DoD awards $40.9M B-2 Software Sustainment contract to Northrop Grumman, raising competition concerns

Contract Overview

Contract Amount: $40,945,944 ($40.9M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2022-01-01

End Date: 2022-12-31

Contract Duration: 364 days

Daily Burn Rate: $112.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: B-2 SOFTWARE SUSTAINMENT

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $40.9 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 SOFTWARE SUSTAINMENT Key points: 1. Significant contract value for specialized aircraft software. 2. Sole source award to incumbent contractor limits competitive pricing. 3. Potential for cost overruns due to Cost Plus Incentive Fee structure. 4. High-tech sector with critical national defense implications.

Value Assessment

Rating: questionable

The contract's Cost Plus Incentive Fee structure, combined with a sole-source award, makes a direct pricing assessment difficult. Without competitive bids, it's hard to determine if the $40.9 million represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, awarded solely to Northrop Grumman Systems Corp. This lack of competition limits price discovery and may result in higher costs for the government.

Taxpayer Impact: The absence of competition for this critical software sustainment could lead to taxpayers paying a premium for services that might be obtained at a lower cost through a competitive process.

Public Impact

Ensures continued operational readiness of the B-2 bomber fleet. Supports advanced software maintenance and upgrades for a critical defense asset. Potential impact on future defense spending if sole-source trends continue.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of small business participation

Positive Signals

Ensures critical system sustainment
Incumbent has specialized knowledge

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft software sustainment. Spending in this area is critical for maintaining aging fleets but can be prone to high costs due to specialized requirements and limited competition.

Small Business Impact

The data indicates no small business participation in this contract. Given the specialized nature of B-2 software sustainment, opportunities for small businesses may be limited, but further analysis could explore subcontracting possibilities.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny regarding the justification for not competing the requirement. Robust oversight is needed to ensure cost controls and performance metrics are met under the incentive fee structure.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award lacks competition.
Cost-plus contract type introduces cost uncertainty.
No small business participation noted.
Potential for contractor lock-in.
High reliance on a single contractor for critical system.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.9 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 SOFTWARE SUSTAINMENT

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 $40.9 million.

What is the period of performance?

Start: 2022-01-01. End: 2022-12-31.

What is the justification for the sole-source award of the B-2 software sustainment contract?

The justification for a sole-source award typically centers on the unique capabilities or proprietary nature of the product or service, or the need for continuity with an existing system. For the B-2 software, it's likely that Northrop Grumman possesses the specific technical knowledge, intellectual property, and historical data essential for its sustainment, making competition impractical or excessively costly due to knowledge transfer requirements.

How does the Cost Plus Incentive Fee (CPIF) structure mitigate or exacerbate cost risks for this contract?

A CPIF contract aims to incentivize the contractor to control costs by sharing savings or cost overruns with the government. While it encourages efficiency, the 'plus' aspect means the government still bears a portion of any cost increases. The effectiveness depends heavily on the realism of the target cost and the incentive structure, which can be complex to set appropriately for specialized software sustainment, potentially leading to higher overall costs if targets are not well-defined.

What is the long-term strategic impact of awarding critical software sustainment contracts on a sole-source basis?

Consistently awarding critical sustainment contracts on a sole-source basis can stifle innovation and competition within the defense industrial base. It may lead to vendor lock-in, reduced market pressure on pricing, and potentially higher long-term sustainment costs for aging platforms. Over time, this can limit the government's strategic options and bargaining power, impacting overall defense budget efficiency.

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 INCENTIVE FEE (V)

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: $41,625,945

Exercised Options: $41,625,944

Current Obligation: $40,945,944

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $78,029,693

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