B-2 Programmed Depot Maintenance contract awarded to Northrop Grumman for over $118 million

Contract Overview

Contract Amount: $118,616,966 ($118.6M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2018-01-01

End Date: 2021-01-31

Contract Duration: 1,126 days

Daily Burn Rate: $105.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: B-2 PROGRAMMED DEPOT MAINTENANCE (PDM)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $118.6 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 PROGRAMMED DEPOT MAINTENANCE (PDM) Key points: 1. Contract awarded for depot maintenance services on the B-2 bomber fleet. 2. Sole-source award to Northrop Grumman, the original equipment manufacturer. 3. Fixed-price incentive contract type suggests shared risk between government and contractor. 4. Contract duration of over three years indicates a significant maintenance commitment. 5. High value suggests critical importance of B-2 fleet readiness. 6. Location in California points to a specific operational or maintenance hub.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized service. However, the fixed-price incentive structure aims to control costs by aligning contractor incentives with government objectives. The total award amount of over $118 million for three years of depot maintenance for a complex aircraft like the B-2 suggests a significant investment in maintaining fleet readiness. Without comparable sole-source contracts for similar advanced aircraft, a precise value-for-money assessment is difficult, but the contract type indicates an effort to manage financial risk.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Northrop Grumman Systems Corp. This indicates that the government determined only Northrop Grumman possessed the necessary expertise, proprietary data, or facilities to perform the programmed depot maintenance for the B-2 bomber. Sole-source awards limit competition, which can sometimes lead to higher prices than if multiple bidders were involved. However, for highly specialized or unique services where only one provider can meet the requirements, it may be the most practical procurement approach.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost savings that could arise from a competitive bidding process. The government relied on negotiation and the incentive structure within the contract to achieve a fair price.

Public Impact

The primary beneficiaries are the U.S. Air Force and national defense, ensuring the operational readiness of the B-2 bomber fleet. Services delivered include critical programmed depot maintenance, essential for the longevity and performance of the aircraft. The geographic impact is centered in California, likely at a facility where B-2 aircraft are maintained or stationed. Workforce implications include skilled technicians and support staff employed by Northrop Grumman and potentially subcontractors in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Fixed-price incentive contracts can lead to cost overruns if not managed carefully.
Dependence on a single contractor for critical maintenance poses a long-term strategic risk.
Lack of transparency inherent in sole-source procurements makes independent value assessment difficult.

Positive Signals

Contractor is the original equipment manufacturer, possessing unique expertise for B-2 maintenance.
Fixed-price incentive contract structure aligns contractor and government interests in cost control.
Long-term contract duration provides stability for essential fleet readiness.
Award to a major defense contractor suggests a commitment to maintaining advanced capabilities.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Programmed depot maintenance for strategic assets like the B-2 bomber is a critical, albeit niche, segment within this sector. Spending on aircraft maintenance and repair is substantial across the federal government, with the Department of Defense being the largest customer. This contract fits within the broader category of sustainment services for major weapon systems, where original equipment manufacturers often play a dominant role due to proprietary knowledge and specialized facilities.

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. There is no explicit information regarding subcontracting plans for small businesses within the provided data. Given the specialized nature of B-2 depot maintenance, it is possible that any subcontracting would be directed towards highly specialized firms, which may or may not be small businesses. The primary focus of this award is on the prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, likely through contracting officers and program management offices responsible for B-2 sustainment. Northrop Grumman's internal quality control and reporting mechanisms would also be subject to government audit and inspection. Transparency is limited due to the sole-source nature, but performance metrics and financial reporting would be key accountability measures. The Inspector General of the Department of Defense may also have jurisdiction for audits and investigations.

Related Government Programs

B-2 Bomber Operations and Support
Air Force Aircraft Maintenance Contracts
Defense Contractor Sustainment Services
Fixed-Price Incentive Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Potential for cost overruns in FPI contracts
Dependence on single contractor for critical asset maintenance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.6 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 PROGRAMMED DEPOT MAINTENANCE (PDM)

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 $118.6 million.

What is the period of performance?

Start: 2018-01-01. End: 2021-01-31.

What is the historical spending trend for B-2 Programmed Depot Maintenance?

Historical spending data for B-2 Programmed Depot Maintenance (PDM) prior to this specific contract (awarded with an start date of 2018-01-01 and end date of 2021-01-31) is not directly provided in the given data snippet. However, the award of over $118 million for a three-year period suggests a consistent and significant investment in maintaining the B-2 fleet. Typically, PDM for advanced aircraft is a recurring requirement, often awarded through multi-year contracts or a series of delivery orders against indefinite-delivery/indefinite-quantity (IDIQ) vehicles. Without access to historical contract databases or specific budget line items for B-2 PDM, it's difficult to establish a precise trend. However, the nature of such critical maintenance implies that spending is likely to remain substantial as long as the aircraft remains in service, subject to operational needs and budget allocations.

How does the pricing of this contract compare to similar aircraft maintenance contracts?

Direct price comparison is difficult because this contract is a sole-source award for the B-2 bomber, a unique and highly specialized platform. Sole-source contracts inherently lack the competitive benchmarking that allows for robust price-to-market analysis. Furthermore, the 'Fixed Price Incentive' (FPI) contract type introduces variables based on performance targets and cost sharing, making simple dollar-per-hour or dollar-per-aircraft comparisons with other contract types (like Firm Fixed Price or Cost Plus) potentially misleading. To assess value, one would need to compare Northrop Grumman's proposed costs and fee structure against internal cost estimates, historical B-2 maintenance costs (if available), and potentially against costs for depot maintenance of other high-end, low-volume military aircraft, adjusting for differences in complexity and scope of work.

What are the key performance indicators (KPIs) and risks associated with this contract?

Key performance indicators (KPIs) for this contract would likely revolve around aircraft availability, turnaround time for maintenance tasks, quality of work (e.g., defect rates), and adherence to schedule. Given the Fixed Price Incentive (FPI) structure, cost control and achieving target cost/performance levels are also critical KPIs. Risks include potential cost overruns if the incentive targets are not met or if unforeseen technical issues arise during maintenance, which could increase the government's share of costs. Another significant risk is the sole-source nature, which creates a dependency on Northrop Grumman and limits leverage in future negotiations. Ensuring the contractor maintains the necessary technical expertise and workforce throughout the contract duration is also a key consideration.

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

Northrop Grumman Systems Corp, as the original equipment manufacturer (OEM) of the B-2 Spirit bomber, possesses an inherent and extensive track record in its maintenance and sustainment. They have been responsible for the B-2 program since its inception, including production, upgrades, and ongoing support. This sole-source award suggests a continuation of this established relationship, implying satisfactory past performance. While specific details of prior B-2 PDM contracts are not provided, it is reasonable to assume that Northrop Grumman has consistently met the Air Force's requirements for maintaining the operational readiness of this critical strategic asset. Their long-standing role in the B-2 program indicates deep institutional knowledge and specialized capabilities.

How does the contract type (Fixed Price Incentive) influence cost and performance?

The Fixed Price Incentive (FPI) contract type aims to balance cost control with performance achievement. It establishes a target cost, a target profit, and a price ceiling. If the final cost is below the target cost, both the government and the contractor share in the savings based on a pre-negotiated formula (sharing ratio). Conversely, if the final cost exceeds the target cost but remains below the ceiling, both parties share the overrun. If the final cost exceeds the ceiling, the contractor absorbs the excess. This structure incentivizes the contractor to control costs while meeting performance specifications. For the government, it provides a degree of cost certainty up to the ceiling, while sharing potential savings if costs are managed effectively. It requires careful negotiation of the target cost, sharing ratio, and ceiling to ensure fairness and optimal outcomes.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

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: $236,960,253

Exercised Options: $236,960,253

Current Obligation: $118,616,966

Subaward Activity

Number of Subawards: 278

Total Subaward Amount: $38,818,625

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline