Air Force awards $173M to Northrop Grumman for B-2 sustaining engineering, a sole-source contract

Contract Overview

Contract Amount: $173,389,656 ($173.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2021-01-01

End Date: 2026-12-18

Contract Duration: 2,177 days

Daily Burn Rate: $79.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY21 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 $173.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY21 B-2 SUSTAINING ENGINEERING Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition and potential value. 2. Long-term contract duration (over 5 years) suggests a critical, ongoing need for B-2 bomber support. 3. Focus on sustaining engineering indicates a need to maintain the operational readiness of a complex, aging platform. 4. High dollar value signifies the significant investment required for maintaining strategic defense assets. 5. Contractor's established role in B-2 program suggests deep institutional knowledge but limits market entry for competitors. 6. Lack of competition may lead to higher costs for taxpayers compared to a more open bidding process.

Value Assessment

Rating: questionable

The contract's value is substantial at over $173 million. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar sustainment contracts. The sole-source nature raises concerns about whether the government is receiving the best possible value for its investment. Further analysis would be needed to assess if the pricing reflects fair market value given the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Northrop Grumman Systems Corp, was solicited. This typically occurs when a specific capability or proprietary technology is required, or when there is insufficient time to conduct a full and open competition. The lack of multiple bidders means there was no direct price comparison or negotiation driven by competitive pressures, potentially impacting the final price.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This limits the government's ability to ensure it is obtaining the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Air Force and its B-2 Spirit bomber fleet, ensuring continued operational capability. Services delivered include critical engineering support, maintenance, and sustainment activities necessary for the bomber's longevity. The geographic impact is primarily centered around the B-2's operational bases and the contractor's facilities in California. 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 price competition, potentially increasing costs for taxpayers.
Long contract duration without clear performance metrics could reduce contractor incentive for efficiency.
Reliance on a single contractor for critical sustainment may create vendor lock-in.
Lack of transparency in pricing due to sole-source nature hinders value assessment.

Positive Signals

Contractor has extensive experience with the B-2 platform, ensuring specialized knowledge.
Sustaining engineering is crucial for maintaining the operational readiness of a strategic asset.
Long-term contract provides stability for critical support services.
Fixed-price contract type shifts some risk to the contractor.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technologies, and significant government investment. Contracts for sustaining aging, high-value platforms like the B-2 bomber are common and represent a substantial portion of defense spending. This contract fits within the aircraft manufacturing and maintenance sub-sector, where specialized engineering expertise is paramount. Comparable spending benchmarks for sustainment of strategic assets can vary widely but often involve multi-year, high-value agreements.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The prime contractor, Northrop Grumman, is a large aerospace company. There is no explicit information regarding subcontracting plans for small businesses within this specific award notice. The impact on the small business ecosystem is likely minimal unless Northrop Grumman actively pursues small business subcontractors for specialized support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and long duration, robust oversight is critical to ensure fair pricing and effective service delivery. Transparency may be limited due to the lack of competitive bidding, but contract performance reviews and audits by the Government Accountability Office (GAO) or the Inspector General could provide accountability measures.

Related Government Programs

B-2 Bomber Program
Aircraft Sustainment Contracts
Defense Logistics Agency
Air Force Materiel Command

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for cost overruns
Long-term contractor dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $173.4 million to NORTHROP GRUMMAN SYSTEMS CORP. CY21 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 $173.4 million.

What is the period of performance?

Start: 2021-01-01. End: 2026-12-18.

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

Northrop Grumman has been the prime contractor for the B-2 Spirit stealth bomber since its inception. The company is responsible for the aircraft's design, development, production, and sustainment. Their long-standing relationship with the B-2 program indicates deep institutional knowledge and a critical role in maintaining the platform's operational readiness. This extensive history suggests a high level of expertise but also highlights the company's entrenched position, which contributes to the sole-source nature of sustainment contracts.

How does the value of this contract compare to previous B-2 sustainment efforts?

Without access to historical contract data specifically for B-2 sustaining engineering, a direct comparison is challenging. However, the $173 million award over approximately five years suggests an average annual expenditure of around $34.6 million for sustainment. This figure should be considered in the context of the B-2's advanced technology, age, and the complexity of maintaining a strategic stealth bomber. Annual sustainment costs for major defense platforms can fluctuate significantly based on operational tempo, modernization efforts, and component obsolescence. Further analysis would require a review of historical contract awards for the B-2 program and similar strategic aircraft sustainment contracts.

What are the primary risks associated with a sole-source contract for critical defense systems?

The primary risks associated with a sole-source contract for critical defense systems like the B-2 bomber sustainment include potential overpricing due to a lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and vendor lock-in. Without competitive pressure, the government may pay more than necessary. Furthermore, reliance on a single provider can create vulnerabilities if the contractor faces financial difficulties, operational issues, or decides to exit the market. Ensuring fair pricing and performance often requires intensive government negotiation, oversight, and potentially independent cost analyses.

How effective is sustaining engineering in maintaining the operational readiness of aging aircraft like the B-2?

Sustaining engineering is critically important for maintaining the operational readiness of aging aircraft like the B-2. It encompasses a range of activities, including addressing component obsolescence, implementing design updates to improve reliability or safety, troubleshooting complex system failures, and ensuring compliance with evolving regulations. For a platform as advanced and long-serving as the B-2, effective sustaining engineering is essential to mitigate degradation, extend the aircraft's service life, and ensure it can perform its strategic mission. The significant investment in this contract underscores its perceived effectiveness by the Air Force.

What are the historical spending patterns for B-2 sustainment?

Historical spending patterns for B-2 sustainment have been substantial, reflecting the complexity and strategic importance of the aircraft. While specific figures for 'sustaining engineering' as a distinct category are not readily available in this award notice, the overall sustainment costs for the B-2 program have historically been in the hundreds of millions of dollars annually, encompassing maintenance, upgrades, and support services. Northrop Grumman, as the prime contractor, has consistently received significant funding for these activities over the life cycle of the B-2 program. The current $173 million award over five years aligns with this historical trend of significant, long-term investment in maintaining the B-2 fleet.

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

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: $173,389,656

Exercised Options: $173,389,656

Current Obligation: $173,389,656

Subaward Activity

Number of Subawards: 68

Total Subaward Amount: $32,658,368

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