DoD awards Northrop Grumman $33.5M for B-2 interim contractor support, raising value-for-money questions

Contract Overview

Contract Amount: $33,494,833 ($33.5M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2020-04-01

End Date: 2025-10-31

Contract Duration: 2,039 days

Daily Burn Rate: $16.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-2 INTERIM CONTRACTOR SUPPORT

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $33.5 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 INTERIM CONTRACTOR SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Long contract duration of over 5 years suggests a need for sustained support, but also locks in pricing. 3. The contract is for interim support, implying a temporary need that may be superseded by future efforts. 4. Focus on aircraft manufacturing services indicates specialized technical expertise is required. 5. Geographic concentration in California may impact regional economic benefits and workforce development. 6. Lack of competition raises concerns about whether the government is achieving optimal value.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized services. Without competitive bids, it's difficult to ascertain if the $33.5 million represents a fair market price. The interim nature of the support also adds complexity, as it may not reflect long-term sustainment costs. Further analysis would require comparing the scope of services to similar sole-source contracts for specialized aerospace support, if available, to gauge potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency precludes a competitive process. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative offers.

Public Impact

The Department of the Air Force benefits from continued operational readiness of the B-2 bomber fleet. Northrop Grumman Systems Corp, the contractor, benefits through sustained revenue and utilization of its specialized workforce. The primary service delivered is aircraft manufacturing support, crucial for maintaining complex defense assets. The geographic impact is concentrated in California, where the contractor's facilities are located, potentially supporting the regional aerospace workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Long contract duration may not reflect evolving needs or technological advancements.
Lack of transparency in pricing due to non-competitive award.
Interim nature of support could lead to follow-on contracts with potentially similar pricing structures.

Positive Signals

Ensures continued support for a critical national defense asset (B-2 bomber).
Leverages specialized expertise of a known contractor with experience on the B-2 platform.
Provides stability for the contractor's workforce involved in B-2 support.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on sustainment and support for a major military aircraft platform. The market for such specialized services is often concentrated among a few large defense contractors due to the high technical barriers to entry and security requirements. Spending in this area is critical for maintaining national security assets, and contracts are often long-term and high-value, reflecting the complexity and strategic importance of the platforms supported.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Consequently, there are no direct subcontracting implications for small businesses mandated by this specific award. The prime contractor, Northrop Grumman, may engage small businesses in its supply chain, but this is not a requirement of this particular contract. The absence of a set-aside means opportunities for small businesses to directly compete for this work are limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and the Department of Defense. Accountability measures would be tied to the performance standards outlined in the contract and the delivery order. Transparency may be limited due to the sole-source nature of the award, making it harder for the public to scrutinize pricing and value. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

B-2 Spirit Bomber Sustainment
Aerospace Contractor Support Services
Department of Defense Aircraft Maintenance
Long-Term Defense Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Lack of competition
High-value contract
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.5 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 INTERIM CONTRACTOR SUPPORT

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 $33.5 million.

What is the period of performance?

Start: 2020-04-01. End: 2025-10-31.

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

Northrop Grumman has a long-standing relationship with the B-2 program, having served as the prime contractor for its development and sustainment. Their track record includes extensive experience in maintaining and upgrading the B-2 fleet, ensuring its operational readiness. This includes providing engineering, logistics, and technical support. Given their deep involvement, they possess unique institutional knowledge and specialized capabilities essential for the B-2's complex systems. Past performance reviews and contract histories would provide a more detailed picture of their reliability and effectiveness in fulfilling previous support agreements.

How does the $33.5 million value compare to similar B-2 support contracts?

Direct comparison of the $33.5 million value is difficult without access to detailed contract line item numbers (CLINs) and specific service scopes for other B-2 support contracts. However, considering the B-2 is a highly complex and aging strategic bomber, sustainment costs are inherently high. This contract covers a period of over five years, suggesting an average annual value of approximately $6.7 million. This figure needs to be assessed against the specific services provided, such as depot-level maintenance, component repair, and technical support. Without competitive bidding, it's challenging to definitively state if this represents optimal value, but it aligns with the high-cost nature of supporting such advanced platforms.

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 pricing due to the lack of competitive pressure. Without competing bids, the government may not be securing the most cost-effective solution. Another risk is vendor lock-in, where the government becomes overly reliant on Northrop Grumman, potentially limiting future flexibility in seeking alternative support providers or technologies. Furthermore, the 'interim' nature of the support suggests a potential for follow-on contracts, which could perpetuate these risks if not managed carefully. Ensuring robust oversight and performance metrics is crucial to mitigate these risks.

How effective is interim contractor support in maintaining B-2 readiness?

Interim contractor support, like this contract for the B-2, is generally considered effective in maintaining readiness when specialized expertise is required and immediate support is necessary. Contractors like Northrop Grumman possess unique knowledge of the aircraft's complex systems, which can be crucial for timely repairs and maintenance that might otherwise be delayed. This support model allows the Air Force to maintain operational capability while potentially developing long-term sustainment strategies or awaiting the completion of other acquisition programs. The effectiveness hinges on clear performance metrics, strong government oversight, and the contractor's ability to deliver the specified services reliably.

What are historical spending patterns for B-2 sustainment?

Historical spending on B-2 sustainment has been substantial, reflecting the aircraft's advanced technology, strategic importance, and operational demands. Over the life cycle of the B-2 program, billions of dollars have been allocated to maintenance, upgrades, and contractor support. Annual sustainment costs can range from hundreds of millions to over a billion dollars, depending on the level of activity and modernization efforts. This $33.5 million interim contract represents a portion of the overall sustainment budget, likely focused on specific, time-sensitive support needs rather than comprehensive fleet-wide maintenance.

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: $33,494,833

Exercised Options: $33,494,833

Current Obligation: $33,494,833

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