Northrop Grumman's $821.9M B-2 Stealth contract awarded in 1998 for airframes and spares

Contract Overview

Contract Amount: $82,193,613 ($82.2M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 1998-08-28

End Date: 2008-01-26

Contract Duration: 3,438 days

Daily Burn Rate: $23.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199812!5700!0061!GU22 !ASC/YSK !F3365797D0012 !A!*!0006 !19980828!19981012!065390122!008255408!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000044500000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!3!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 $82.2 million to NORTHROP GRUMMAN CORPORATION for work described as: 199812!5700!0061!GU22 !ASC/YSK !F3365797D0012 !A!*!0006 !19980828!19981012!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 for a significant sum, indicating a high-value, critical defense component. 2. Sole-source award suggests a lack of competition, potentially impacting price. 3. Long performance period (1998-2008) implies a sustained need for these specialized parts. 4. The contract is for a specific, advanced aircraft component (B-2 Stealth airframes and spares). 5. The awardee, Northrop Grumman, is a major defense contractor with extensive experience in aerospace. 6. The contract type (Cost Plus Award Fee) allows for contractor reimbursement of costs plus a performance-based fee.

Value Assessment

Rating: questionable

The contract's value of over $821 million for airframes and spares for the B-2 Stealth bomber is substantial. However, without comparable sole-source contracts for similar advanced aircraft components, it is difficult to definitively benchmark its value for money. The Cost Plus Award Fee (CPAF) structure, while common for complex defense systems, can lead to higher costs if not managed rigorously, as the contractor is incentivized to incur costs to achieve a higher fee.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no competition. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole manufacturer of the required item. The lack of competition means that the government did not benefit from a competitive bidding process, which could have potentially driven down prices.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government relied on negotiation and oversight to ensure a fair price, which is inherently less efficient than market-driven price discovery.

Public Impact

The primary beneficiaries are the U.S. Air Force and national defense, 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 the maintenance and repair of these advanced aircraft. The geographic impact is primarily national, supporting a key strategic asset of the U.S. military. Workforce implications are significant for Northrop Grumman and its supply chain, supporting specialized manufacturing and engineering jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Award Fee structure can lead to cost overruns if not managed effectively.
Long contract duration may indicate potential for cost creep over time.
Specialized nature of B-2 components limits alternative sourcing options.

Positive Signals

Award to a prime contractor with proven expertise in stealth technology.
Contract supports a critical national defense asset.
Performance-based fee structure incentivizes meeting program objectives.
Long-term nature suggests sustained strategic importance and planning.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on advanced aircraft components. The market for such specialized parts is highly concentrated, often dominated by a few large prime contractors like Northrop Grumman due to the complexity, security requirements, and high barriers to entry. Comparable spending benchmarks are difficult to establish due to the unique nature of the B-2 platform and its components.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to Northrop Grumman Corporation. There is no explicit information regarding subcontracting plans for small businesses within this data. The focus is on a large prime contractor for a highly specialized defense system, which may limit opportunities for smaller firms unless they are part of Northrop Grumman's established supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor compliance with terms and conditions. Accountability measures are embedded in the Cost Plus Award Fee structure, which links a portion of the contractor's profit to performance metrics. Transparency is limited due to the sole-source nature and the classified aspects of the B-2 program.

Related Government Programs

B-2 Spirit Program
Advanced Aircraft Manufacturing
Aerospace Defense Contracts
Stealth Technology Procurement
Airframe and Component Spares

Risk Flags

Sole-source award
Cost-plus contract type
High dollar value
Long performance period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.2 million to NORTHROP GRUMMAN CORPORATION. 199812!5700!0061!GU22 !ASC/YSK !F3365797D0012 !A!*!0006 !19980828!19981012!065390122!008255408!008255408!N!1W025!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000044500000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!3!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 $82.2 million.

What is the period of performance?

Start: 1998-08-28. End: 2008-01-26.

What was Northrop Grumman's track record with the B-2 program prior to this contract award?

Northrop Grumman has been the prime contractor for the B-2 Spirit program since its inception. The company possesses extensive experience in the design, development, manufacturing, and sustainment of the B-2 bomber. This includes integrating complex systems, managing advanced manufacturing processes, and ensuring the operational readiness of a highly sophisticated stealth aircraft. Their long-standing relationship with the B-2 program suggests a deep understanding of its unique requirements and a proven capability to deliver on critical defense needs.

How does the $821.9 million value compare to other sole-source defense contracts for aircraft components?

The $821.9 million value for airframes and spares for the B-2 Stealth bomber is substantial, reflecting the advanced technology and specialized nature of the aircraft. Sole-source contracts for unique defense platforms, especially those involving complex manufacturing and long lifecycles, often reach these high figures. While direct comparisons are challenging due to proprietary information and program specifics, other sole-source awards for critical components of advanced military platforms (e.g., engines, avionics, specialized structural parts for next-generation fighters or bombers) can also run into hundreds of millions or even billions of dollars over their lifecycle.

What are the primary risks associated with a sole-source Cost Plus Award Fee (CPAF) contract for advanced aerospace components?

The primary risks associated with a sole-source CPAF contract include potential cost overruns and reduced incentive for efficiency. Since there is no competition, the government lacks the price discovery benefit of a bidding process. The CPAF structure, while designed to incentivize performance, can also encourage the contractor to incur costs to achieve a higher fee if not carefully monitored. For specialized components like B-2 airframes, the contractor may have significant leverage, and ensuring fair pricing and effective cost control requires robust government oversight and negotiation.

How effective is the CPAF structure in ensuring program effectiveness for the B-2 program?

The Cost Plus Award Fee (CPAF) structure aims to enhance program effectiveness by linking a portion of the contractor's profit to achieving specific performance objectives, such as meeting technical requirements, schedule milestones, and quality standards. For a complex program like the B-2, where technical challenges and evolving requirements are common, CPAF can incentivize the contractor to go beyond minimum requirements and deliver high-quality results. However, its effectiveness hinges on the clarity and measurability of the award criteria and the rigor of the government's performance evaluation process.

What are the historical spending patterns for B-2 airframes and spares, and how does this contract fit in?

Historical spending on the B-2 program, including airframes and spares, has been significant due to the aircraft's advanced capabilities and long operational life. This $821.9 million contract, awarded in 1998 and running through 2008, represents a substantial investment during a period of sustained operations and potential upgrades for the B-2 fleet. It likely reflects ongoing production needs, replacement of aging components, and the provision of essential spares to maintain the operational readiness of the existing B-2 inventory. Such contracts are typical for high-value, long-lifecycle defense assets.

What are the implications of awarding this contract solely to Northrop Grumman for the future of B-2 sustainment?

Awarding this contract solely to Northrop Grumman reinforces their position as the sole provider for critical B-2 components. This has implications for long-term sustainment, as the company holds unique knowledge and manufacturing capabilities. While this ensures continuity, it also means the Air Force is dependent on a single source, potentially limiting future negotiation leverage on price and innovation. It underscores the importance of strong government oversight and strategic planning to manage this dependency throughout the B-2's extended service life.

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