DoD's $242M contract for missile and space vehicles awarded to Orbital Sciences LLC shows strong competition

Contract Overview

Contract Amount: $242,078,717 ($242.1M)

Contractor: Orbital Sciences LLC

Awarding Agency: Department of Defense

Start Date: 2017-10-31

End Date: 2024-05-31

Contract Duration: 2,404 days

Daily Burn Rate: $100.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST NO FEE

Sector: Defense

Official Description: LDPE ESPA RING

Place of Performance

Location: STERLING, LOUDOUN County, VIRGINIA, 20166

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $242.1 million to ORBITAL SCIENCES LLC for work described as: LDPE ESPA RING Key points: 1. Value for money appears reasonable given the long duration and specialized nature of the contract. 2. Full and open competition suggests a healthy market for these advanced aerospace services. 3. The contract's duration and cost-plus-fee structure present potential cost escalation risks. 4. Performance context is within guided missile and space vehicle manufacturing, a critical defense sector. 5. This contract positions Orbital Sciences LLC as a key player in space vehicle production for the Air Force. 6. The definitive contract type indicates a long-term commitment to a specific supplier.

Value Assessment

Rating: good

The contract value of $242 million over approximately 200 months (2404 days) suggests an average annual spend of roughly $1.45 million. Without specific per-unit cost data or comparable contracts for similar missile and space vehicle manufacturing, a precise value-for-money assessment is challenging. However, the competitive nature of the award implies that the pricing was deemed acceptable by the Air Force. The Cost No Fee (CNF) pricing structure shifts risk to the contractor, which can be advantageous for the government if managed effectively.

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 likely considered. The presence of two bids suggests a competitive environment, though the exact number of interested parties and the rigor of the competition are not detailed. This level of competition is generally positive for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a market where multiple capable contractors vie for the business.

Public Impact

The Department of Defense benefits from the acquisition of critical guided missile and space vehicle capabilities. This contract supports the development and production of advanced space and missile systems essential for national security. The geographic impact is primarily in Virginia, where Orbital Sciences LLC is located, potentially supporting local employment and the aerospace ecosystem. Workforce implications include skilled engineers, technicians, and manufacturing personnel involved in complex aerospace projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fee structure can lead to cost overruns if not closely monitored.
Long contract duration increases the risk of scope creep or evolving technological requirements.
Reliance on a single contractor for a critical capability could pose supply chain risks.

Positive Signals

Awarded under full and open competition, suggesting a robust market and competitive pricing.
Contractor (Orbital Sciences LLC) has a track record in space and missile systems.
Cost No Fee structure incentivizes contractor efficiency and risk management.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the aerospace and defense industry. This sector is characterized by high barriers to entry due to technological complexity, stringent quality requirements, and significant R&D investment. Spending in this area is driven by national security imperatives and technological advancement. Comparable spending benchmarks would typically involve other large-scale, long-term contracts for satellite, missile, or launch vehicle development and production.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). Given the nature of guided missile and space vehicle manufacturing, it is likely that large, specialized contractors are the primary participants. Subcontracting opportunities for small businesses may exist within the supply chain, but direct set-aside awards are improbable for this type of complex, high-value contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force, with specific contracting officers and program managers responsible for monitoring performance, costs, and adherence to contract terms. The Cost No Fee structure implies significant contractor responsibility for managing costs. Transparency is generally maintained through contract reporting requirements, though detailed public disclosure of specific technical or cost data may be limited due to national security sensitivities. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Manufacturing
Space Vehicle Development
Aerospace Defense Contracts
Guided Missile Systems
Space Launch Services

Risk Flags

Cost-plus-fee structure requires diligent oversight to manage potential cost growth.
Long contract duration may necessitate adjustments for evolving technological requirements.
Sole contractor for critical components could pose supply chain risks if not managed proactively.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $242.1 million to ORBITAL SCIENCES LLC. LDPE ESPA RING

Who is the contractor on this award?

The obligated recipient is ORBITAL SCIENCES LLC.

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 $242.1 million.

What is the period of performance?

Start: 2017-10-31. End: 2024-05-31.

What is Orbital Sciences LLC's track record with the Department of Defense, particularly in missile and space vehicle manufacturing?

Orbital Sciences LLC, now part of Northrop Grumman Innovation Systems, has a significant history with the Department of Defense and NASA in developing and manufacturing space systems, including satellites, launch vehicles, and missile components. They have been involved in numerous programs related to national security space, missile defense, and scientific exploration. Their experience includes complex integration, testing, and production of sophisticated hardware. While specific performance metrics for all past contracts are not publicly detailed, their continued selection for major programs suggests a generally positive track record and capability in meeting stringent defense requirements. The longevity and scale of contracts like this one underscore their established position within the defense industrial base for space and missile technologies.

How does the $242 million contract value compare to similar contracts for guided missile and space vehicle manufacturing?

Comparing the $242 million contract value requires context regarding the specific scope, duration, and technological complexity. Contracts for guided missile and space vehicle manufacturing can range from tens of millions for component development to billions for large-scale production or advanced system development programs. This $242 million contract, spanning over 2000 days (approximately 6.5 years), suggests a substantial, long-term effort. Annualized, it represents approximately $37 million per year. This figure appears moderate within the context of major defense aerospace programs, which often involve significantly larger sums for full-rate production or highly complex R&D. However, without knowing the exact deliverables (e.g., number of units, specific technological advancements), a precise benchmark is difficult. It is likely competitive for its specific niche within the broader sector.

What are the primary risks associated with this Cost No Fee (CNF) contract, and how are they mitigated?

The primary risk with a Cost No Fee (CNF) contract is that the contractor bears all costs, regardless of whether they meet performance objectives or if costs exceed estimates. This can incentivize contractors to cut corners on quality or performance to manage their own financial exposure, potentially leading to subpar deliverables. Mitigation strategies employed by the government include rigorous oversight, detailed performance metrics, phased delivery schedules, and strong quality assurance protocols. The Air Force would closely monitor the contractor's financial health and project progress. Furthermore, the 'No Fee' aspect means the contractor does not earn a profit margin, which could reduce their motivation for innovation or exceeding basic requirements, though it strongly incentivizes cost control. The government's ability to terminate the contract for non-performance also serves as a critical risk mitigation tool.

What is the historical spending pattern for guided missile and space vehicle manufacturing by the Department of the Air Force?

Historical spending by the Department of the Air Force (and the broader DoD) on guided missile and space vehicle manufacturing has been substantial and consistent, driven by national security priorities. This spending fluctuates based on modernization cycles, geopolitical threats, and specific program requirements. Major programs often involve multi-year procurement contracts and significant R&D investments. The Air Force consistently allocates billions annually to space and missile programs, encompassing everything from satellite constellations and launch services to intercontinental ballistic missiles (ICBMs) and tactical missile systems. Spending trends reflect a continuous need for advanced capabilities in space-based intelligence, surveillance, reconnaissance (ISR), communication, navigation, and missile defense, as well as offensive strike capabilities. This $242 million contract represents a portion of that ongoing investment.

How does the 'full and open competition' award mechanism impact the overall cost-effectiveness for taxpayers?

Awarding contracts under 'full and open competition' is generally considered the most cost-effective method for taxpayers. This mechanism allows all responsible sources, regardless of size or type, to submit bids. The inherent competition drives down prices as contractors strive to offer the most compelling value proposition to win the contract. It ensures that the government is not limited to a select few providers, thereby preventing potential monopolies or oligopolies that could inflate prices. Furthermore, it encourages innovation as companies compete not just on price but also on technical merit and proposed solutions. While the administrative effort to manage a full and open competition can be higher, the resulting price discovery and potential for savings typically outweigh these costs, leading to better value for taxpayer dollars in the long run.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA881817R0002

Offers Received: 2

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 45101 WARP DRIVE, DULLES, VA, 20166

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: $252,727,527

Exercised Options: $248,897,776

Current Obligation: $242,078,717

Actual Outlays: $-48,598,883

Subaward Activity

Number of Subawards: 70

Total Subaward Amount: $34,062,479

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline