DoD's Northrop Grumman Awarded $121M for ICBM Software Sustainment, Facing Potential Cost Overruns
Contract Overview
Contract Amount: $121,452,381 ($121.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2021-09-01
End Date: 2026-08-31
Contract Duration: 1,825 days
Daily Burn Rate: $66.5K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: 625TH STRATEGIC OPERATIONS SQUADRON AND INTERCONTINENTAL BALLISTIC MISSILE OPERATIONAL SOFTWARE SUSTAINMENT PROGRAM/ CONTRACTOR LOGISTICS SUPPORT
Place of Performance
Location: HILL AFB, DAVIS County, UTAH, 84056
State: Utah Government Spending
Plain-Language Summary
Department of Defense obligated $121.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: 625TH STRATEGIC OPERATIONS SQUADRON AND INTERCONTINENTAL BALLISTIC MISSILE OPERATIONAL SOFTWARE SUSTAINMENT PROGRAM/ CONTRACTOR LOGISTICS SUPPORT Key points: 1. Contract awarded to Northrop Grumman for critical ICBM software sustainment. 2. Significant contract value of $121.45M over 5 years. 3. Potential for cost overruns due to Cost Plus Award Fee structure. 4. Engineering Services sector, NAICS 541330, with limited small business participation.
Value Assessment
Rating: questionable
The Cost Plus Award Fee (CPAF) structure, while incentivizing performance, carries inherent risk of cost escalation. Benchmarking against similar complex software sustainment contracts is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the CPAF structure may not fully optimize price discovery compared to fixed-price contracts.
Taxpayer Impact: Taxpayer funds are being utilized for a critical national security program. The CPAF structure necessitates close monitoring to ensure cost efficiency and prevent unnecessary expenditure.
Public Impact
Ensures the operational readiness of Intercontinental Ballistic Missiles, a key component of national defense. Supports advanced engineering and software sustainment services for complex military systems. Potential impact on defense budget allocation due to contract value and fee structure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure can lead to higher than anticipated costs.
- Lack of small business participation may limit competitive options and innovation.
- Long contract duration (5 years) increases exposure to evolving technological needs and cost fluctuations.
Positive Signals
- Awarded under full and open competition, indicating a competitive process.
- Focus on critical national security infrastructure ensures vital system availability.
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting complex defense systems. Spending benchmarks for ICBM software sustainment are highly specialized and not readily comparable to broader engineering services.
Small Business Impact
The contract indicates no small business participation (SB=false). This suggests that the prime contractor, Northrop Grumman, is handling the entirety of the work, potentially limiting opportunities for smaller, specialized firms in this domain.
Oversight & Accountability
The Department of the Air Force is the contracting agency. Oversight will be crucial to manage the CPAF structure effectively, ensuring performance targets are met without excessive cost growth and that funds are used judiciously.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Cost Plus Award Fee (CPAF) structure.
- No small business participation.
- Long contract duration.
- Critical infrastructure reliance.
- Potential for cost escalation.
Tags
engineering-services, department-of-defense, ut, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $121.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. 625TH STRATEGIC OPERATIONS SQUADRON AND INTERCONTINENTAL BALLISTIC MISSILE OPERATIONAL SOFTWARE SUSTAINMENT PROGRAM/ CONTRACTOR LOGISTICS SUPPORT
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 $121.5 million.
What is the period of performance?
Start: 2021-09-01. End: 2026-08-31.
What specific performance metrics are tied to the award fee, and how are they measured to ensure fair compensation and prevent contractor overreach?
The specific performance metrics for the award fee are not detailed in the provided data. However, typical metrics for such contracts include system availability, reliability, response times for critical issues, and successful implementation of software updates. The Air Force's contracting officers would be responsible for defining, monitoring, and evaluating these metrics against pre-defined targets to determine the award fee amount.
Given the CPAF structure, what mechanisms are in place to mitigate the risk of cost overruns and ensure the government receives the best value?
Mitigation strategies for CPAF contracts typically involve robust government oversight, detailed cost tracking, and clearly defined performance objectives linked to the award fee. The government must actively manage the contract, scrutinize contractor expenditures, and ensure that the award fee is genuinely earned through exceptional performance rather than simply incurred costs. Regular audits and performance reviews are essential.
How does the sustainment of this ICBM operational software contribute to the overall effectiveness and readiness of the U.S. strategic deterrent?
The operational software sustainment is fundamental to the effectiveness and readiness of the U.S. strategic deterrent. It ensures the reliability, security, and functionality of the command and control systems for Intercontinental Ballistic Missiles. Without continuous updates, maintenance, and modernization, these critical systems could degrade, compromising their ability to function when needed and thus weakening the nation's nuclear deterrence posture.
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 AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Northrop Grumman Corporation
Address: 6006 WARDLEIGH RD BLDG 1575, HILL AIR FORCE BASE, UT, 84056
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $145,863,486
Exercised Options: $130,768,889
Current Obligation: $121,452,381
Subaward Activity
Number of Subawards: 65
Total Subaward Amount: $457,611,318
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA821421D0002
IDV Type: IDC
Timeline
Start Date: 2021-09-01
Current End Date: 2026-08-31
Potential End Date: 2026-08-31 00:00:00
Last Modified: 2026-01-15
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