DoD's $224M contract for B-2 stealth aircraft parts awarded to Northrop Grumman, a sole-source delivery order

Contract Overview

Contract Amount: $224,428,352 ($224.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2002-10-16

End Date: 2003-06-11

Contract Duration: 238 days

Daily Burn Rate: $943.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200301!000001!5700!GU22 !ASC/YSK !F3365799D0028 !A!N! !N!0017 !20021016!20030611!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000000652963!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !336413!E! !5!B!S! ! ! !99990909!B! ! !N!Z!D!U!J!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $224.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200301!000001!5700!GU22 !ASC/YSK !F3365799D0028 !A!N! !N!0017 !20021016!20030611!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS A… Key points: 1. This contract represents a significant investment in maintaining the B-2 bomber fleet's readiness. 2. The sole-source nature raises questions about potential price inflation and lack of competitive pressure. 3. Northrop Grumman's established role as the prime contractor for the B-2 program likely influenced the award. 4. The contract duration of 238 days suggests a focus on specific, time-sensitive needs. 5. Performance context is limited due to the lack of competition and publicly available performance metrics. 6. Sector positioning highlights the critical role of specialized aerospace manufacturers in national defense.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable bids. The total award of $224,428,352.04 for a 238-day period for aircraft parts suggests a high per-unit cost, typical for specialized defense components. However, the absence of competition means there's no market-driven price discovery to confirm if this represents a fair value for money. Further analysis would require access to historical pricing for similar B-2 components or internal cost data from the contractor.

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 Systems Corporation, was solicited. This approach is typically justified when a specific contractor possesses unique capabilities or proprietary knowledge essential for the requirement, or in cases of urgent and compelling need where competition is not feasible. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive bidding. Without multiple offers, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Air Force and the operational readiness of the B-2 stealth bomber fleet. Services delivered include the provision of critical aircraft parts and potentially related support for the B-2 airframe. Geographic impact is concentrated around Northrop Grumman's facilities in Palmdale, California, and the operational bases for the B-2. Workforce implications include continued employment for specialized 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 leading to higher costs for taxpayers.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single contractor for critical B-2 components could pose supply chain risks.
Limited public performance data makes it difficult to assess value for money.

Positive Signals

Ensures continued support for a critical and highly specialized defense asset (B-2 bomber).
Leverages Northrop Grumman's unique expertise and established role as the B-2 prime contractor.
Likely addresses specific, potentially urgent, parts requirements for fleet readiness.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and maintenance. The market for specialized components for advanced military platforms like the B-2 is highly concentrated, with prime contractors like Northrop Grumman often holding dominant positions. Spending benchmarks for such unique platforms are difficult to establish externally, but the significant dollar value indicates the high cost associated with maintaining cutting-edge defense technology.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Northrop Grumman engages them as subcontractors. There is no explicit indication of subcontracting plans for small businesses within the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Air Force. Accountability measures would include contract performance monitoring and financial audits. Transparency is limited due to the sole-source nature and the sensitive defense context, but Inspector General investigations could be initiated if performance or financial irregularities were suspected.

Related Government Programs

B-2 Spirit Bomber Program
Air Force Aircraft Procurement
Defense Logistics Agency (DLA) Parts Procurement
Aerospace Manufacturing Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $224.4 million to NORTHROP GRUMMAN SYSTEMS CORP. 200301!000001!5700!GU22 !ASC/YSK !F3365799D0028 !A!N! !N!0017 !20021016!20030611!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000000652963!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !336413!E! !5!B!S! ! ! !99990909!B

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 $224.4 million.

What is the period of performance?

Start: 2002-10-16. End: 2003-06-11.

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

Northrop Grumman has an extensive and long-standing track record with the B-2 Spirit program, serving as the prime contractor responsible for its design, development, and sustainment since its inception. The company has been integral to the aircraft's manufacturing, integration, and ongoing maintenance. This deep involvement provides them with unparalleled expertise and institutional knowledge regarding the B-2's complex systems and unique component requirements. Their historical performance on this program is a key factor often cited in justifying sole-source awards for critical B-2-related needs, as transitioning such specialized knowledge to another entity would be exceptionally difficult and costly.

How does the $224M award compare to historical spending on B-2 parts?

Directly comparing this $224 million award for a 238-day period to historical spending on B-2 parts is challenging without granular data on specific component types and quantities across different years. However, the B-2 is an aging, highly complex, and low-production-rate aircraft, meaning that specialized parts and sustainment activities are inherently expensive. Annual spending on B-2 sustainment can run into hundreds of millions or even billions of dollars, encompassing a wide range of services and parts. This $224 million delivery order likely represents a significant, but not necessarily anomalous, portion of the overall sustainment budget for a specific period, reflecting the high cost of maintaining such a unique strategic asset.

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

The primary risks associated with this sole-source contract stem from the lack of competition. Firstly, there is a significant risk of elevated costs, as Northrop Grumman faces no competitive pressure to offer the lowest possible price. Secondly, there's a potential for reduced innovation or efficiency, as the contractor may have less incentive to find cost-saving measures or implement process improvements. Thirdly, a sole-source award can create a dependency on the incumbent contractor, potentially limiting the government's flexibility in the future. Finally, without competitive benchmarking, assessing the true value for money and ensuring fair pricing becomes more difficult for the contracting agency.

How effective is the B-2 program, and does this contract contribute to its effectiveness?

The B-2 Spirit program is considered highly effective in its role as a strategic stealth bomber, capable of penetrating advanced air defenses and delivering both conventional and nuclear payloads. Its effectiveness is derived from its low-observable technology, long range, and payload capacity. This $224 million contract, by providing necessary parts for the aircraft, directly contributes to maintaining the operational readiness and effectiveness of the B-2 fleet. Ensuring the availability of critical components is essential for the aircraft's ability to perform its missions, thus supporting the overall strategic objectives of the U.S. Air Force.

What is the historical spending pattern for aircraft parts under the PSC code 336411 (Aircraft Fixed Wing)?

The provided data includes the Product Service Code (PSC) '336411' for Aircraft Fixed Wing. Historical spending under this PSC code across the federal government is substantial, reflecting the continuous need for procurement, maintenance, and repair of fixed-wing aircraft, particularly within the Department of Defense. While specific aggregate spending figures for '336411' are not detailed here, it represents a significant category within defense procurement. Contracts under this code can range from the acquisition of new aircraft to the supply of individual components and spare parts, often involving complex supply chains and specialized manufacturers like Northrop Grumman.

What is the significance of the 'Delivery Order' contract type in this context?

The contract type is a 'Delivery Order,' which implies that it is a task order issued against an existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar basic ordering agreement. In this case, it's a delivery order against a sole-source contract. This means that while the overall contract vehicle might have been established previously, this specific order defines the quantity, delivery schedule, and price for a particular set of goods or services. For the government, it offers flexibility to order what is needed, when it is needed, up to certain limits. For the contractor, it provides a framework for fulfilling ongoing requirements.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline