DoD's $42.6M B-2 Software Sustainment contract awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $42,655,733 ($42.7M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2017-01-01

End Date: 2017-12-31

Contract Duration: 364 days

Daily Burn Rate: $117.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF CY17 PERFORMANCE-BASED LOGISTICS (PBL) B-2 SOFTWARE SUSTAINMENT (SWS).

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $42.7 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF CY17 PERFORMANCE-BASED LOGISTICS (PBL) B-2 SOFTWARE SUSTAINMENT (SWS). Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Performance-based logistics approach suggests a focus on outcomes, but specific metrics are not detailed. 3. Limited competition may indicate a specialized need or a lack of market alternatives for B-2 software. 4. Contract duration of one year limits long-term risk assessment but requires annual scrutiny. 5. Northrop Grumman's incumbency as the likely original equipment manufacturer suggests a strong position. 6. The contract falls under aircraft manufacturing, a sector with significant R&D and sustainment costs.

Value Assessment

Rating: questionable

The contract's value of $42.6 million for a one-year period of sustainment for B-2 software is difficult to benchmark without more detailed cost breakdowns or comparisons to similar sustainment contracts for complex aircraft systems. Given the sole-source nature, there is a risk that the pricing may not reflect competitive market rates. The performance-based logistics (PBL) structure aims for value by linking payment to outcomes, but the specific performance metrics and their associated costs are not publicly available, making a definitive value assessment challenging. Without competitive bidding, it's hard to ascertain if this represents a fair and reasonable price.

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. This typically occurs when a single contractor possesses unique capabilities, intellectual property, or is the sole provider of a critical component or service. In this case, Northrop Grumman is likely the original equipment manufacturer or has exclusive rights to the B-2 software sustainment, limiting the possibility of broader competition. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing the requirement, the government cannot be assured it is receiving the best possible price for this critical software sustainment.

Public Impact

The primary beneficiary is the Department of the Air Force, ensuring the operational readiness of the B-2 bomber fleet. Services delivered include sustainment of critical software for the B-2 bomber, likely encompassing maintenance, updates, and technical support. The geographic impact is primarily within the United States, supporting Air Force bases where the B-2 is stationed and maintained. Workforce implications include the need for highly specialized software engineers and technicians, likely employed by Northrop Grumman, to support the B-2's complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs.
Lack of detailed performance metrics makes it difficult to assess true value for money.
Contract duration is short (one year), requiring continuous monitoring and potential re-competition challenges.
Dependence on a single contractor for critical software sustainment poses a long-term risk.

Positive Signals

Performance-based logistics (PBL) approach can incentivize contractor efficiency and focus on outcomes.
Northrop Grumman's likely incumbency suggests deep knowledge of the B-2 system, potentially leading to effective sustainment.
Focus on sustainment ensures the continued operational capability of a strategic asset.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the sustainment of complex aircraft systems. The market for such specialized software sustainment is often dominated by a few large prime contractors who developed or have intimate knowledge of the systems. The total addressable market for aircraft sustainment is substantial, with significant government spending allocated annually to maintain aging fleets and ensure readiness. This contract represents a small but critical component of the overall B-2 program's lifecycle costs.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded sole-source to Northrop Grumman, a large defense contractor. There is no indication of subcontracting plans specifically for small businesses within the provided data. The focus on a specialized, sole-source requirement for a major defense platform like the B-2 typically limits opportunities for broad small business participation, unless they are part of Northrop Grumman's established supply chain for this specific program.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature and the proprietary aspects of software sustainment, but contract awards and basic details are usually reported in federal procurement databases. Accountability would be driven by the terms of the performance-based contract and any defined deliverables or key performance indicators.

Related Government Programs

B-2 Bomber Program
Aircraft Software Sustainment
Performance-Based Logistics (PBL)
Defense Logistics Agency (DLA) Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole Source Award
Lack of Competition
Potential for Overpricing
Limited Transparency
Single Point of Failure Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.7 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF CY17 PERFORMANCE-BASED LOGISTICS (PBL) B-2 SOFTWARE SUSTAINMENT (SWS).

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 $42.7 million.

What is the period of performance?

Start: 2017-01-01. End: 2017-12-31.

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

Northrop Grumman has a long-standing relationship with the B-2 Spirit program, having served as the prime contractor for its development and sustainment. Their track record includes extensive experience in managing complex aerospace systems and providing lifecycle support. For similar sustainment contracts, Northrop Grumman typically holds positions as a key provider for major defense platforms. While specific performance metrics for past contracts are not detailed here, their incumbency suggests a history of fulfilling sustainment requirements for the Air Force. However, the sole-source nature of this particular award warrants scrutiny regarding the efficiency and cost-effectiveness of their past performance in this specific software sustainment role.

How does the $42.6 million contract value compare to other B-2 sustainment efforts or similar aircraft software sustainment contracts?

Direct comparison of the $42.6 million contract value is challenging without access to detailed cost breakdowns and specific performance metrics. However, sustainment costs for major defense platforms like the B-2 can be substantial, often running into hundreds of millions or even billions of dollars over the life of the aircraft. This $42.6 million figure represents a one-year award for software sustainment, which is a critical but specific component. Similar contracts for software sustainment on other advanced aircraft might range from tens to hundreds of millions annually, depending on the complexity, age of the system, and the scope of services (e.g., updates, cybersecurity, troubleshooting). The sole-source award here prevents a direct market-based comparison to ascertain if this price is competitive.

What are the primary risks associated with a sole-source award for critical software sustainment?

The primary risks associated with a sole-source award for critical software sustainment include a lack of price competition, potentially leading to inflated costs for the government. There's also a risk of reduced innovation and efficiency, as the contractor may face less pressure to improve services or reduce costs without competitive alternatives. Furthermore, a sole-source dependency creates a single point of failure; if the contractor experiences financial difficulties, operational issues, or decides to exit the market, the government could face significant disruption in maintaining the B-2's operational capability. This also limits the government's leverage in negotiating terms and pricing over the long term.

How effective is the Performance-Based Logistics (PBL) approach in ensuring the B-2 software sustainment meets operational needs?

The Performance-Based Logistics (PBL) approach is designed to improve weapon system readiness and reduce costs by focusing on outcomes rather than specific tasks. For B-2 software sustainment, an effective PBL contract would link payments to measurable performance metrics, such as software uptime, availability of technical support, response times for critical issues, and successful implementation of necessary updates. If well-defined and rigorously monitored, PBL can incentivize Northrop Grumman to proactively manage the software lifecycle, ensure high availability, and deliver value efficiently. However, the effectiveness hinges entirely on the quality of the performance metrics established and the government's ability to accurately measure and enforce them. Without visibility into these specific metrics, assessing the PBL's effectiveness remains speculative.

What are the historical spending patterns for B-2 software sustainment, and how does this $42.6M award fit within that trend?

Historical spending on B-2 sustainment, including software, has been significant due to the aircraft's complexity and strategic importance. While specific annual figures for software sustainment alone are not readily available in the provided data, the overall sustainment budget for the B-2 program typically runs into hundreds of millions of dollars annually. This $42.6 million award for a single year of software sustainment appears to be a component of that larger sustainment expenditure. Without multi-year data or a breakdown of previous software-specific costs, it's difficult to determine if this award represents an increase, decrease, or stable trend compared to prior years. The sole-source nature might suggest a consistent, ongoing requirement managed by the incumbent.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $42,655,733

Exercised Options: $42,655,733

Current Obligation: $42,655,733

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $86,220,482

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline