DoD awards $311M contract to Northrop Grumman for aircraft software sustainment and lab support

Contract Overview

Contract Amount: $311,294,129 ($311.3M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2023-01-01

End Date: 2025-12-31

Contract Duration: 1,095 days

Daily Burn Rate: $284.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: B-2 SOFTWARE SUSTAINMENT AND LABORATORY SUPPORT.

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $311.3 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: B-2 SOFTWARE SUSTAINMENT AND LABORATORY SUPPORT. Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant duration of 1095 days suggests a long-term need for these services. 3. The contract's value places it among substantial investments in defense software sustainment. 4. Focus on aircraft manufacturing support indicates a critical role in maintaining operational readiness. 5. The 'Cost Plus Fixed Fee' pricing structure requires careful monitoring to ensure value. 6. Lack of competition may limit opportunities for innovative solutions from other vendors.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific technical requirements. However, the duration and scope suggest a significant investment. The 'Cost Plus Fixed Fee' (CPFF) structure, while common for complex R&D or sustainment, necessitates robust oversight to control costs and ensure the government receives fair value. Without competitive bids, it's difficult to definitively assess if the pricing is optimal compared to market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means there were no other bidders to compare against, potentially impacting price discovery and limiting the government's ability to secure the most cost-effective solution.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure that could drive down prices. This necessitates a higher degree of scrutiny on the contractor's proposed costs and the justification for the sole-source award to ensure public funds are used efficiently.

Public Impact

The Department of the Air Force is the primary beneficiary, ensuring the sustainment of critical aircraft software. This contract supports the operational readiness and longevity of Air Force aircraft fleets. Services are likely concentrated in California, where Northrop Grumman has significant operations. The contract supports specialized technical labor within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Cost Plus Fixed Fee structure requires diligent oversight to prevent cost overruns.
Long contract duration may not adapt well to rapidly evolving technological needs.
Lack of transparency in the procurement process due to sole-source nature.

Positive Signals

Addresses critical sustainment needs for existing aircraft platforms.
Leverages established expertise of a major defense contractor.
Provides stability and predictability for essential software support.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft manufacturing and sustainment. The market for defense software sustainment is characterized by long-term relationships, high barriers to entry due to security and technical expertise, and significant government investment. Comparable spending often involves multi-year contracts for maintaining complex weapon systems, where specialized knowledge is paramount.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the prime contractor being Northrop Grumman, a large aerospace company, the primary focus is on direct award. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the provided data. The impact on the small business ecosystem is likely indirect, depending on Northrop Grumman's subcontracting strategy.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. Given the 'Cost Plus Fixed Fee' structure, rigorous financial oversight and performance monitoring are crucial to ensure accountability and prevent cost creep. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by relevant Inspector General offices would be standard procedures.

Related Government Programs

Aircraft Maintenance and Repair
Defense Software Development
Aerospace Engineering Services
Logistics Support Services
Military Aircraft Sustainment

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $311.3 million to NORTHROP GRUMMAN SYSTEMS CORP. B-2 SOFTWARE SUSTAINMENT AND LABORATORY 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 $311.3 million.

What is the period of performance?

Start: 2023-01-01. End: 2025-12-31.

What is Northrop Grumman's track record with similar sole-source sustainment contracts for the Department of Defense?

Northrop Grumman has a long history of performing sustainment and support services for various Department of Defense (DoD) platforms, often through sole-source or limited-competition contracts due to the specialized nature of the systems and their established role as a prime contractor. Their track record typically involves managing complex logistics, software updates, and technical support for aircraft and other defense systems. While specific details on past sole-source sustainment contracts require deeper analysis of historical contract data, their extensive experience suggests a capability to fulfill such requirements. However, the effectiveness and value derived from these past contracts can vary, necessitating a review of performance metrics, cost overruns, and any associated audits or investigations.

How does the 'Cost Plus Fixed Fee' (CPFF) pricing structure compare to other contract types for software sustainment, and what are the implications for value?

The 'Cost Plus Fixed Fee' (CPFF) structure is often used for research and development or complex sustainment efforts where the scope of work is not precisely defined or is expected to evolve. In CPFF contracts, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF offers more flexibility but shifts more cost risk to the government. For software sustainment, this means the government bears the risk of cost overruns, while the contractor is incentivized to complete the work within the estimated cost to achieve their fixed fee. This structure can be advantageous when innovation or adaptation is key, but it requires robust government oversight to ensure costs remain reasonable and the fixed fee is justified. Without competitive bidding, assessing the fairness of the fee and the efficiency of cost management is critical for ensuring value for money.

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

Sole-source awards for critical software sustainment carry several potential risks. Firstly, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as the contractor faces less pressure to optimize costs. Secondly, it can stifle innovation, as there is less incentive for the incumbent contractor to introduce novel or more efficient solutions if they are guaranteed the contract. Thirdly, there's a risk of vendor lock-in, where the government becomes overly reliant on a single provider, making it difficult and costly to switch vendors in the future. Finally, without the scrutiny of multiple bids, there's an increased need for diligent government oversight to ensure the contractor is performing efficiently and that costs are reasonable, as the government lacks the comparative data that competition provides.

What is the historical spending pattern for aircraft software sustainment within the Department of the Air Force?

Historical spending patterns for aircraft software sustainment within the Department of the Air Force (USAF) generally show a consistent and significant allocation of resources. These expenditures are driven by the need to maintain the operational readiness and extend the lifespan of complex aircraft systems, which rely heavily on sophisticated software for navigation, control, weapons systems, and communication. Spending typically involves multi-year contracts for sustainment, upgrades, and lifecycle support. The amounts can fluctuate based on modernization programs, the introduction of new platforms, and the aging of existing fleets. Analyzing past budgets and contract awards reveals a substantial and ongoing investment in this area, often dominated by major defense contractors due to the specialized nature of the work and the security requirements involved. The trend is towards increasing complexity and cost as aircraft systems become more integrated and software-dependent.

How does the geographic location of contract performance (California) influence the cost and execution of this sustainment contract?

The performance location in California can influence the cost and execution of this sustainment contract primarily through labor rates and the established presence of defense industry infrastructure. California has a high cost of living and, consequently, often higher labor costs for skilled technical personnel compared to some other regions. However, it also boasts a mature aerospace and defense ecosystem, with a deep pool of experienced talent and specialized facilities, which can facilitate efficient execution and access to necessary resources. Northrop Grumman's significant presence in California likely means they have established infrastructure and personnel readily available, potentially streamlining operations. The state's regulatory environment and business costs are also factors that could indirectly affect overall contract expenses.

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: $399,349,137

Exercised Options: $399,349,137

Current Obligation: $311,294,129

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $2,477,143

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