Northrop Grumman awarded $362.6M for B-2 Stealth airframe spares, a sole-source contract

Contract Overview

Contract Amount: $16,900,436 ($16.9M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 2001-12-03

End Date: 2005-06-22

Contract Duration: 1,297 days

Daily Burn Rate: $13.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200211!000109!5700!GU22 !ASC/YSK !F3365797D0012 !A!N! !N!0013 !20011203!20030923!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000010850000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !336411!E! !5!B!S! ! ! !99990909!B! ! !A! !D!N!R!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !B!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $16.9 million to NORTHROP GRUMMAN CORPORATION for work described as: 200211!000109!5700!GU22 !ASC/YSK !F3365797D0012 !A!N! !N!0013 !20011203!20030923!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS A… Key points: 1. Contract awarded on a cost-plus award fee basis, allowing for flexibility but potentially higher costs. 2. Sole-source award indicates a lack of competition, raising concerns about price reasonableness. 3. The contract duration of over 3 years suggests a significant, ongoing need for these specialized parts. 4. The primary contractor, Northrop Grumman, is the original manufacturer of the B-2 bomber, implying unique expertise. 5. This contract supports a critical, high-value defense asset, highlighting its strategic importance. 6. The absence of small business set-asides or subcontracting plans may limit opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's cost-plus award fee structure, while common for complex R&D or production, can lead to costs exceeding fixed-price contracts if not managed tightly. Without competitive bidding, it's difficult to benchmark the pricing against market alternatives. The total award value of $362.6 million over approximately 3.5 years suggests a substantial investment in specialized aircraft components. Further analysis would require detailed cost breakdowns and comparison to similar sole-source procurements for other high-value defense platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Northrop Grumman Systems Corporation, was solicited. This typically occurs when a product or service is unique and only one source can provide it, often due to proprietary technology, specialized knowledge, or existing infrastructure. The lack of competition means there was no opportunity for price discovery through a bidding process, which can sometimes lead to higher prices for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, the government has less leverage to negotiate the lowest possible price for these critical aircraft spares.

Public Impact

The primary beneficiaries are the U.S. Air Force and national security, ensuring the operational readiness of the B-2 stealth bomber fleet. Services delivered include the provision of airframes and spares essential for maintaining the B-2's advanced capabilities. The geographic impact is primarily within the United States, supporting defense operations and potentially involving facilities in California where the contractor is located. Workforce implications include the employment of highly skilled engineers, technicians, and manufacturing personnel at Northrop Grumman.

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 structure requires robust government oversight to control expenditures.
Lack of small business participation noted in the award details.
Contract duration of over three years necessitates ongoing monitoring of performance and costs.

Positive Signals

Contract awarded to the original equipment manufacturer, ensuring specialized knowledge and quality.
Supports a critical national defense asset, the B-2 stealth bomber.
Contract value reflects the complexity and strategic importance of the B-2 program.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft components for a highly specialized platform. The market for B-2 bomber parts is inherently limited, with Northrop Grumman being the original manufacturer and possessing unique technical data and tooling. Comparable spending benchmarks would likely involve other sole-source procurements for unique military aircraft systems, where pricing is driven by specialized production requirements and limited supplier bases rather than broad market competition.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the sole-source nature and the specialized requirements for B-2 airframe spares, it is unlikely that small businesses were directly solicited as prime contractors. There is no explicit mention of subcontracting plans, which could limit opportunities for small businesses to participate in this significant defense expenditure.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a cost-plus award fee contract, rigorous monitoring of costs, performance, and adherence to technical specifications is crucial. Inspector General investigations could be initiated if any irregularities or fraud are suspected. Transparency is generally limited for sole-source defense contracts, but contract modifications and performance reports would be subject to internal government review.

Related Government Programs

B-2 Bomber Sustainment Programs
Aerospace Component Manufacturing
Defense Logistics Agency (DLA) Spare Parts Procurement
Air Force Materiel Command (AFMC) Contracts

Risk Flags

Sole-source award
Cost-plus award fee structure
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.9 million to NORTHROP GRUMMAN CORPORATION. 200211!000109!5700!GU22 !ASC/YSK !F3365797D0012 !A!N! !N!0013 !20011203!20030923!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000010850000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !336411!E! !5!B!S! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN CORPORATION.

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 $16.9 million.

What is the period of performance?

Start: 2001-12-03. End: 2005-06-22.

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

Northrop Grumman has an extensive and long-standing track record with the B-2 Spirit program, having served as the prime contractor for its development and production. This deep historical involvement means they possess unparalleled knowledge of the aircraft's systems, including its airframe and specialized components. Their experience with sole-source contracts for unique defense platforms is also substantial, as is typical for major defense contractors dealing with highly specialized, low-volume, or legacy systems where competition is often limited. This specific contract leverages that established relationship and expertise, but the lack of competition necessitates careful government oversight to ensure fair pricing and value.

How does the $362.6 million award compare to historical spending on B-2 spares?

Directly comparing this $362.6 million award to historical spending on B-2 spares requires access to detailed historical contract data, which is not fully available in the provided snippet. However, the award amount covers a period of approximately 3.5 years (from December 2001 to June 2005, with an end date of 2003-09-23 for the initial period, and a total duration of 1297 days). This suggests an average annual expenditure of roughly $100 million for these specific airframe spares. Given the B-2's advanced technology and limited production run, spare parts costs can be substantial. Without comparative data on previous sole-source awards for similar components or the total sustainment costs for the B-2 fleet over its lifecycle, it's challenging to definitively state if this represents an increase or decrease relative to historical trends.

What are the primary risks associated with this sole-source, cost-plus award fee contract?

The primary risks associated with this sole-source, cost-plus award fee (CPAF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to inflated prices as the government lacks leverage to negotiate the lowest possible cost. The contractor may not feel compelled to be as cost-efficient as they would in a competitive environment. Secondly, the CPAF structure, while offering flexibility, carries inherent risks of cost overruns. The government pays allowable costs plus a fee that is adjusted based on performance. If performance targets are not clearly defined, measurable, or if oversight is insufficient, costs can escalate beyond initial projections, and the award fee may not adequately incentivize the contractor's best performance. Robust government oversight is critical to mitigate these risks.

How effective is the government's oversight likely to be for this type of contract?

The effectiveness of government oversight for this contract hinges on several factors. The Department of the Air Force, as the procuring agency, has established procedures for managing CPAF contracts, including cost monitoring, performance reviews, and audits. However, the complexity of the B-2 platform and the specialized nature of airframe spares can present challenges. Effective oversight requires dedicated personnel with deep technical expertise, rigorous auditing of contractor expenditures, and clear, objective performance metrics tied to the award fee. The success of oversight is often dependent on resource allocation, contractor transparency, and the government's ability to proactively identify and address potential cost inefficiencies or performance issues. Without specific details on the oversight mechanisms implemented, it's difficult to provide a definitive assessment, but the inherent risks of CPAF and sole-source awards necessitate a high level of diligence.

What are the implications of this contract for the broader defense industrial base and small businesses?

This contract primarily benefits the prime contractor, Northrop Grumman, and its direct supply chain, which likely consists of specialized manufacturers. The implications for the broader defense industrial base are that it reinforces the position of established, large prime contractors for critical, high-technology platforms. For small businesses, the implications are mixed. While this specific contract may not directly involve small business set-asides, the overall health of the defense industrial base, supported by such contracts, can indirectly create opportunities through subcontracting tiers. However, the lack of explicit subcontracting requirements in the award details suggests that opportunities for small businesses may be limited unless actively pursued by the prime contractor. It highlights a trend where large, sole-source contracts for specialized defense assets may concentrate opportunities among a few large players.

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, 38

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365797D0012

IDV Type: IDC

Timeline