DoD awards Northrop Grumman $57M for B-2 stealth aircraft airframes and spares, a sole-source contract

Contract Overview

Contract Amount: $57,047,148 ($57.0M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 1997-05-09

End Date: 2001-05-31

Contract Duration: 1,483 days

Daily Burn Rate: $38.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199711!5700!0052!GU22 !ASC/YSK !F3365797D0012 !A!*!0001 !19970509!19990630!065390122!362686958!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000056164944!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!5!A!S!*!B!N!Z!D !N!R!2!001!N!1B!Z!Y!Z!* !* !N!C!*!B!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $57.0 million to NORTHROP GRUMMAN CORPORATION for work described as: 199711!5700!0052!GU22 !ASC/YSK !F3365797D0012 !A!*!0001 !19970509!19990630!065390122!362686958!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS AN… Key points: 1. Contract awarded on a cost-plus-award-fee basis, indicating potential for performance incentives. 2. Sole-source award raises questions about price reasonableness and potential for overpayment. 3. Contract duration of nearly 5 years suggests a long-term need for these specialized parts. 4. Northrop Grumman's established role as the B-2 prime contractor likely influenced the sole-source decision. 5. The contract falls under aircraft manufacturing, a critical but high-cost defense sector. 6. Awarded to a large business, with no indication of small business subcontracting goals.

Value Assessment

Rating: questionable

The contract's value of $57 million for airframes and spares for the B-2 stealth bomber is significant. However, as a sole-source award to the prime contractor, it is difficult to benchmark against competitive pricing. The cost-plus-award-fee structure allows for flexibility but also necessitates close oversight to ensure costs remain reasonable and that award fees are justified by performance. Without competitive bids, the government has less leverage to negotiate the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Corporation, was solicited. This is often justified when a specific contractor possesses unique capabilities or is the sole provider of a required item or service, as is typically the case with prime contractors for complex weapon systems like the B-2. The lack of competition limits the government's ability to explore alternative solutions or secure potentially lower prices through a bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust government oversight to ensure fair pricing and prevent potential cost overruns.

Public Impact

The primary beneficiaries are the U.S. Air Force, ensuring the continued operational readiness of the B-2 stealth bomber fleet. Services delivered include the provision of critical airframes and spare parts essential for aircraft maintenance and repair. The geographic impact is national, supporting a key strategic asset for U.S. defense capabilities. Workforce implications are primarily within Northrop Grumman's aerospace manufacturing divisions, supporting skilled labor in specialized engineering and production roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-award-fee contracts require diligent oversight to manage costs and ensure performance.
Lack of transparency in sole-source justifications can obscure the true value proposition.
High cost of specialized defense components can strain budgets.
Long contract duration may not reflect evolving technological needs or market conditions.

Positive Signals

Award to incumbent prime contractor ensures continuity and leverages existing expertise for a complex system.
Cost-plus-award-fee structure incentivizes contractor performance and efficiency.
Focus on airframes and spares directly supports the operational readiness of a critical strategic asset.
Contract duration suggests a stable, long-term requirement, providing predictability for the supplier.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft production and sustainment. The market for specialized components for advanced military aircraft like the B-2 is highly concentrated, with prime contractors like Northrop Grumman often being the sole or primary source for such parts. Spending in this area is driven by national security requirements and the need to maintain aging, high-value assets. Comparable spending benchmarks are difficult to establish due to the unique nature of stealth technology and the limited number of B-2 aircraft.

Small Business Impact

This contract was awarded to Northrop Grumman Corporation, a large business. There is no explicit mention of small business set-asides or subcontracting requirements in the provided data. Given the specialized nature of B-2 components and the sole-source award to the prime contractor, it is unlikely that small businesses were directly solicited for the primary contract. However, Northrop Grumman may engage small businesses for lower-tier subcontracting opportunities, though this is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Contract Management Agency (DCMA). As a cost-plus-award-fee contract, rigorous financial and performance monitoring is expected. Transparency is limited by the sole-source nature, but contract modifications, performance reviews, and audits would be key accountability measures. The Inspector General's office within the DoD would have jurisdiction for investigating any potential fraud, waste, or abuse.

Related Government Programs

B-2 Spirit Bomber Program
Advanced Aircraft Manufacturing
Defense Logistics and Sustainment
Aerospace Component Procurement
Stealth Technology Development

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
High value contract
Specialized defense component

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.0 million to NORTHROP GRUMMAN CORPORATION. 199711!5700!0052!GU22 !ASC/YSK !F3365797D0012 !A!*!0001 !19970509!19990630!065390122!362686958!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000056164944!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!5!A!S!*!B!N!Z!D !N!R!2!0

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN 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 $57.0 million.

What is the period of performance?

Start: 1997-05-09. End: 2001-05-31.

What is Northrop Grumman's track record with the B-2 program and similar sole-source contracts?

Northrop Grumman has been the prime contractor for the B-2 Spirit program since its inception, responsible for its design, development, production, and sustainment. This long-standing relationship means they possess unparalleled expertise and proprietary knowledge regarding the aircraft's complex systems, including its airframes and specialized spares. Consequently, many B-2-specific contracts, particularly for unique components or sustainment services, are awarded sole-source to Northrop Grumman due to their unique position as the original equipment manufacturer and system integrator. While this ensures continuity and leverages deep expertise, it also means that the government relies heavily on Northrop Grumman's pricing and performance, necessitating robust oversight to ensure value for money in the absence of competitive bidding.

How does the 'Cost Plus Award Fee' (CPAF) structure compare to other contract types for this type of procurement?

Cost Plus Award Fee (CPAF) contracts, like the one awarded to Northrop Grumman for B-2 airframes and spares, are common in defense procurements where the scope of work is not precisely defined or where innovation and performance are critical. Unlike fixed-price contracts, CPAF allows the contractor to recover incurred costs plus a base fee, with the potential for an additional award fee based on meeting or exceeding specific performance objectives. This differs from 'Cost Plus Fixed Fee' (CPFF), where the total fee is fixed, or 'Cost Plus Incentive Fee' (CPIF), where both the fee and the final cost are subject to adjustment based on performance targets. For complex, long-term programs like the B-2, CPAF offers flexibility and incentivizes the contractor to achieve high performance standards, but it requires stringent government oversight to manage costs and objectively assess performance for award fee determination.

What are the primary risks associated with a sole-source award for critical aircraft components?

The primary risks associated with a sole-source award for critical aircraft components like B-2 airframes and spares revolve around cost and lack of innovation. Without competition, the government has limited leverage to negotiate the lowest possible price, potentially leading to higher expenditures. The absence of competing proposals can also stifle innovation, as the sole contractor may have less incentive to develop more cost-effective or technologically advanced solutions. Furthermore, sole-source awards can create dependency on a single supplier, making the government vulnerable to supply chain disruptions or price increases if the contractor faces financial difficulties or changes its business strategy. Robust contract administration, including detailed cost analysis and performance monitoring, is crucial to mitigate these risks.

What is the historical spending pattern for B-2 aircraft sustainment and component procurement?

Historical spending on B-2 aircraft sustainment and component procurement has been substantial, reflecting the aircraft's advanced technology, strategic importance, and aging fleet status. As the sole prime contractor, Northrop Grumman has consistently received significant contract awards for maintenance, repair, upgrades, and spare parts. These contracts are often sole-source or narrowly competed due to the specialized nature of the B-2. Over the decades, total program costs have run into the tens of billions of dollars. Spending tends to be characterized by long-term sustainment contracts and specific procurement actions for critical components, often awarded on a cost-reimbursement basis with performance incentives, reflecting the ongoing need to maintain the operational readiness of this unique and costly asset.

How does the geographic location of the contractor (California) impact logistics and delivery for this contract?

The contractor, Northrop Grumman Corporation, is located in Pico Rivera, California. For a contract involving aircraft airframes and spares for the B-2 bomber, which is operated by the U.S. Air Force, the California location has several logistical implications. Proximity to major aerospace manufacturing hubs and transportation infrastructure in Southern California can facilitate efficient production and initial shipment. However, the ultimate delivery destination for the spares and potentially the airframes would be Air Force bases, which could be located anywhere domestically or internationally. Therefore, while the manufacturing base is in California, the logistics chain extends nationally and potentially globally, requiring robust transportation planning and coordination to ensure timely delivery to operational units or maintenance depots, regardless of the contractor's home state.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 8900 WASHINGTON BLVD, PICO RIVERA, CA, 90660

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365797D0012

IDV Type: IDC

Timeline