Northrop Grumman awarded $78.9M for B-2 Stealth aircraft airframes and spares, spanning over 7 years

Contract Overview

Contract Amount: $78,935,775 ($78.9M)

Contractor: Northrop Grumman Corporation

Awarding Agency: Department of Defense

Start Date: 1999-11-19

End Date: 2006-06-03

Contract Duration: 2,388 days

Daily Burn Rate: $33.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 200007!5700!000002!GU22 !ASC/YSK !F3365781C0067 !A!*!P00754 !19991119!19970801!065390122!008255408!008255408!N!76823!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000070000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!3!A!S!*!A!N!Z!A !N!V!0!000!*!* !A!Y!Z!* !* !N!C!*!B!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 $78.9 million to NORTHROP GRUMMAN CORPORATION for work described as: 200007!5700!000002!GU22 !ASC/YSK !F3365781C0067 !A!*!P00754 !19991119!19970801!065390122!008255408!008255408!N!76823!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000070000000!N!N!000000000000!151… Key points: 1. Contract value represents a significant investment in advanced aerospace technology. 2. Long duration suggests a sustained need for critical aircraft components. 3. Sole contractor for B-2 Stealth airframes indicates specialized capabilities. 4. Performance-based contract type incentivizes contractor efficiency and quality. 5. Geographic concentration in California highlights a key aerospace manufacturing hub.

Value Assessment

Rating: good

The contract value of $78.9 million over approximately 7 years for B-2 Stealth airframes and spares appears reasonable given the highly specialized nature of the aircraft and the limited number of entities capable of producing such components. Benchmarking against similar advanced military aircraft programs would provide further context, but the cost reflects the cutting-edge technology and complex manufacturing involved. The Cost Plus Incentive Fee (CPIF) structure suggests an effort to align contractor performance with government objectives, potentially leading to better value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for the work. The specific number of bidders is not detailed, but the open competition suggests a market where price and technical merit were key evaluation factors. This process is designed to foster price discovery and ensure the government receives competitive offers for its requirements.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and encouraging innovation among potential suppliers.

Public Impact

The primary beneficiaries are the U.S. Air Force, ensuring the continued operational readiness of the B-2 Stealth bomber fleet. Services delivered include the manufacturing and supply of critical airframes and spare parts for a highly advanced aircraft. Geographic impact is concentrated in Pico Rivera, California, supporting local employment and the regional aerospace industry. Workforce implications include the need for highly skilled engineers, technicians, and manufacturing personnel within Northrop Grumman and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of the contract could lead to vendor lock-in if not managed carefully.
Reliance on a single platform (B-2) might limit broader application of learned efficiencies.
Complexity of stealth technology may present unforeseen technical challenges and cost overruns.

Positive Signals

Contractor's established expertise in advanced aircraft manufacturing is a positive signal.
Incentive fee structure encourages performance and cost control.
Full and open competition initially suggests a robust market approach.

Sector Analysis

This contract falls 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 need to maintain a technological edge. Comparable spending benchmarks would likely involve other major defense platforms requiring complex airframe and component manufacturing.

Small Business Impact

While this contract is with a large prime contractor, Northrop Grumman, the nature of advanced aerospace manufacturing often involves a complex supply chain. It is probable that small businesses play a role as subcontractors, providing specialized parts or services. The contract does not appear to be a small business set-aside, but subcontracting opportunities could still be significant for qualified small businesses within the aerospace ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms, quality standards, and delivery schedules. Accountability measures are embedded within the Cost Plus Incentive Fee structure, which links contractor profit to performance metrics. Transparency is facilitated through contract reporting requirements, though detailed operational data may be classified due to the nature of the B-2 program.

Related Government Programs

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

Risk Flags

Sole-source dependency for critical components
High technological complexity
Long contract duration
Potential for cost overruns in advanced manufacturing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.9 million to NORTHROP GRUMMAN CORPORATION. 200007!5700!000002!GU22 !ASC/YSK !F3365781C0067 !A!*!P00754 !19991119!19970801!065390122!008255408!008255408!N!76823!NORTHROP GRUMMAN CORPORATION !8900 WASHINGTON BLVD !PICO RIVERA !CA!90660!56924!037!06!PICO RIVERA !LOS ANGELES !CALIFORNIA!0001!+000070000000!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ABK!B-2 STEALTH !3721!3!A!S!*!A!N!Z!A !N!V!0!000!*!* !A!Y!Z!* !* !N!C!*!B!B!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

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 $78.9 million.

What is the period of performance?

Start: 1999-11-19. End: 2006-06-03.

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

Northrop Grumman has been the prime contractor for the B-2 Spirit program since its inception, responsible for the design, development, and production of the aircraft. Their extensive experience with this highly complex and classified platform suggests a deep understanding of its unique requirements. Prior performance on the B-2 program would have been a critical factor in their selection for this subsequent contract, demonstrating their capability to deliver specialized airframes and spares. Historical data on their performance regarding cost, schedule, and quality on previous B-2 related contracts would be essential for a comprehensive assessment.

How does the $78.9 million value compare to other airframe contracts for advanced military aircraft?

Direct comparisons of airframe contract values for highly specialized, low-production military aircraft like the B-2 are challenging due to the unique nature of each platform and the classified aspects often involved. However, $78.9 million spread over approximately seven years for airframes and spares for a strategic bomber represents a significant, but not necessarily excessive, investment. For context, major fighter jet programs or other bomber development contracts can run into billions of dollars over their lifecycles. The value here likely reflects the limited number of B-2 aircraft, the complexity of their stealth airframes, and the ongoing need for sustainment spares, rather than the cost of producing a large fleet.

What are the primary risks associated with this contract for the government?

The primary risks for the government center on the highly specialized and technologically advanced nature of the B-2 Stealth bomber. These include potential cost overruns due to the complexity of stealth materials and manufacturing processes, schedule delays in production or delivery of spares, and the risk of technical obsolescence or performance degradation over the long contract duration. Given Northrop Grumman's sole-source-like position for B-2 specific components, there's also a risk of reduced price competition on future modifications or sustainment efforts. Ensuring continued supply chain integrity and managing the intellectual property associated with the unique technologies are also key risks.

How effective is the Cost Plus Incentive Fee (CPIF) structure in managing costs for this type of contract?

The Cost Plus Incentive Fee (CPIF) structure is designed to incentivize the contractor to control costs while meeting performance targets. In this model, the final fee (profit) is adjusted based on the contractor's performance against pre-determined cost, schedule, and performance objectives. For a complex program like the B-2 airframes and spares, CPIF can be effective by aligning the contractor's financial interests with those of the government. If the contractor performs better than target (e.g., lower cost, faster delivery), they earn a higher fee, up to a ceiling. Conversely, underperformance leads to a reduced fee. This encourages efficiency and proactive problem-solving, though the effectiveness hinges on the realism of the targets and the clarity of the incentive metrics.

What has been the historical spending trend for B-2 related airframe and spare parts procurement?

Historical spending on B-2 related airframe and spare parts procurement has been substantial, reflecting the aircraft's strategic importance and high manufacturing costs. While specific figures for airframe and spare parts procurement outside of the overall program cost are often classified or aggregated, the B-2 program itself has historically represented one of the most expensive defense acquisition programs. Spending would have been concentrated during the initial production phases and continues through sustainment and modernization efforts. This $78.9 million contract appears to represent ongoing sustainment and potential limited production of spares, fitting within the long-term lifecycle cost profile of such a unique and critical asset.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Contractor Details

Address: 8900 E WASHINGTON BLVD, PICO RIVERA

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline