Northrop Grumman awarded $25.1M for B-2 Stealth aircraft airframes and spares, a sole-source contract

Contract Overview

Contract Amount: $25,071,147 ($25.1M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 1998-06-12

End Date: 2001-02-12

Contract Duration: 976 days

Daily Burn Rate: $25.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199809!5700!0041!GU22 !ASC/YSK !F3365797D0012 !A!*!0002 !19980612!20001231!065390122!008255408!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000019110059!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!5!B!S!*!B!A!*!D !N!R!2!001!N!1G!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 $25.1 million to NORTHROP GRUMMAN CORPORATION for work described as: 199809!5700!0041!GU22 !ASC/YSK !F3365797D0012 !A!*!0002 !19980612!20001231!065390122!008255408!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-based incentives. 2. Sole-source award suggests limited competition, potentially impacting price negotiation. 3. Contract duration of 976 days points to a significant, ongoing need for B-2 support. 4. The contract falls under Aircraft Manufacturing, a critical sector for national defense. 5. Awarded by the Defense Contract Management Agency, highlighting specialized oversight for complex defense systems.

Value Assessment

Rating: fair

The contract's value of $25.1 million for airframes and spares for the B-2 Stealth bomber appears reasonable given the specialized nature of the aircraft and the sole-source award. However, without comparable sole-source contracts for similar advanced aircraft components, a definitive value-for-money assessment is challenging. The cost-plus-award-fee structure allows for flexibility but also necessitates careful monitoring to ensure costs remain controlled and performance incentives are effectively utilized.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Corporation, was solicited. This is common for highly specialized defense systems where only one entity possesses the necessary technical expertise, intellectual property, or manufacturing capability. The lack of competition means that price discovery through market forces was not a factor in this award.

Taxpayer Impact: For taxpayers, a sole-source award means that the government did not benefit from competitive bidding, which typically drives down prices. The government must rely on robust negotiation and oversight to ensure a fair price.

Public Impact

The primary beneficiaries are the U.S. Air Force and national security, 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 primarily centered around Northrop Grumman's facilities in California, where the work is performed. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel involved in aerospace production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-award-fee contracts can lead to cost overruns if not managed tightly.
Reliance on a single contractor for critical components poses a supply chain risk.

Positive Signals

Northrop Grumman is a highly experienced defense contractor with established expertise in stealth technology.
The contract addresses a critical need for maintaining a strategic defense asset.
The award-fee component incentivizes contractor performance, potentially leading to higher quality outcomes.

Sector Analysis

This contract operates within the aerospace and defense manufacturing sector, specifically focusing on advanced military aircraft. The market for such specialized components is highly concentrated, with a few major prime contractors dominating. Spending in this area is driven by national security requirements and the lifecycle support needs of complex weapon systems. Benchmarks are difficult to establish due to the unique nature of the B-2 platform.

Small Business Impact

This contract does not appear to involve small business set-asides. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal. However, Northrop Grumman may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contract compliance, quality control, and timely delivery. The cost-plus-award-fee structure necessitates rigorous financial oversight to validate costs and assess performance against award criteria. Transparency is generally limited for sole-source defense contracts of this nature.

Related Government Programs

B-2 Spirit Program
Advanced Aircraft Manufacturing
Defense Logistics and Sustainment
Aerospace Component Procurement

Risk Flags

Sole-source award
Cost-plus contract type
Critical defense asset sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.1 million to NORTHROP GRUMMAN CORPORATION. 199809!5700!0041!GU22 !ASC/YSK !F3365797D0012 !A!*!0002 !19980612!20001231!065390122!008255408!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000019110059!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!5!B!S!*!B!A!*!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 $25.1 million.

What is the period of performance?

Start: 1998-06-12. End: 2001-02-12.

What is Northrop Grumman's track record with the B-2 program?

Northrop Grumman has been the prime contractor for the B-2 Spirit program since its inception, responsible for its design, development, production, and sustainment. Their long-standing involvement signifies deep institutional knowledge and a critical role in maintaining the aircraft's operational readiness. Over the decades, they have managed numerous contracts related to the B-2, encompassing everything from initial airframe construction to ongoing maintenance, upgrades, and spare parts provisioning. This extensive history suggests a strong, albeit exclusive, capability in supporting this unique and complex weapon system.

How does the $25.1 million value compare to other B-2 sustainment contracts?

Direct comparisons for specific B-2 airframe and spare part contracts are challenging due to the proprietary nature of defense contracting data and the unique characteristics of the B-2 platform. However, sustainment costs for strategic, low-observable aircraft are inherently high. The $25.1 million awarded over a period of approximately 976 days (roughly 2.7 years) translates to an average annual value of around $9.3 million. This figure needs to be considered within the context of the B-2's advanced technology, limited production numbers, and the specialized expertise required for its maintenance. Without access to detailed cost breakdowns or comparable contracts for similar platforms, it's difficult to definitively benchmark this specific award.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can potentially lead to higher prices than might be achieved in a competitive environment. Taxpayers may not be receiving the best possible value. Additionally, reliance on a single contractor for critical components creates a potential supply chain vulnerability; any disruption at Northrop Grumman could significantly impact the B-2's operational availability. There's also the risk of cost overruns inherent in cost-plus-award-fee contracts if performance metrics and cost controls are not rigorously managed by the contracting agency.

How effective is the cost-plus-award-fee (CPAF) structure for this type of contract?

The Cost-Plus-Award-Fee (CPAF) structure is often employed for complex, high-risk, or developmental contracts where the scope of work may evolve, and performance outcomes are critical but difficult to pre-define precisely. For the B-2 sustainment, CPAF allows the government to reimburse Northrop Grumman for allowable costs while providing an incentive fee based on achieving specific performance objectives. This can encourage higher quality work and efficiency. However, the effectiveness hinges on the clarity and measurability of the award criteria and the rigor of the government's oversight in evaluating performance and controlling costs. Without strong oversight, CPAF can incentivize cost growth.

What are the historical spending patterns for B-2 sustainment?

Historical spending on B-2 sustainment has been substantial, reflecting the aircraft's advanced technology, high operational tempo, and the need for specialized maintenance and upgrades throughout its lifecycle. While specific figures for airframe and spares procurement vary year to year, the overall sustainment budget for the B-2 program typically runs into hundreds of millions of dollars annually. This includes costs for personnel, depot maintenance, component repair, software updates, and the procurement of long-lead-time items and spare parts, such as those covered by this contract. Spending is driven by readiness requirements and modernization efforts.

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