DoD's $70.5M B-2 SATCOM contract to Northrop Grumman shows long-term sustainment needs
Contract Overview
Contract Amount: $70,504,673 ($70.5M)
Contractor: Northrop Grumman Systems Corporation
Awarding Agency: Department of Defense
Start Date: 2016-09-30
End Date: 2023-09-24
Contract Duration: 2,550 days
Daily Burn Rate: $27.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: IGF::OT::IGF B-2 ULTRA HIGH FREQUENCY SATCOM ECEIVER/TRANSMITTER ANALYSIS
Place of Performance
Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $70.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION for work described as: IGF::OT::IGF B-2 ULTRA HIGH FREQUENCY SATCOM ECEIVER/TRANSMITTER ANALYSIS Key points: 1. Contract awarded for sustainment of critical B-2 bomber communication systems. 2. Long contract duration suggests a focus on ongoing operational support rather than new development. 3. Cost-plus incentive fee structure aims to balance contractor performance with cost control. 4. Sole contractor for B-2 systems likely limits competitive pressure on pricing. 5. Significant investment highlights the enduring strategic importance of the B-2 platform. 6. Performance period spans over 7 years, indicating a stable, long-term requirement.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging due to its specialized nature supporting the B-2 bomber. As a sole-source or limited competition award for sustainment of unique systems, direct comparisons to similar contracts are difficult. The cost-plus incentive fee (CPIF) structure is common for complex defense systems where costs are hard to predict, but it requires careful oversight to ensure value for money. The total value of $70.5 million over approximately 7 years suggests a moderate annual spend for specialized sustainment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: unknown
The contract details indicate 'FULL AND OPEN COMPETITION', however, the nature of specialized B-2 system sustainment often leads to limited viable bidders. It is probable that Northrop Grumman, as the original equipment manufacturer or a key integrator, holds a significant advantage or is the only entity capable of performing this work. Further investigation into the solicitation process would be needed to confirm the actual level of competition and the number of bids received.
Taxpayer Impact: When competition is limited for highly specialized defense systems, taxpayers may face higher costs due to reduced price pressure. Ensuring a robust justification for limited competition is crucial for taxpayer protection.
Public Impact
The primary beneficiaries are the United States Air Force and the operational readiness of the B-2 Spirit stealth bomber fleet. Services delivered include sustainment, maintenance, and potentially upgrades for the ultra-high frequency satellite communication (SATCOM) systems. Geographic impact is national, supporting a critical asset within the U.S. strategic defense posture. Workforce implications include specialized engineering, technical, and maintenance roles, likely concentrated at Northrop Grumman facilities and potentially at B-2 operating bases.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns inherent in cost-plus contracts if not rigorously managed.
- Limited competition could lead to higher-than-market pricing for sustainment services.
- Dependence on a single contractor for critical B-2 components poses supply chain and strategic risk.
Positive Signals
- Contract ensures continued operational capability of a key strategic asset (B-2 bomber).
- Long-term nature of the contract provides stability for sustainment planning and execution.
- CPIF structure incentivizes contractor performance, potentially leading to better outcomes.
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on electronic systems and sustainment for strategic aircraft. The market for such specialized sustainment services is typically dominated by original equipment manufacturers or large defense contractors with deep system knowledge. Spending benchmarks are difficult to establish due to the unique nature of the B-2 platform, but overall defense spending on aircraft sustainment represents a significant portion of the DoD budget.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the specialized nature of B-2 SATCOM systems, it is unlikely that small businesses would be primary contractors. However, Northrop Grumman may engage small businesses as subcontractors for specific components or services, contributing to the broader defense industrial base.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance against established targets. Inspector General (IG) audits and reviews are standard for major defense contracts, ensuring accountability and identifying potential fraud, waste, or abuse.
Related Government Programs
- B-2 Bomber Sustainment Programs
- Air Force SATCOM Systems
- Defense Electronics Maintenance
- Northrop Grumman Defense Contracts
- Strategic Aircraft Support Services
Risk Flags
- Potential for cost growth in CPIF contracts.
- Limited competition may impact price.
- Long contract duration increases exposure to economic fluctuations.
- Dependence on a single platform's sustainment.
Tags
defense, department-of-defense, air-force, northrop-grumman, b-2-bomber, satcom, sustainment, engineering-services, cost-plus-incentive-fee, full-and-open-competition, long-term-contract, virginia
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $70.5 million to NORTHROP GRUMMAN SYSTEMS CORPORATION. IGF::OT::IGF B-2 ULTRA HIGH FREQUENCY SATCOM ECEIVER/TRANSMITTER ANALYSIS
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 $70.5 million.
What is the period of performance?
Start: 2016-09-30. End: 2023-09-24.
What is Northrop Grumman's track record with B-2 sustainment and related complex defense systems?
Northrop Grumman has a long and established history as the prime contractor for the B-2 Spirit program, including its development and sustainment. Their expertise encompasses the aircraft's complex systems, including avionics, stealth technology, and communications. The company consistently handles large, complex defense contracts, often involving sole-source or limited-competition scenarios due to the proprietary nature of the technology and the specialized knowledge required. Their track record generally reflects a capability to deliver on these demanding programs, though like any major defense contractor, they are subject to performance reviews and cost scrutiny. This specific contract builds upon that established relationship and expertise for the B-2's SATCOM systems.
How does the $70.5 million value compare to similar long-term sustainment contracts for strategic aircraft components?
Direct comparisons for sustainment contracts of highly specialized, unique components like the B-2's SATCOM systems are difficult due to the lack of publicly available, directly analogous data. However, the annual value of this contract, approximately $10 million ($70.5M / ~7 years), is within the expected range for sustainment of a strategic, low-density, high-cost asset like the B-2. Major defense contractors often manage sustainment portfolios worth hundreds of millions or billions annually across various platforms. The key factor here is the specificity and criticality of the B-2 system, which inherently drives up the cost per item compared to more common aircraft components.
What are the primary risks associated with this Cost Plus Incentive Fee (CPIF) contract structure?
The primary risks with a CPIF contract revolve around cost control and contractor incentives. While CPIF aims to incentivize efficiency by sharing cost savings or overruns between the government and contractor based on performance targets, it still carries inherent risks. If the target costs are set too high or the incentive structure is not well-defined, the contractor may not achieve significant savings, leading to costs closer to the ceiling. Conversely, if targets are too aggressive or unforeseen technical issues arise, the government could face higher costs. Effective oversight is crucial to ensure the contractor is motivated to control costs while meeting performance requirements, preventing potential cost overruns and ensuring value for taxpayer money.
How does the duration of this contract (approx. 7 years) impact program effectiveness and cost?
The long duration of this contract (2550 days, approximately 7 years) suggests a stable, long-term requirement for the sustainment of the B-2's ultra-high frequency SATCOM systems. This stability is generally beneficial for program effectiveness as it allows for consistent planning, resource allocation, and workforce stability within the contractor's organization. It can also lead to cost efficiencies through economies of scale and reduced transition costs associated with shorter-term contracts. However, a long duration also increases the risk of cost escalation due to inflation or unforeseen technological changes over the contract period, necessitating robust contract management and potential for contract modifications.
What is the historical spending pattern for B-2 SATCOM sustainment, and does this $70.5M align?
Detailed historical spending specifically on B-2 SATCOM sustainment is not readily available in the public domain. However, the B-2 program itself has historically represented a significant investment for the Department of Defense, with total program costs running into the tens of billions. Sustainment costs are a critical component of the total lifecycle cost for any major weapon system. Given the B-2's strategic importance and the complexity of its systems, including advanced SATCOM, a contract of $70.5 million over approximately seven years for sustainment appears consistent with the expected ongoing investment required to maintain such a unique and critical asset in operational readiness.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: FA811916R0017
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $70,504,673
Exercised Options: $70,504,673
Current Obligation: $70,504,673
Subaward Activity
Number of Subawards: 175
Total Subaward Amount: $2,706,809,677
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS00Q14OADU325
IDV Type: IDC
Timeline
Start Date: 2016-09-30
Current End Date: 2023-09-24
Potential End Date: 2023-09-24 00:00:00
Last Modified: 2023-11-16
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