Air Force's $45.3M Launch Control Center upgrade by Northrop Grumman shows fair value with a 3.76% cost underrun

Contract Overview

Contract Amount: $45,333,481 ($45.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2020-04-14

End Date: 2023-07-31

Contract Duration: 1,203 days

Daily Burn Rate: $37.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LAUNCH CONTROL CENTER BLOCK UPGRADE (LCCBU) PRODUCTION AND DEPLOYMENT

Place of Performance

Location: HILL AFB, DAVIS County, UTAH, 84056

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $45.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: LAUNCH CONTROL CENTER BLOCK UPGRADE (LCCBU) PRODUCTION AND DEPLOYMENT Key points: 1. The contract achieved a cost underrun of 3.76%, indicating effective cost management. 2. Northrop Grumman, a large defense contractor, was awarded this contract. 3. The contract was awarded under full and open competition, suggesting a competitive bidding process. 4. The project spanned over three years, indicating a significant duration for the upgrade. 5. The contract type is Cost Plus Fixed Fee, which can incentivize cost control but also carries inherent risks. 6. The service falls under Engineering Services, a broad category with diverse applications.

Value Assessment

Rating: fair

The final cost of $45.3 million was 3.76% below the initial estimate, suggesting some level of cost efficiency. Benchmarking this against similar complex engineering services contracts is challenging without more specific data on the scope of work. However, achieving an underrun on a Cost Plus Fixed Fee contract is generally a positive sign, indicating that the contractor managed costs effectively within the agreed-upon fee structure. The fixed fee component likely provided a strong incentive for the contractor to control costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, implying that multiple qualified bidders had the opportunity to submit proposals. This level of competition is generally expected to drive down prices and ensure fair market value. The number of bidders is not specified, but the 'full and open' designation suggests a robust process.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price for the required engineering services, reducing the risk of overpayment.

Public Impact

The primary beneficiaries are the Department of the Air Force and its space launch operations. The services delivered involve the upgrade and deployment of critical launch control center infrastructure. The geographic impact is likely concentrated at the specific Air Force installation where the launch control center is located, presumed to be in Utah. The contract supports highly skilled engineering and technical roles within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to cost overruns if not managed meticulously.
The long duration of the contract (over three years) increases the potential for scope creep or unforeseen challenges.
Reliance on a single large contractor like Northrop Grumman could limit future competition for related services.

Positive Signals

Achieved a cost underrun, indicating effective financial management.
Awarded through full and open competition, suggesting a fair and competitive process.
The fixed fee component provides a ceiling for contractor profit, aligning incentives with cost control.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting critical infrastructure for the Department of Defense's space launch capabilities. The aerospace and defense engineering market is characterized by high technical complexity, stringent quality requirements, and significant government investment. Comparable spending benchmarks would involve other large-scale infrastructure upgrades for national security assets, often involving specialized engineering firms.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting goals for small businesses. As a large prime contract awarded to a major defense corporation, the direct impact on small businesses is likely limited unless they are part of Northrop Grumman's supply chain. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management within the Department of the Air Force. The Cost Plus Fixed Fee structure necessitates close monitoring of costs and performance to ensure adherence to the contract's objectives. Transparency is generally maintained through contract reporting requirements, though specific details of oversight mechanisms are not provided in the summary data. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Space Launch Systems
Missile Defense Systems
Aerospace Engineering Services
Department of Defense Infrastructure Modernization

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost escalations.
Long contract duration increases exposure to scope creep and evolving requirements.
No explicit small business subcontracting goals mentioned, potentially limiting direct small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. LAUNCH CONTROL CENTER BLOCK UPGRADE (LCCBU) PRODUCTION AND DEPLOYMENT

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 Air Force).

What is the total obligated amount?

The obligated amount is $45.3 million.

What is the period of performance?

Start: 2020-04-14. End: 2023-07-31.

What was the specific scope of the Launch Control Center Block Upgrade (LCCBU)?

The specific scope of the Launch Control Center Block Upgrade (LCCBU) involved modernizing and deploying essential components of the launch control infrastructure for the Department of the Air Force. This likely included upgrading hardware, software, and communication systems to ensure the reliability, security, and operational effectiveness of launch operations. The 'Block Upgrade' designation suggests a phased approach to modernization, potentially addressing obsolescence and incorporating new technological capabilities to support current and future space launch missions. The upgrade aimed to maintain the integrity and readiness of critical launch facilities.

How does the 3.76% cost underrun compare to similar engineering services contracts for defense infrastructure?

A 3.76% cost underrun on a $45.3 million Cost Plus Fixed Fee contract for defense infrastructure engineering services can be considered a positive outcome. While specific benchmarks vary widely based on contract complexity, duration, and technological risk, achieving any underrun, especially on a CPFF contract, suggests effective cost management by the contractor and diligent oversight by the government. Many large-scale defense projects, particularly those involving complex systems integration and R&D elements, often experience cost overruns due to unforeseen technical challenges or evolving requirements. Therefore, a cost underrun indicates that Northrop Grumman managed the project within its estimated financial parameters, potentially due to efficient execution, accurate initial estimations, or a well-defined scope that minimized changes.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of project?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for a project like the LCCBU revolve around potential cost escalation and the contractor's incentive structure. While the fixed fee provides a ceiling on the contractor's profit, the 'cost plus' portion means the government reimburses allowable costs. If cost estimation is inaccurate or if unforeseen technical challenges arise, the total cost to the government can increase significantly. The contractor, having already secured their fee, may have less incentive to aggressively control costs once the fee is guaranteed, potentially leading to less efficient resource utilization compared to fixed-price contracts. Robust government oversight is crucial to scrutinize allowable costs and ensure the contractor exercises due diligence in managing expenses.

What is the significance of Northrop Grumman Systems Corporation being the contractor for this project?

Northrop Grumman Systems Corporation is a major defense contractor with extensive experience in aerospace, defense, and national security systems. Their involvement in the LCCBU project signifies the critical nature of the upgrade and the requirement for specialized expertise in launch systems and control infrastructure. As a large, established entity, they possess the resources, technical capabilities, and security clearances necessary for such sensitive government projects. Their track record in delivering complex defense systems suggests a high likelihood of technical competence, though it also means the contract value represents a portion of their overall large-scale government business. The award to such a prime contractor often implies a complex supply chain and potential for further subcontracting opportunities.

How does this contract fit into the broader context of US space launch capabilities and modernization efforts?

This contract is a component of the broader effort to modernize and maintain the United States' critical space launch infrastructure, particularly for national security missions. Ensuring the reliability and security of launch control centers is paramount for the successful deployment of satellites and other payloads essential for defense, intelligence, and scientific endeavors. Investments in upgrades like the LCCBU reflect the government's commitment to sustaining a robust and technologically advanced launch capability in an increasingly complex global space environment. Such modernization efforts are vital for maintaining a strategic advantage and ensuring operational readiness for space-based assets.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering 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: $45,336,721

Exercised Options: $45,336,721

Current Obligation: $45,333,481

Actual Outlays: $1,799,170

Subaward Activity

Number of Subawards: 115

Total Subaward Amount: $37,494,954

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