Northrop Grumman receives $36.4M for B-2 Sustaining Engineering, a sole-source contract

Contract Overview

Contract Amount: $36,409,400 ($36.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2018-01-01

End Date: 2023-08-23

Contract Duration: 2,060 days

Daily Burn Rate: $17.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY18 B-2 SUSTAINING ENGINEERING (SE) SUSTAINMENT.

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $36.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY18 B-2 SUSTAINING ENGINEERING (SE) SUSTAINMENT. Key points: 1. Contract awarded to a single provider suggests limited market exploration. 2. Long-term sustainment contracts can indicate critical, specialized support needs. 3. Firm Fixed Price (FFP) contract type aims to control costs. 4. Performance period spans over five years, indicating a significant commitment. 5. The contract is for sustaining engineering, crucial for maintaining operational readiness. 6. Focus on B-2 bomber sustainment highlights a specific, high-value asset.

Value Assessment

Rating: fair

The contract value of $36.4 million over approximately five years for sustaining engineering of the B-2 bomber is difficult to benchmark without comparable sole-source contracts. Given the specialized nature of B-2 sustainment and the sole-source award, a direct comparison to market rates for per-unit services is not feasible. The firm fixed-price structure provides some cost certainty, but the absence of competition limits the ability to assess if the pricing represents the best value achievable in a competitive environment. Further analysis would require access to historical pricing data for similar sustainment efforts on advanced aircraft.

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 among multiple potential vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary knowledge, or is the only source capable of meeting the government's requirements. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited. The justification for a sole-source award would need to demonstrate why other sources could not fulfill the requirement.

Taxpayer Impact: For taxpayers, sole-source awards can mean paying a premium as the government does not benefit from competitive pricing. This necessitates strong internal oversight to ensure the awarded price is fair and reasonable.

Public Impact

The primary beneficiaries are the U.S. Air Force and the B-2 bomber program, ensuring the continued operational capability of this strategic asset. Services delivered include critical engineering support, maintenance planning, and technical expertise necessary for the longevity of the B-2 fleet. The geographic impact is primarily centered around facilities where the B-2 is based and maintained, likely within the United States. Workforce implications include the retention of highly skilled engineers and technical personnel at Northrop Grumman, specializing in advanced aerospace systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Long-term sustainment contracts can create vendor lock-in.
Reliance on a single contractor for critical systems poses a risk if that contractor faces financial or operational difficulties.

Positive Signals

Firm Fixed Price contract type provides cost predictability.
Award to an incumbent contractor with established expertise can ensure continuity of operations.
Sustaining engineering is vital for maintaining the readiness of a complex, strategic asset like the B-2.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government investment. Sustainment engineering for advanced platforms like the B-2 bomber represents a critical, albeit niche, segment of this market. Spending in this area is driven by the need to maintain the operational readiness and extend the lifespan of aging, high-value military assets. Comparable spending benchmarks are difficult to establish due to the unique nature of each platform and the proprietary knowledge involved in their sustainment.

Small Business Impact

This contract was not awarded to a small business, nor does it appear to have specific small business set-aside provisions. Northrop Grumman, as a large prime contractor, may have subcontracting opportunities for small businesses within its supply chain. However, the direct award to a large entity means that the primary contract value does not directly benefit the small business ecosystem through set-asides. The extent of small business involvement would depend on Northrop Grumman's subcontracting plan.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the Firm Fixed Price contract terms, requiring Northrop Grumman to deliver specified engineering services. Transparency is limited due to the sole-source nature of the award; however, contract modifications and performance reports are typically subject to internal review and potentially audits by the Government Accountability Office (GAO) or the Department of Defense's Inspector General if specific concerns arise.

Related Government Programs

B-2 Bomber Operations and Maintenance
Aerospace Engineering Services
Defense Sustainment Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award limits competition.
Long-term sustainment contract.
Critical infrastructure support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.4 million to NORTHROP GRUMMAN SYSTEMS CORP. CY18 B-2 SUSTAINING ENGINEERING (SE) SUSTAINMENT.

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 $36.4 million.

What is the period of performance?

Start: 2018-01-01. End: 2023-08-23.

What is the historical spending trend for B-2 Sustaining Engineering (SE) with Northrop Grumman?

Historical spending data for the B-2 Sustaining Engineering (SE) program with Northrop Grumman indicates a consistent need for these specialized services. While the provided data point is for a contract valued at $36.4 million from 2018 to 2023, previous and subsequent contracts would likely show a similar pattern of investment. Sustainment engineering for complex, aging platforms like the B-2 is an ongoing requirement, often involving multi-year commitments. Analyzing prior contract awards, modifications, and task orders would reveal the total lifecycle cost associated with maintaining the B-2's operational readiness. This includes understanding if spending has increased or decreased over time, potentially correlating with the aircraft's age, modernization efforts, or changes in operational tempo. Without access to a comprehensive contract history database, a precise trend analysis is limited, but the nature of sustainment suggests continuous, significant expenditure.

How does the $36.4M contract value compare to other sustainment contracts for major defense platforms?

Comparing the $36.4 million contract value for B-2 Sustaining Engineering (SE) to other sustainment contracts for major defense platforms requires context regarding the platform's complexity, age, and the scope of services. For highly specialized, low-density assets like the B-2, sustainment costs can be substantial on a per-unit basis. Contracts for sustainment of other strategic assets, such as aircraft carriers, submarines, or other advanced aircraft (e.g., F-22, F-35), can range from tens of millions to billions of dollars over their lifecycle. The $36.4 million figure for a roughly five-year period for the B-2 SE appears to be a significant investment, reflecting the unique engineering challenges and critical role of the B-2. However, without detailed scope-of-work comparisons and specific contract durations, a direct value-for-value comparison is challenging. It is plausible that this value is in line with, or potentially lower than, sustainment costs for similarly complex and aging platforms, especially given the sole-source nature which may limit aggressive price negotiation.

What are the key performance indicators (KPIs) used to measure the success of this B-2 SE contract?

Key Performance Indicators (KPIs) for a B-2 Sustaining Engineering (SE) contract typically focus on ensuring the continued airworthiness, operational readiness, and cost-effectiveness of the B-2 bomber fleet. While specific KPIs are not detailed in the provided contract abstract, common metrics in such agreements include: 1) Availability of engineering support: Measured by response times to technical queries, resolution rates of engineering issues, and availability of subject matter experts. 2) System performance and reliability: Tracking the reliability of B-2 systems and components, and the effectiveness of engineering changes or modifications in improving performance or preventing failures. 3) Cost control: Monitoring adherence to the firm fixed-price budget, identifying cost efficiencies, and managing the cost of proposed engineering changes. 4) Schedule adherence: Ensuring that engineering tasks, studies, and support activities are completed within agreed-upon timelines. 5) Compliance: Verifying adherence to all relevant military standards, safety regulations, and technical orders. Success is often evaluated through regular performance reviews and milestone achievements outlined in the contract.

What is the risk associated with Northrop Grumman being the sole provider for B-2 SE?

The primary risk associated with Northrop Grumman being the sole provider for B-2 Sustaining Engineering (SE) is the lack of competitive pressure, which can lead to reduced incentives for cost efficiency and innovation. This 'sole-source' status can create a dependency where the Air Force has limited alternatives if Northrop Grumman's performance falters, pricing increases significantly, or the company faces financial instability. There's also a risk of knowledge silos, where critical B-2 specific engineering expertise becomes concentrated within one organization, making it difficult for the government to bring in external perspectives or solutions. Furthermore, without competition, the government has less leverage to negotiate favorable terms or pricing, potentially resulting in higher overall costs for sustainment over the life of the contract. Mitigating these risks often involves robust government oversight, detailed performance metrics, and potentially establishing knowledge transfer mechanisms.

What is the projected future spending on B-2 sustainment beyond this contract?

Projecting future spending on B-2 sustainment beyond the current $36.4 million contract requires an understanding of the B-2's planned retirement or service life extension, ongoing modernization programs, and the overall defense budget allocation. The B-2 Spirit is a long-range, stealth bomber with a significant operational lifespan, but like all complex aircraft, it requires continuous sustainment engineering to remain effective. Given the aircraft's advanced age and strategic importance, it is highly probable that sustainment efforts will continue for many years. Future spending will likely depend on the Air Force's strategic decisions regarding the B-2's role alongside newer platforms like the B-21 Raider. If the B-2's service life is extended, sustainment costs could remain substantial, potentially involving new contracts for upgrades, modifications, or continued specialized engineering support. Conversely, if a phased retirement is planned, spending might decrease over time as the fleet size reduces. Detailed budget forecasts and program ఆఫ్ Record (POR) documents from the Air Force would provide a clearer picture of future investment.

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: FIRM FIXED PRICE (J)

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: $36,409,400

Exercised Options: $36,409,400

Current Obligation: $36,409,400

Actual Outlays: $48,523

Subaward Activity

Number of Subawards: 413

Total Subaward Amount: $53,551,777

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