Air Force awards $40.9M contract for B-2 special test equipment refurbishment to Northrop Grumman

Contract Overview

Contract Amount: $40,953,609 ($41.0M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2018-03-30

End Date: 2019-12-31

Contract Duration: 641 days

Daily Burn Rate: $63.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: REFURBISHMENT OF B-2 SPECIAL TEST EQUIPMENT

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $41.0 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: REFURBISHMENT OF B-2 SPECIAL TEST EQUIPMENT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant duration of 641 days suggests a complex and extensive refurbishment process. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not closely managed. 4. Specialized nature of B-2 test equipment indicates a niche market with limited contractor options. 5. The award falls under Aircraft Manufacturing, a sector critical to national defense readiness. 6. High dollar value warrants scrutiny of performance metrics and value for taxpayer money.

Value Assessment

Rating: fair

The total award amount of $40.9 million for the refurbishment of B-2 special test equipment is substantial. Without specific benchmarks for this type of specialized equipment, a direct value-for-money assessment is challenging. However, the Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost escalation. The government must ensure rigorous oversight to prevent the contractor from exceeding the anticipated costs. Comparing this to similar, albeit likely less complex, equipment refurbishment contracts would be necessary for a more precise valuation.

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 vendors. This approach is typically justified when only one responsible source is available or authorized by statute. For taxpayers, a sole-source award means there was no opportunity for competitive bidding to drive down prices, potentially leading to higher costs compared to a competed contract. The lack of competition limits price discovery and may reduce the incentive for the contractor to offer the most cost-effective solution.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding process. This contract's price was negotiated directly, without the downward pressure typically exerted by multiple interested parties.

Public Impact

The primary beneficiaries are the U.S. Air Force and its B-2 bomber program, ensuring the continued operational readiness of critical testing equipment. Services delivered include the refurbishment of specialized test equipment essential for maintaining and verifying the functionality of the B-2 aircraft's complex systems. The geographic impact is primarily within California, where Northrop Grumman Systems Corp. is located, and potentially at Air Force bases where the B-2 fleet operates. Workforce implications include the employment of skilled technicians and engineers at Northrop Grumman involved in the refurbishment process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type carries a risk of cost overruns without stringent oversight.
The specialized nature of the equipment may limit future competition, creating vendor lock-in.
Long contract duration (641 days) requires sustained monitoring to ensure progress and adherence to schedule.

Positive Signals

Award to an established contractor (Northrop Grumman) with known capabilities in aerospace systems.
Refurbishment of critical test equipment directly supports the operational readiness of the B-2 bomber fleet.
The contract specifies a fixed fee component, providing some level of cost certainty for the government.
The contract is managed by the Department of the Air Force, a key stakeholder in the B-2 program.

Sector Analysis

The defense industrial base, particularly the aircraft manufacturing sector, relies heavily on specialized equipment for maintenance and testing. This contract for B-2 special test equipment refurbishment falls within this critical niche. The market for such highly specialized components is often limited, with a few key players possessing the necessary expertise and security clearances. Spending in this area is directly tied to the sustainment and modernization of high-value military assets, making it a crucial but often less transparent segment of defense spending.

Small Business Impact

This contract was awarded to Northrop Grumman Systems Corp. and does not appear to have a small business set-aside component. Given the specialized nature of B-2 test equipment and the sole-source award, it is unlikely that small businesses were directly involved as prime contractors. Subcontracting opportunities for small businesses may exist, but these would be at the discretion of the prime contractor and dependent on the specific needs of the refurbishment project.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, likely through contracting officers and program managers responsible for the B-2 fleet's sustainment. Given the sole-source nature and CPFF structure, rigorous oversight is crucial to monitor costs, schedule, and performance. Transparency may be limited due to the proprietary nature of specialized defense equipment and the sole-source award process. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

B-2 Bomber Sustainment Programs
Aerospace Test and Evaluation Equipment
Defense Contractor Logistics Support
Specialized Aircraft Component Maintenance

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Specialized equipment with limited market
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.0 million to NORTHROP GRUMMAN SYSTEMS CORP. REFURBISHMENT OF B-2 SPECIAL TEST EQUIPMENT

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 $41.0 million.

What is the period of performance?

Start: 2018-03-30. End: 2019-12-31.

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

Northrop Grumman Systems Corp. has a long-standing and primary role in the B-2 Spirit program, serving as the prime contractor for its development, production, and sustainment. Their track record includes extensive experience with the aircraft's complex systems, including specialized test equipment. Historically, they have been awarded numerous contracts related to the B-2, encompassing upgrades, maintenance, and operational support. While their deep involvement ensures familiarity, the scale and nature of these contracts, often sole-sourced due to program exclusivity, necessitate careful review of pricing and performance to ensure fair value for the government.

How does the $40.9M value compare to similar refurbishment contracts for specialized military test equipment?

Direct comparisons for the refurbishment of highly specialized B-2 test equipment are difficult due to the unique nature of the platform and the limited market. However, contracts for refurbishing complex avionics, radar systems, or other critical aircraft components can range from several million to tens of millions of dollars, depending on the system's complexity, age, and required upgrades. The $40.9 million figure for this contract, spanning over 600 days, suggests a significant undertaking. Without specific cost breakdowns or benchmarks for comparable niche military equipment, assessing whether this represents optimal value is challenging, but it falls within the expected range for major sustainment efforts on advanced military platforms.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of equipment?

The primary risk with a CPFF contract for refurbishing specialized test equipment is cost escalation. While the 'fixed fee' provides the contractor a set profit margin, the 'cost plus' portion means the government reimburses the contractor for allowable costs incurred. If the refurbishment proves more complex or requires more resources than initially estimated, the total cost to the government can increase significantly. This necessitates robust government oversight to scrutinize all claimed costs, ensure efficiency, and prevent scope creep. The CPFF structure can reduce the contractor's incentive to control costs compared to fixed-price contracts, making diligent program management and auditing essential.

What is the historical spending trend for B-2 special test equipment maintenance and refurbishment?

Historical spending data for B-2 special test equipment maintenance and refurbishment is often embedded within broader B-2 sustainment and modernization contracts. Annual spending can fluctuate based on the lifecycle stage of the aircraft and its components. Over the past decade, significant investments have been made to ensure the B-2 fleet's continued readiness and to incorporate necessary upgrades. While specific figures for 'special test equipment refurbishment' are not always itemized separately in public databases, the overall sustainment costs for the B-2 program are substantial, reflecting the complexity and aging nature of the platform. This $40.9 million award represents a notable investment in maintaining critical support infrastructure.

How does the sole-source nature of this award impact potential future competition for similar services?

The sole-source nature of this award, citing Northrop Grumman Systems Corp. as the only responsible source, could potentially limit future competition for similar services related to B-2 special test equipment. If the equipment is highly proprietary or integrated into the B-2's unique architecture in a way that only Northrop Grumman can service, it may establish a de facto monopoly. This could make it difficult for other qualified companies to enter the market or compete effectively on future contracts, potentially leading to sustained higher costs for the government. However, the Air Force may periodically reassess the market to identify potential sources for competition on future requirements.

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

Pricing Type: COST PLUS FIXED FEE (U)

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: $40,953,609

Exercised Options: $40,953,609

Current Obligation: $40,953,609

Actual Outlays: $4,850,688

Subaward Activity

Number of Subawards: 242

Total Subaward Amount: $415,565,115

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