DoD's $35M B-2 Sustaining Engineering contract awarded to Northrop Grumman, a sole-source acquisition

Contract Overview

Contract Amount: $35,002,335 ($35.0M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2019-01-01

End Date: 2023-11-30

Contract Duration: 1,794 days

Daily Burn Rate: $19.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-2 SUSTAINING ENGINEERING

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $35.0 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 SUSTAINING ENGINEERING Key points: 1. Contract awarded without competition, raising questions about potential cost efficiencies. 2. Long-term contract duration (1794 days) suggests a critical, ongoing need for B-2 support. 3. Sole-source nature limits opportunities for market-driven price discovery and innovation. 4. Focus on sustaining engineering indicates a mature platform requiring specialized, long-term maintenance. 5. Contract value of $35M over nearly 5 years warrants scrutiny for value for money. 6. Geographic concentration in California for a national defense asset.

Value Assessment

Rating: questionable

Benchmarking the value for money on this sole-source contract is challenging without competitive data. The $35 million awarded over nearly five years for sustaining engineering suggests a significant investment in maintaining the B-2 bomber fleet. However, the lack of competition means there's no direct comparison to assess if this price represents a fair market value or if alternative solutions could have been more cost-effective. The fixed-price nature of the contract provides some cost certainty, but the absence of competitive pressure could lead to inflated costs over the contract's life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Northrop Grumman Systems Corp, was considered. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency and national security preclude a competitive process. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms inherent in a bidding process, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium, as there was no market pressure to drive down costs. This sole-source award limits the government's ability to explore potentially more innovative or cost-effective solutions from other providers.

Public Impact

The primary beneficiaries are the U.S. Air Force and the operational readiness of the B-2 Spirit bomber fleet. Services delivered include critical engineering support, maintenance, and sustainment activities necessary for the B-2's continued operation. The geographic impact is concentrated in California, where Northrop Grumman Systems Corp is located, and potentially at B-2 operating bases. Workforce implications include the employment of specialized engineers and technicians required for advanced aircraft sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Lack of transparency in pricing due to no competitive bidding.
Long contract duration without clear performance metrics for cost-effectiveness.
Concentration of critical sustainment in a single contractor.

Positive Signals

Northrop Grumman is the original manufacturer, possessing unique institutional knowledge of the B-2.
Fixed-price contract type offers some cost predictability.
Sustaining engineering is crucial for maintaining the operational capability of a complex weapon system.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government investment. Contracts for sustaining engineering, particularly for legacy platforms like the B-2 bomber, are often awarded to the original equipment manufacturer due to specialized knowledge and intellectual property. The total addressable market for such niche sustainment services is limited to the specific platform's lifecycle. Benchmarking is difficult as these are often sole-source or limited competition awards.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded sole-source to a large defense contractor. There is no explicit information regarding subcontracting plans for small businesses. The focus on specialized sustaining engineering for a major defense platform suggests that the primary contractor likely possesses the core capabilities, potentially limiting opportunities for small businesses unless they are specialized suppliers to Northrop Grumman.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny might be heightened to ensure fair pricing and necessity. Inspector General investigations could be initiated if performance issues or allegations of impropriety arise. Transparency is limited due to the non-competitive nature, but contract modifications and performance reports would be subject to internal review.

Related Government Programs

B-2 Bomber Program
Air Force Sustainment Contracts
Aerospace Engineering Services
Defense Contractor Support

Risk Flags

Sole-source award
Lack of competition
Potential for cost creep
Critical infrastructure reliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.0 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 SUSTAINING ENGINEERING

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 $35.0 million.

What is the period of performance?

Start: 2019-01-01. End: 2023-11-30.

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

Northrop Grumman is the prime contractor and designer of the B-2 Spirit bomber, giving them unparalleled institutional knowledge and a long-standing track record with the platform. Their experience spans the aircraft's development, production, and sustainment phases. For sustaining engineering, their history with the B-2 likely involves managing complex technical challenges, ensuring airworthiness, and providing ongoing support to maintain the bomber's operational readiness. This deep historical involvement is often a key justification for sole-source awards in highly specialized defense programs, as transitioning such critical knowledge to another entity would be prohibitively expensive and time-consuming.

How does the $35 million contract value compare to historical spending on B-2 sustaining engineering?

Direct historical spending comparisons for this specific $35 million contract are difficult without access to detailed historical contract data for B-2 sustaining engineering. However, given the B-2's advanced capabilities and the long duration of this contract (nearly 5 years), $35 million represents an average annual expenditure of approximately $7 million. This figure needs to be contextualized against the overall operating and sustainment costs of the B-2 fleet, which are substantial due to the aircraft's complexity and strategic role. Without competitive bidding, it's challenging to definitively state if this amount represents optimal value or is in line with market rates for comparable, albeit rare, sole-source sustainment services.

What are the primary risks associated with this sole-source contract for sustaining engineering?

The primary risk associated with this sole-source contract is the potential for cost overruns and reduced value for money due to the absence of competitive pressure. Northrop Grumman, as the sole provider, may have less incentive to innovate or aggressively manage costs compared to a competitive environment. Another risk is vendor lock-in, where the government becomes heavily reliant on a single supplier for critical support, making it difficult and costly to switch providers even if performance or pricing becomes unsatisfactory. Furthermore, without open competition, there's a risk that alternative, potentially more efficient or technologically advanced, sustainment solutions are not explored.

How effective is sustaining engineering in ensuring the long-term operational capability of the B-2 bomber?

Sustaining engineering is critically effective, and indeed essential, for ensuring the long-term operational capability of complex platforms like the B-2 bomber. It encompasses a range of activities including managing obsolescence of components, implementing design changes to improve reliability or safety, addressing wear and tear, and adapting the system to evolving threats or operational requirements. For the B-2, which is a strategic asset with a long service life, continuous engineering support is vital to maintain its stealth capabilities, avionics, and overall mission readiness. Without robust sustaining engineering, the aircraft's effectiveness would degrade over time, potentially rendering it obsolete or unreliable.

What are the implications of awarding this contract in California?

Awarding this contract to Northrop Grumman Systems Corp in California has several implications. It concentrates a significant portion of the B-2's sustaining engineering work within a specific geographic region, potentially benefiting the local economy through employment and related business activities. For the Department of Defense, it means relying on a contractor located in a high-cost state, which could influence overall contract costs. While Northrop Grumman's presence in California is tied to its historical role and facilities related to the B-2 program, it also means that oversight and communication might require specific logistical considerations compared to a more geographically dispersed contract.

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: $35,007,343

Exercised Options: $35,002,335

Current Obligation: $35,002,335

Actual Outlays: $207,108

Subaward Activity

Number of Subawards: 120

Total Subaward Amount: $33,720,808

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