DoD awards $14.3M Northrop Grumman contract for B-2 Pressurization Control Valve Obsolescence Solution Resolution Testing

Contract Overview

Contract Amount: $14,271,766 ($14.3M)

Contractor: Northrop Grumman Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2022-09-26

End Date: 2026-09-26

Contract Duration: 1,461 days

Daily Burn Rate: $9.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: B-2 PRESSURIZATION CONTROL VALVE PHASE III, OBSOLESCENCE SOLUTION RESOLUTION TESTING

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: B-2 PRESSURIZATION CONTROL VALVE PHASE III, OBSOLESCENCE SOLUTION RESOLUTION TESTING Key points: 1. Contract awarded to a single, established prime contractor with extensive experience on the B-2 platform. 2. The contract type is Cost Plus Fixed Fee, which may offer less incentive for cost control compared to fixed-price contracts. 3. The contract duration is 1461 days, indicating a long-term need for these specialized engineering services. 4. The contract was not competed, raising questions about potential cost efficiencies and market-driven pricing. 5. This contract addresses obsolescence issues, a common challenge in maintaining aging defense platforms like the B-2 bomber. 6. The specific engineering services required are highly specialized and likely require unique contractor expertise.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its specialized nature and lack of competition. The Cost Plus Fixed Fee structure means actual costs could exceed the initial estimate, and the fixed fee provides the contractor with a guaranteed profit margin regardless of efficiency. Without comparable contract data or a competitive bidding process, it is difficult to definitively assess if the pricing represents excellent value for money. However, the long duration and critical nature of resolving obsolescence for a key defense asset suggest a necessary investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential bidders. This approach is typically used when a specific contractor possesses unique capabilities, proprietary knowledge, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a price discovery process driven by multiple offers, potentially leading to higher costs than if it had been competed.

Taxpayer Impact: Taxpayers may not have received the most cost-effective solution due to the absence of competitive pressure to drive down prices. The government's negotiating position is also weakened without alternative sources to consider.

Public Impact

The primary beneficiaries are the Department of the Air Force and the operational readiness of the B-2 bomber fleet. The services delivered will ensure the continued functionality and safety of critical aircraft systems by addressing component obsolescence. The geographic impact is primarily within the United States, likely at contractor facilities and Air Force bases where the B-2 is operated or maintained. Workforce implications include specialized engineering and technical roles at the contractor's facility, contributing to high-skill employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Cost Plus Fixed Fee contract type may disincentivize aggressive cost management by the contractor.
Long contract duration could lead to cost overruns if not closely managed.
Obsolescence resolution can be complex and unpredictable, potentially leading to scope creep or extended timelines.

Positive Signals

Addresses critical obsolescence issues for a vital national defense asset (B-2 bomber).
Awarded to a prime contractor with established expertise on the B-2 platform, suggesting technical capability.
Focus on resolution testing implies a structured approach to problem-solving.
Contract duration allows for thorough testing and implementation of solutions.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the aerospace and defense industry. The market for specialized engineering services for aging military platforms is significant, driven by the need to maintain operational readiness and extend the life of existing assets. Benchmarking is difficult as these are highly specific, often proprietary, solutions. However, the overall defense engineering services market is substantial, with numerous firms competing for various segments.

Small Business Impact

This contract was awarded to Northrop Grumman Systems Corporation, a large prime contractor, and does not appear to have a small business set-aside component. There is no explicit information provided regarding subcontracting plans for small businesses. Given the specialized nature of the work and the prime contractor's role, the direct impact on the small business ecosystem is likely minimal unless Northrop Grumman actively engages small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are inherent in the Cost Plus Fixed Fee structure, which requires detailed cost reporting and justification. Transparency may be limited due to the sole-source nature and the classified or sensitive aspects of defense systems. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

B-2 Bomber Sustainment Programs
Aerospace Engineering Services
Defense Platform Obsolescence Management
Air Force Logistics and Maintenance Contracts
Critical Component Testing and Resolution

Risk Flags

Sole-source award
Cost-plus contract type
Critical system obsolescence
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. B-2 PRESSURIZATION CONTROL VALVE PHASE III, OBSOLESCENCE SOLUTION RESOLUTION TESTING

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORPORATION.

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 $14.3 million.

What is the period of performance?

Start: 2022-09-26. End: 2026-09-26.

What is Northrop Grumman's track record with B-2 bomber sustainment and modernization contracts?

Northrop Grumman has a long and extensive history as the prime contractor for the B-2 Spirit stealth bomber, responsible for its development, production, and sustainment. The company has consistently been involved in various aspects of the B-2 program, including upgrades, maintenance, and addressing operational challenges. Their deep institutional knowledge and established relationship with the Air Force position them as a key partner in ensuring the B-2's continued readiness. This includes managing complex systems, integrating new technologies, and resolving issues like component obsolescence, which is critical for maintaining the operational effectiveness of such a sophisticated and aging aircraft.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar engineering services?

The Cost Plus Fixed Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with Fixed Price contracts, where the contractor agrees to a set price regardless of actual costs, incentivizing efficiency. CPFF is often used for research and development or complex services where the scope is uncertain or difficult to define precisely upfront, as is common with obsolescence resolution. While it provides flexibility and ensures the contractor is compensated for necessary work, it carries a higher risk of cost overruns for the government compared to fixed-price arrangements. Other variations like Cost Plus Incentive Fee (CPIF) can introduce performance targets to better align contractor incentives with government objectives.

What are the primary risks associated with resolving obsolescence in critical defense systems like the B-2's pressurization control valve?

Resolving obsolescence in critical defense systems presents several significant risks. Firstly, the availability of replacement parts or suitable alternatives can be limited, especially for highly specialized or older components, potentially requiring extensive redesign or reverse engineering. Secondly, the technical complexity of integrating new or modified components into existing, often sensitive, systems can lead to unforeseen compatibility issues or performance degradation. Thirdly, the cost and timeline for resolution can be unpredictable, as the full extent of the problem and the effort required for a robust solution may not be immediately apparent. Finally, there's a risk that the chosen solution may not meet long-term sustainment requirements or could introduce new vulnerabilities, necessitating ongoing monitoring and potential further investment.

What is the historical spending pattern for B-2 bomber sustainment and related engineering services?

Historical spending on B-2 bomber sustainment and related engineering services has been substantial, reflecting the complexity and strategic importance of the platform. The B-2 program has consistently required significant investment for maintenance, upgrades, and operational support throughout its service life. Annual spending can fluctuate based on specific modernization initiatives, depot maintenance cycles, and emergent issues like obsolescence. While precise figures for 'obsolescence solution resolution testing' are not publicly itemized, overall sustainment costs for the B-2 fleet are in the hundreds of millions to billions of dollars annually, encompassing a wide range of services including engineering, logistics, and component repair or replacement.

How does the lack of competition in this sole-source award impact the government's ability to ensure fair and reasonable pricing?

The lack of competition in a sole-source award significantly impacts the government's ability to ensure fair and reasonable pricing. Without multiple bidders vying for the contract, there is no market-driven pressure to offer the lowest possible price. The government must rely heavily on its own cost analysis, negotiation expertise, and available market research to determine if the proposed price is justified. This often involves scrutinizing the contractor's proposed costs, profit margins, and historical pricing data. While regulations require justification for sole-source awards and price reasonableness determination, the absence of competitive proposals inherently weakens the government's negotiating leverage and increases the risk of paying a premium for the goods or services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA811822R0019

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation

Address: 7575 COLSHIRE DR, MCLEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,271,766

Exercised Options: $14,271,766

Current Obligation: $14,271,766

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $82,732,775

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline