Northrop Grumman receives $150.5M for B-61 Mod 12 EMD effort, a sole-source aircraft manufacturing contract

Contract Overview

Contract Amount: $150,555,672 ($150.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2015-01-22

End Date: 2025-01-31

Contract Duration: 3,662 days

Daily Burn Rate: $41.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: NON-ACAT, B-2, B-61 MOD 12 EMD EFFORT

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $150.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: NON-ACAT, B-2, B-61 MOD 12 EMD EFFORT Key points: 1. Contract awarded to a single, established provider, raising questions about potential price efficiencies. 2. The contract's duration spans over a decade, suggesting a long-term strategic investment. 3. A Cost Plus Incentive Fee structure may incentivize performance but also carries inherent cost risks. 4. The specific nature of the EMD effort points to early-stage development and potential for future modifications. 5. This contract falls under the broad 'Aircraft Manufacturing' NAICS code, indicating a focus on complex aerospace systems.

Value Assessment

Rating: fair

Benchmarking the value of this specific EMD effort is challenging due to its unique nature and sole-source award. The Cost Plus Incentive Fee (CPIF) structure, while common for development, can lead to costs exceeding initial estimates if not carefully managed. Without competitive bids, it's difficult to definitively assess if the pricing represents optimal value for the government. However, the scale of the award suggests significant investment in a critical defense capability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically justified when only one vendor possesses the necessary specialized capabilities, technology, or intellectual property. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process. The government relies on negotiation and oversight to ensure a fair price in sole-source situations.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, receiving critical components for the B-61 Mod 12. The contract supports the development and enhancement of nuclear weapon systems, a key national security function. The geographic impact is primarily within California, where Northrop Grumman Systems Corp is located, potentially creating or sustaining high-skilled jobs in the aerospace sector. Workforce implications include the employment of engineers, technicians, and support staff involved in complex aerospace manufacturing and development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Incentive Fee structure can lead to cost overruns if not managed stringently.
Long contract duration increases exposure to potential scope creep or evolving requirements.
EMD phase inherently carries technical and development risks.

Positive Signals

Award to an established contractor with likely relevant experience in similar programs.
CPIF structure can incentivize contractor performance and efficiency.
Focus on a critical modernization effort for a key strategic asset.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a significant segment of the US industrial base. The market is characterized by high barriers to entry, specialized technology, and substantial government investment. Spending in this sector is often driven by national security priorities and technological advancement. Comparable spending benchmarks are difficult to establish for specific EMD efforts, but large-scale defense contracts are common.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss' being false. Northrop Grumman Systems Corp is a large prime contractor. While the prime contract is not set aside, there may be opportunities for small businesses to participate as subcontractors. The extent of subcontracting to small businesses would depend on Northrop Grumman's procurement practices and any specific subcontracting goals or requirements imposed by the government.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force, likely through contracting officers and program management offices. Accountability measures would be embedded within the Cost Plus Incentive Fee structure, performance metrics, and reporting requirements. Transparency may be limited due to the sensitive nature of the defense program, but contract awards and basic details are generally publicly available through federal procurement databases.

Related Government Programs

B-61 Nuclear Weapon Program
Aerospace Manufacturing Contracts
Defense Research and Development
Aircraft Component Production
Strategic Weapons Systems Development

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Sensitive defense program

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $150.6 million to NORTHROP GRUMMAN SYSTEMS CORP. NON-ACAT, B-2, B-61 MOD 12 EMD EFFORT

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

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 $150.6 million.

What is the period of performance?

Start: 2015-01-22. End: 2025-01-31.

What is the historical spending trend for the B-61 program, and how does this award compare?

The B-61 program is a long-standing initiative involving the modernization and maintenance of a strategic nuclear gravity bomb. Historical spending on the B-61 program has been substantial over several decades, encompassing various life extension programs and modifications. This specific award of $150.5 million for the EMD (Engineering and Manufacturing Development) phase of the B-61 Mod 12 represents a significant investment in the latest iteration of the weapon. While precise historical EMD costs for previous B-61 variants are not readily available in the public domain, this figure aligns with the substantial resources typically allocated to the development of complex, high-stakes defense systems. The total lifecycle cost of the B-61 Mod 12 program is expected to be considerably higher than this initial EMD award.

What are the specific risks associated with a Cost Plus Incentive Fee (CPIF) contract for EMD?

Cost Plus Incentive Fee (CPIF) contracts, while designed to incentivize performance, carry inherent risks, especially during the Engineering and Manufacturing Development (EMD) phase. For the government, the primary risk is that the final cost could exceed initial projections if the contractor is unable to meet performance targets efficiently or if unforeseen technical challenges arise. The incentive fee structure means the contractor's profit is tied to achieving specific cost, schedule, or performance goals. If these goals are not met, the contractor's fee is reduced, but the government still pays the incurred costs. Conversely, if targets are exceeded, the government may pay more than initially anticipated. Effective oversight, clear target setting, and robust negotiation are crucial to mitigate these risks and ensure value for taxpayer money.

How does the sole-source nature of this award impact potential innovation and cost-effectiveness?

A sole-source award, by definition, bypasses the competitive process, which is a primary driver of innovation and cost-effectiveness in government contracting. When multiple companies compete, they are incentivized to offer the most innovative solutions at the lowest possible price to win the contract. In a sole-source scenario, the government relies heavily on its negotiation skills and the contractor's willingness to provide fair pricing and efficient execution. While this award may be justified by unique capabilities or proprietary technology held by Northrop Grumman, it limits the government's ability to explore alternative solutions or leverage market competition to drive down costs. This necessitates stringent oversight to ensure the government receives optimal value.

What is Northrop Grumman's track record with similar large-scale defense development contracts?

Northrop Grumman Systems Corporation has a long and extensive track record of successfully executing large-scale, complex defense development and manufacturing contracts for the U.S. government. They are a major prime contractor on numerous high-profile programs across various domains, including aerospace, defense electronics, and information systems. Their experience includes work on strategic aircraft, missile systems, and advanced technologies. Given their established position as a defense industrial base leader, it is highly probable that they possess the requisite expertise, infrastructure, and security clearances necessary for the B-61 Mod 12 EMD effort. Their history suggests a capacity to manage intricate technical challenges and large budgets, although specific performance metrics on past EMD contracts are not publicly detailed.

What are the potential long-term implications of this contract for the B-61 program and related defense modernization efforts?

This contract represents a critical step in the ongoing modernization of the U.S. nuclear triad, specifically focusing on extending the life and enhancing the capabilities of the B-61 gravity bomb. Successful completion of the Engineering and Manufacturing Development (EMD) phase is essential for ensuring the reliability, safety, and effectiveness of this strategic deterrent for decades to come. The insights gained and technologies developed during this EMD effort could also inform future modernization programs for other strategic assets. Furthermore, the significant investment underscores the government's commitment to maintaining its nuclear capabilities, influencing strategic planning and resource allocation within the Department of Defense and the broader national security apparatus.

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

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $170,672,015

Exercised Options: $170,672,015

Current Obligation: $150,555,672

Subaward Activity

Number of Subawards: 288

Total Subaward Amount: $1,724,800,157

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline