Air Force spent $125M on B-2 depot maintenance, a sole-source contract awarded to Northrop Grumman

Contract Overview

Contract Amount: $125,137,982 ($125.1M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2015-01-01

End Date: 2017-02-25

Contract Duration: 786 days

Daily Burn Rate: $159.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF CY 15 B-2 PROGRAMMED DEPOT MAINTENANCE (PDM)

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $125.1 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF CY 15 B-2 PROGRAMMED DEPOT MAINTENANCE (PDM) Key points: 1. Contract awarded without competition, raising questions about price discovery and potential overpayment. 2. Long-term maintenance contract for a critical defense asset, indicating a high degree of contractor dependency. 3. Fixed-price contract type aims to control costs, but without competition, actual value is harder to ascertain. 4. The duration of the contract (786 days) suggests a significant, ongoing need for specialized maintenance. 5. Focus on depot maintenance highlights the importance of sustaining aging aircraft fleets. 6. Geographic concentration in California for this specific contract.

Value Assessment

Rating: questionable

This contract for B-2 depot maintenance was awarded sole-source to Northrop Grumman for approximately $125 million. Without competitive bidding, it is difficult to benchmark the value for money. Comparable contracts for similar specialized aircraft maintenance are scarce, making direct price comparisons challenging. The fixed-price nature of the contract provides some cost certainty, but the absence of competition means taxpayers may not have benefited from the most economical pricing.

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. This typically occurs when only one contractor possesses the necessary specialized skills, technology, or security clearances. The lack of competition limits the government's ability to solicit multiple bids and negotiate the best possible price, potentially leading to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are the U.S. Air Force and its B-2 bomber fleet, ensuring operational readiness. Services delivered include specialized depot maintenance, critical for extending the lifespan and performance of complex aircraft. The contract has a geographic impact concentrated in California, where the maintenance is likely performed. Workforce implications include the need for highly skilled technicians and engineers specializing in advanced aerospace systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
High cost of specialized maintenance for advanced aircraft.
Dependency on a single contractor for critical sustainment.
Potential for cost overruns if not closely managed due to lack of competition.

Positive Signals

Fixed-price contract type provides cost predictability.
Maintenance ensures the continued operational capability of a strategic asset.
Northrop Grumman is the original manufacturer, possessing unique expertise.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technologies, and significant government investment. Contracts for specialized aircraft maintenance, particularly for advanced platforms like the B-2 bomber, represent a niche but critical segment. Spending in this area is driven by the need to sustain aging fleets and ensure national security. Benchmarking is difficult due to the unique nature of these assets and the limited number of qualified contractors.

Small Business Impact

This contract does not appear to involve small business set-asides. As a sole-source award to a large prime contractor, the primary focus is on the prime's capability. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the provided data. The overall impact on the small business ecosystem for this specific contract is likely indirect, depending on the prime's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature, rigorous oversight is crucial to ensure fair pricing and performance. Accountability measures would include contract performance reviews and adherence to the fixed-price terms. Transparency is limited due to the non-competitive award, but reporting requirements would still apply.

Related Government Programs

B-2 Spirit Bomber Program
Air Force Sustainment and Maintenance Contracts
Aerospace Depot Maintenance
Northrop Grumman Defense Contracts

Risk Flags

Sole-source award
Lack of competition
High contract value
Specialized defense asset maintenance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.1 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF CY 15 B-2 PROGRAMMED DEPOT MAINTENANCE (PDM)

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 $125.1 million.

What is the period of performance?

Start: 2015-01-01. End: 2017-02-25.

What is Northrop Grumman's track record with B-2 maintenance contracts?

Northrop Grumman, as the original manufacturer of the B-2 Spirit, has a long-standing and exclusive relationship with the U.S. Air Force for the sustainment and maintenance of this complex aircraft. Their track record is intrinsically tied to the B-2 program itself. Historically, they have been responsible for the aircraft's production, upgrades, and ongoing operational readiness. This includes depot-level maintenance, which involves comprehensive inspections, repairs, and overhauls. Given the B-2's advanced stealth technology and unique design, Northrop Grumman possesses the proprietary knowledge, specialized facilities, and trained workforce essential for this work. While specific performance metrics for individual contracts are often sensitive, the continued operation of the B-2 fleet implies a generally successful, albeit sole-source, execution of these critical sustainment tasks over the years.

How does the $125 million cost compare to similar aircraft maintenance contracts?

Direct comparison of the $125 million cost for B-2 depot maintenance is challenging due to the unique nature of the B-2 bomber and its highly specialized requirements. Unlike more common aircraft, the B-2 is a strategic, low-observable platform with advanced composite materials and complex systems, demanding unique maintenance expertise and facilities. Comparable contracts would likely involve other high-value, low-production military aircraft requiring extensive depot-level support, such as other stealth platforms or advanced fighter jets. However, such contracts are often classified or awarded under similar sole-source arrangements, making public benchmarking difficult. The cost is also influenced by the contract duration (786 days in this case) and the specific scope of work, which can vary significantly. Without competitive bids, it's hard to definitively state if $125 million represents optimal value, but it reflects the high cost associated with sustaining such a technologically advanced and critical defense asset.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated costs due to the lack of competitive pressure. When a single contractor is the only option, there is less incentive to offer the most competitive pricing. This can lead to taxpayers bearing a higher cost than might be achieved in a competitive environment. Another significant risk is contractor dependency; the Air Force becomes reliant on Northrop Grumman for critical maintenance, potentially limiting flexibility and leverage in negotiations. Furthermore, without the validation of multiple bids, assessing the true market value and ensuring optimal resource allocation becomes more difficult. There's also a risk of complacency or reduced efficiency over time, as the contractor may face less pressure to innovate or streamline processes compared to a competitive scenario. Robust oversight and performance management are therefore critical to mitigate these risks.

How effective is the fixed-price contract type in controlling costs for this specific service?

The fixed-price contract type (Firm Fixed Price - FFP) is generally considered effective in controlling costs because it shifts the risk of cost overruns from the government to the contractor. Under an FFP agreement, the contractor agrees to perform a specific scope of work for a predetermined price. If the contractor's costs exceed this price, they absorb the loss. Conversely, if costs are lower than anticipated, the contractor realizes a higher profit. For depot maintenance, where the scope of work can be reasonably defined, FFP provides cost certainty for the government. However, the effectiveness in *minimizing* costs is significantly hampered when the contract is sole-source. While the price is fixed, the initial negotiation of that fixed price lacks the downward pressure that competition provides. Therefore, while FFP controls cost *variability*, it doesn't guarantee the lowest possible cost in a non-competitive scenario.

What are the historical spending patterns for B-2 depot maintenance?

Historical spending patterns for B-2 depot maintenance reveal a consistent and substantial investment required to sustain this unique strategic asset. As the sole manufacturer and maintainer, Northrop Grumman has been the recipient of significant funding over the life cycle of the B-2 program. Annual spending can fluctuate based on the specific maintenance cycles required, the complexity of the tasks, and any ongoing upgrades or modifications. While precise historical figures for every year are not publicly detailed, it's understood that depot maintenance for advanced aircraft like the B-2 represents a multi-million dollar annual expenditure. These costs are driven by the need for specialized labor, exotic materials, complex diagnostics, and extensive facility requirements. Over the decades, the total investment in keeping the B-2 fleet operationally ready has amounted to billions of dollars, reflecting the high cost of maintaining cutting-edge, low-observable technology.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

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: $280,089,757

Exercised Options: $280,089,757

Current Obligation: $125,137,982

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $102,467

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline