DoD's $47.3M B-2 Software Sustainment Contract Awarded to Northrop Grumman Under Sole Source Basis

Contract Overview

Contract Amount: $47,297,449 ($47.3M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2015-01-01

End Date: 2015-12-31

Contract Duration: 364 days

Daily Burn Rate: $129.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF CY15 PERFORMANCE-BASED LOGISTICS (PBL) B-2 CY15 SOFTWARE SUSTAINMENT (SWS).

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $47.3 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF CY15 PERFORMANCE-BASED LOGISTICS (PBL) B-2 CY15 SOFTWARE SUSTAINMENT (SWS). Key points: 1. The contract focuses on software sustainment for the B-2 bomber, a critical defense asset. 2. Awarded to Northrop Grumman, the sole incumbent contractor, raising questions about competition. 3. The $47.3M value for a single year of sustainment warrants scrutiny, especially given the lack of competition. 4. The sector is Aircraft Manufacturing, a high-value, specialized industry.

Value Assessment

Rating: questionable

The contract value of $47.3M for one year of sustainment for a critical platform like the B-2 is substantial. Without competitive bidding, it's difficult to benchmark against similar contracts or assess if this represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Northrop Grumman. This lack of competition limits price discovery and potentially leads to higher costs for taxpayers.

Taxpayer Impact: The absence of competition likely results in a higher cost to taxpayers than a competitively awarded contract would yield.

Public Impact

Taxpayers may be overpaying for software sustainment due to the lack of competitive bidding. The sole-source nature of the award raises concerns about contractor lock-in and potential future cost escalations. The B-2 bomber's operational readiness could be indirectly impacted if sustainment costs are not optimized. The Department of Defense's reliance on a single contractor for critical software sustainment poses a strategic risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Potential for overpayment

Positive Signals

Performance-based logistics approach (implied by contract type)
Sustainment of critical defense asset

Sector Analysis

The Aircraft Manufacturing sector is characterized by high R&D costs, long product lifecycles, and significant government contracts. Spending benchmarks are difficult to establish due to the specialized nature of defense platforms like the B-2.

Small Business Impact

This contract was awarded to Northrop Grumman Systems Corp, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data.

Oversight & Accountability

The sole-source nature of this award suggests limited oversight on price reasonableness. Further review by the agency's contracting officer and potentially the IG would be necessary to ensure accountability.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Lack of competition
Sole-source award
Potential for inflated pricing
Contractor lock-in
Limited transparency on price justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.3 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF CY15 PERFORMANCE-BASED LOGISTICS (PBL) B-2 CY15 SOFTWARE SUSTAINMENT (SWS).

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 $47.3 million.

What is the period of performance?

Start: 2015-01-01. End: 2015-12-31.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure price reasonableness?

The justification for a sole-source award typically stems from unique capabilities or proprietary technology held by the incumbent contractor. However, for software sustainment, alternative solutions or competitive approaches should be explored. Steps to ensure price reasonableness might include historical price analysis, comparison to similar commercial items, or independent cost estimates, though their effectiveness is diminished without true competition.

What is the long-term strategy for B-2 software sustainment to ensure future cost-effectiveness and mitigate risks associated with sole-source dependency?

The long-term strategy should involve exploring options for increasing competition, such as developing in-house capabilities, fostering a secondary market for sustainment, or breaking down the sustainment into smaller, more competitive packages. Mitigating sole-source dependency requires proactive planning, including thorough market research and early engagement with potential alternative providers to encourage market entry.

How does the annual cost of $47.3M for B-2 software sustainment compare to industry benchmarks for similar complex aircraft systems, and what is the projected cost trend?

Direct industry benchmarks for highly specialized, classified aircraft like the B-2 are difficult to ascertain publicly. However, annual sustainment costs for major defense platforms can range from 5-15% of the acquisition cost. Without competitive data, it's challenging to determine if $47.3M is reasonable or if it represents an escalating cost trend due to the lack of competitive pressure.

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: $47,297,449

Exercised Options: $47,297,449

Current Obligation: $47,297,449

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $80,077,166

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861614D6060

IDV Type: IDC

Timeline