DoD's $34.8M B-2 Software Sustainment contract awarded to Northrop Grumman without competition

Contract Overview

Contract Amount: $34,814,984 ($34.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2021-11-19

End Date: 2026-07-31

Contract Duration: 1,715 days

Daily Burn Rate: $20.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CY22 B-2 SOFTWARE SUSTAINMENT (SWS) ADDITIONAL EFFORTS

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $34.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: CY22 B-2 SOFTWARE SUSTAINMENT (SWS) ADDITIONAL EFFORTS Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award raises concerns about price reasonableness and lack of market pressure. 3. Long contract duration of over 1700 days suggests a critical, long-term need. 4. The contract is for sustainment, implying ongoing operational support rather than new development. 5. Northrop Grumman's established role in B-2 programs suggests a deep understanding of the system. 6. Lack of competition limits opportunities for other firms and potentially higher innovation. 7. The contract's value is significant within the aircraft manufacturing sub-sector. 8. No small business set-aside was applied, suggesting no specific focus on small business participation.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a sole-source award, makes a definitive value assessment difficult without detailed cost breakdowns. Benchmarking against similar sustainment contracts for complex defense platforms is challenging due to the unique nature of the B-2 bomber. However, the absence of competition inherently limits the government's ability to secure the most competitive pricing. The fixed fee component provides some cost control, but the variable cost component requires close monitoring.

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 solicited. This approach is typically justified when a unique capability or proprietary technology is required, or when there is an urgent need that precludes a competitive process. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, it is harder to ensure that the price reflects the lowest reasonable cost for the required software sustainment services.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the continued operational readiness of the B-2 bomber fleet. Services delivered include software sustainment, maintenance, and potentially updates critical for the B-2's mission capabilities. The geographic impact is primarily within the United States, supporting Air Force bases where the B-2 is stationed or maintained. Workforce implications include the need for specialized software engineers and technicians with knowledge of the B-2's unique systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure can lead to cost overruns if not managed tightly.
Long contract duration requires sustained oversight.
Lack of small business participation noted.

Positive Signals

Northrop Grumman has extensive experience with the B-2 platform.
Sustainment contracts are crucial for maintaining aging defense assets.
Fixed fee provides a baseline profit margin, potentially stabilizing contractor focus.

Sector Analysis

This contract falls within the Aircraft Manufacturing sub-sector, specifically focusing on sustainment for a highly specialized defense platform. The market for such unique, legacy aircraft sustainment is often dominated by the original equipment manufacturers due to proprietary knowledge and specialized tooling. Comparable spending benchmarks are difficult to establish given the B-2's unique capabilities and limited fleet size. The overall defense aerospace sustainment market is substantial, but segment-specific data for platforms like the B-2 is scarce.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for them mentioned in the provided data. This suggests that the primary contractor, Northrop Grumman, will likely perform the majority of the work internally. Consequently, there may be limited direct opportunities for small businesses to participate in this specific contract, potentially impacting their ability to gain experience with this particular defense platform.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would include performance metrics, milestone tracking, and financial reviews inherent in the cost-plus-fixed-fee structure. Transparency is limited by the sole-source nature and the proprietary aspects of the software. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

B-2 Bomber Program
Aircraft Software Sustainment
Defense Logistics Agency (DLA) Support
Air Force Materiel Command (AFMC) Contracts
Northrop Grumman Defense Contracts

Risk Flags

Sole Source Award
Cost-Plus Contract Type
Long Contract Duration
Critical Defense Platform Sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.8 million to NORTHROP GRUMMAN SYSTEMS CORP. CY22 B-2 SOFTWARE SUSTAINMENT (SWS) ADDITIONAL EFFORTS

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 $34.8 million.

What is the period of performance?

Start: 2021-11-19. End: 2026-07-31.

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

Northrop Grumman has been the prime contractor for the B-2 Spirit stealth bomber program since its inception, responsible for its development, production, and sustainment. This deep, decades-long involvement provides them with unparalleled institutional knowledge of the aircraft's complex systems, including its software. Their track record with the B-2 specifically involves managing intricate sustainment requirements to ensure the platform's continued operational readiness. Beyond the B-2, Northrop Grumman holds numerous other large, complex sustainment contracts across various defense platforms, demonstrating a broad capability in maintaining advanced aerospace and defense systems. This extensive experience suggests a high level of technical proficiency and program management expertise relevant to the B-2 Software Sustainment contract.

How does the pricing structure (Cost Plus Fixed Fee) compare to other sustainment contracts for similar high-value defense assets?

Cost Plus Fixed Fee (CPFF) is a common contract type for complex, long-duration projects like defense sustainment where the scope may evolve or is difficult to define precisely upfront. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF offers more flexibility for the government when dealing with uncertain requirements but carries a higher risk of cost growth. For similar high-value defense assets, CPFF is frequently used for sustainment, R&D, and specialized services. However, the 'fixed fee' component aims to incentivize efficiency by capping the contractor's profit regardless of cost overruns. The reasonableness of the fee itself is subject to negotiation and benchmarking against industry standards for similar risk profiles and effort.

What are the primary risks associated with a sole-source award for critical software sustainment?

The primary risks associated with a sole-source award for critical software sustainment include lack of price competition, potential for inflated costs, reduced incentive for innovation, and vendor lock-in. Without competing bids, the government cannot be assured it is receiving the best possible price for the services rendered. The incumbent contractor may have less incentive to find cost efficiencies or introduce innovative solutions if they are guaranteed the contract. Furthermore, reliance on a single provider can create dependency, making it difficult and costly to switch vendors in the future if performance issues arise or if market conditions change. This also limits opportunities for other capable firms to enter the market and develop expertise.

What are the implications of the contract's long duration (over 1700 days) for program effectiveness and oversight?

A contract duration exceeding 1700 days (approximately 4.7 years) for software sustainment implies a long-term, critical need for the B-2's operational capability. This extended timeframe allows for stability and continuity in support, which is vital for maintaining complex systems like the B-2 bomber. However, it also necessitates robust, ongoing oversight to ensure performance remains high, costs are controlled, and the contract remains aligned with evolving technological needs and strategic priorities. Program effectiveness relies on the contractor's sustained performance and the government's ability to adapt contract requirements if necessary. Long durations can also increase the risk of scope creep or outdated technology if not actively managed and reviewed periodically.

How does this contract fit into the broader context of Air Force sustainment spending and modernization efforts?

This contract represents a component of the Air Force's broader sustainment spending, which is crucial for maintaining the readiness of its aging fleet, including legacy platforms like the B-2. While modernization efforts focus on developing and acquiring next-generation capabilities (e.g., B-21 Raider), significant resources are still allocated to ensuring current assets remain viable and effective. Sustainment spending ensures that platforms like the B-2 can continue to fulfill their strategic roles until they are fully replaced. This specific contract addresses the software aspect, which is increasingly critical for the functionality and security of modern military systems. It highlights the ongoing investment required to keep advanced, albeit older, platforms operational alongside the introduction of new technologies.

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 FIXED FEE (U)

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: $34,814,984

Exercised Options: $34,814,984

Current Obligation: $34,814,984

Subaward Activity

Number of Subawards: 45

Total Subaward Amount: $7,525,593

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