Air Force awards Northrop Grumman $34.5M for B-2 sustaining engineering, a sole-source contract

Contract Overview

Contract Amount: $34,473,200 ($34.5M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2020-01-01

End Date: 2026-12-31

Contract Duration: 2,556 days

Daily Burn Rate: $13.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY20 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 $34.5 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY20 B-2 SUSTAINING ENGINEERING Key points: 1. Contract awarded to a single, incumbent provider, raising questions about price competitiveness. 2. Long-term contract duration suggests a critical, ongoing need for B-2 bomber sustainment. 3. Focus on sustaining engineering indicates efforts to maintain the operational readiness of aging aircraft. 4. The contract's value, while significant, needs to be benchmarked against similar sustainment efforts for complex weapon systems. 5. Lack of competition limits opportunities for innovative solutions or cost reductions from alternative vendors. 6. The contract is a sole-source award, indicating a lack of market research or a perceived inability to find alternatives.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns or comparisons to similar sustainment contracts for other major weapon systems. Given the sole-source nature, it's difficult to assess if the pricing reflects competitive market rates. The contract's duration and the critical nature of B-2 sustainment suggest a high value to the Air Force, but the absence of competition prevents a definitive value-for-money assessment.

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 specific contractor possesses unique capabilities, intellectual property, or is the sole provider of a critical component or service. The lack of competition means the Air Force did not solicit bids from multiple vendors, potentially limiting price discovery and the opportunity to secure the best possible terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing the requirement, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the Department of the Air Force and the operational readiness of the B-2 Spirit bomber fleet. Services delivered include essential engineering support to maintain the complex systems of the B-2 aircraft. The geographic impact is primarily centered around the B-2's home base, Whiteman Air Force Base, Missouri, and potentially other operational locations. Workforce implications include the retention of specialized engineering talent required for the B-2 program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Long-term contract duration may not allow for periodic re-evaluation of market conditions.
Lack of transparency in cost elements due to sole-source nature.

Positive Signals

Ensures continuity of essential sustainment for a critical strategic asset.
Leverages incumbent contractor's specialized knowledge of the B-2 platform.
Provides stability for a highly specialized engineering workforce.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and long product lifecycles. Sustainment engineering for advanced platforms like the B-2 is a critical but often niche market. Spending in this area is driven by the need to maintain the operational effectiveness of aging fleets, which can represent a significant portion of overall defense budgets. Comparable spending benchmarks would involve analyzing sustainment contracts for other strategic aircraft or complex military systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is Northrop Grumman a small business. The implications for small businesses would likely be indirect, potentially through subcontracting opportunities if Northrop Grumman chooses to engage them. However, without specific subcontracting plans detailed in the award, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the contract. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

B-2 Spirit Bomber Program
Air Force Sustainment Contracts
Aircraft Maintenance and Repair
Aerospace Engineering Services
Defense Contractor Support

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Long-term contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.5 million to NORTHROP GRUMMAN SYSTEMS CORP. CY20 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 $34.5 million.

What is the period of performance?

Start: 2020-01-01. End: 2026-12-31.

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

Northrop Grumman has been the prime contractor for the B-2 Spirit program since its inception, responsible for its development, production, and sustainment. Their extensive history with the platform provides them with unparalleled institutional knowledge and specialized expertise. This long-standing relationship suggests a strong track record in managing the complex engineering requirements for the B-2. Benchmarking their performance on this specific contract against other large-scale, long-term sustainment contracts for complex military aircraft would provide further insight into their efficiency and cost-effectiveness. However, specific performance metrics and historical cost data for this particular contract are not publicly detailed, making a comprehensive assessment challenging.

How does the value of this contract compare to historical spending on B-2 sustainment?

The current award of approximately $34.5 million for the period of January 1, 2020, to December 31, 2026, represents a portion of the overall sustainment costs for the B-2 fleet. To compare this to historical spending, one would need to examine annual expenditures on B-2 sustainment engineering and maintenance over previous years and contract periods. Given the long operational life of the B-2 and the increasing age of the aircraft, sustainment costs can fluctuate based on component wear, modernization needs, and evolving threats. Without access to detailed historical spending data specifically for B-2 sustaining engineering, a direct comparison is difficult. However, it is reasonable to assume that sustainment costs for such a complex and aging platform are substantial and likely represent a consistent line item in the Air Force's budget.

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

The primary risk associated with this sole-source contract is the potential for inflated costs due to the lack of competitive pressure. Without competing the requirement, the Air Force may not be achieving the best possible price for the sustaining engineering services. Another risk is vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting flexibility and future negotiation leverage. Furthermore, if Northrop Grumman experiences significant financial difficulties or strategic shifts, it could disrupt the critical sustainment of the B-2 fleet. The long-term nature of the contract also poses a risk if technological advancements or changes in operational requirements render the current sustainment approach suboptimal.

How effective is the sustaining engineering likely to be for the B-2 given its age?

The effectiveness of sustaining engineering for the B-2, an aircraft first introduced in the late 1980s, is crucial for maintaining its operational readiness and extending its service life. Sustaining engineering efforts typically focus on addressing obsolescence, improving reliability, enhancing safety, and potentially incorporating minor upgrades to maintain mission capability. Given the advanced age of the B-2 fleet, the effectiveness of these efforts will depend on the contractor's ability to manage aging systems, source or remanufacture parts, and adapt to evolving maintenance challenges. The long duration of this contract suggests the Air Force views these efforts as essential and likely effective in keeping the B-2 operational, but continuous monitoring of performance metrics and fleet readiness is necessary to confirm ongoing effectiveness.

What is the market landscape for B-2 sustaining engineering services?

The market landscape for B-2 sustaining engineering services is highly specialized and dominated by the original equipment manufacturer, Northrop Grumman. Due to the unique design, complex systems, and classified nature of the B-2 bomber, only Northrop Grumman possesses the deep institutional knowledge, proprietary data, and specialized facilities required for its sustainment. This creates a natural monopoly or 'sole-source' situation for these specific services. While other aerospace and defense companies might offer general engineering or maintenance support, they would lack the specific expertise and access necessary for the B-2. Therefore, the market is effectively closed to competition for these critical sustainment functions.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA811019R0002

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: $34,473,200

Exercised Options: $34,473,200

Current Obligation: $34,473,200

Actual Outlays: $1,958,563

Subaward Activity

Number of Subawards: 137

Total Subaward Amount: $15,433,160

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