control systems specifically, their incumbency suggests a deep understanding of the system's intricacies, maintenance requirements, and operational context. While generally considered a reliable contractor, performance can vary across contracts, with factors like contract type, oversight rigor, and specific program challenges influencing outcomes. Analyzing past performance on similar contracts would involve reviewing contract award histories, any reported performance issues or successes, and customer satisfaction feedback where available.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for sustainment services, and what are the implications for value?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not precisely defined or involves significant uncertainty, such as in sustainment of complex, aging systems. The government pays the contractor's actual allowable costs plus a fixed fee representing profit. This structure provides flexibility but can incentivize cost growth, as the contractor is reimbursed for costs incurred. Compared to fixed-price contracts, CPFF offers less cost certainty for the government. For sustainment, it can be beneficial if unforeseen technical issues arise, but it requires robust government oversight to manage costs effectively and ensure value. Fixed-price incentive fee or other performance-based contracts might offer better value if performance metrics can be clearly defined and measured.

What are the key performance indicators (KPIs) used to measure the success of this contract, and how are they monitored?

Specific Key Performance Indicators (KPIs) for this 'GROUND SUBSYSTEM SUPPORT CONTRACT, AIRBORNE LAUNCH CONTROL SYSTEM SUSTAINMENT' are not publicly detailed in the provided data. However, typical KPIs for such sustainment contracts would likely include metrics related to system availability, Mean Time Between Failures (MTBF), Mean Time To Repair (MTTR), response time for support requests, and successful completion of scheduled maintenance or inspections. Monitoring these KPIs would be the responsibility of the contracting officer's representative (COR) and the Defense Contract Management Agency (DCMA). They would review contractor reports, conduct site visits, and potentially use government-furnished data on system performance to assess adherence to contractual requirements and ensure mission readiness.

What is the historical spending trend for airborne launch control system sustainment, and how does this award compare?

Historical spending data for airborne launch control system sustainment is not directly available in the provided snippet. However, the award of $20,067,212.68 from 2015 to 2021 suggests an average annual spend of approximately $3.34 million. To compare this, one would need to access historical contract databases (like FPDS) to identify previous contracts for the same or similar systems, noting their award amounts, durations, and pricing structures. Trends might indicate increasing costs due to aging systems, technological obsolescence, or changes in operational tempo. This specific award represents a significant investment in maintaining a critical component of the nation's strategic deterrent.

Are there any identified risks associated with Northrop Grumman's performance on this specific contract or similar contracts?

Without access to detailed performance reports or past performance reviews, specific risks associated with Northrop Grumman's performance on this particular contract are not publicly identifiable. However, general risks for sustainment contracts of this nature include potential cost overruns due to unforeseen technical challenges, schedule delays in providing support or parts, and risks related to supply chain disruptions for specialized components. For large incumbent contractors like Northrop Grumman, risks can also include complacency or a lack of aggressive innovation if competition is perceived as low. A thorough risk assessment would require reviewing contractor past performance information (CAGE code searches, CPARS data) and analyzing the specific technical and operational environment of the airborne launch control system.

Industry Classification

NAICS: Professional, Scientific, and Technical ServicesArchitectural, Engineering, and Related ServicesEngineering Services

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS.TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 2340 DULLES CORNER BLVD, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,184,767

Exercised Options: $20,198,498

Current Obligation: $20,067,213

Subaward Activity

Number of Subawards: 104

Total Subaward Amount: $29,248,487

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821415D0001

IDV Type: IDC

Timeline

Start Date: 2015-09-29

Current End Date: 2021-08-31

Potential End Date: 2021-08-31 00:00:00

Last Modified: 2025-10-03

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