DoD's $1.1B B-2 PDM Contract Awarded to Northrop Grumman Raises Concerns Over Competition

Contract Overview

Contract Amount: $109,794,275 ($109.8M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2016-01-01

End Date: 2019-06-30

Contract Duration: 1,276 days

Daily Burn Rate: $86.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF CY 16 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 $109.8 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: IGF::OT::IGF CY 16 B-2 PROGRAMMED DEPOT MAINTENANCE (PDM) Key points: 1. Significant spending on a critical defense asset, the B-2 bomber. 2. Sole-source award to Northrop Grumman limits competitive pricing. 3. Potential for overpayment due to lack of competition. 4. High value contract within the aerospace and defense sector.

Value Assessment

Rating: questionable

The contract value of $1.1 billion for programmed depot maintenance on the B-2 bomber is substantial. Without competitive bidding, it is difficult to assess if this price represents fair value compared to potential market rates for similar complex aircraft maintenance.

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 may lead to higher costs for the government.

Taxpayer Impact: The absence of competition on this large contract could result in taxpayers bearing a higher cost than if the work had been competitively bid.

Public Impact

Impacts the operational readiness and maintenance costs of a key strategic asset. Raises questions about the cost-effectiveness of sole-source defense contracts. Highlights the reliance on incumbent contractors for specialized military equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Potential for cost overruns

Positive Signals

Essential maintenance for a critical defense asset
Contract awarded to a known, experienced provider

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and maintenance. Spending benchmarks for depot maintenance on advanced military aircraft are often high, but competitive factors significantly influence cost efficiency.

Small Business Impact

The data indicates this contract was awarded to Northrop Grumman Systems Corp, a large prime contractor. There is no indication of small business participation in this specific award, which is common for highly specialized sole-source defense contracts.

Oversight & Accountability

Oversight is crucial for sole-source contracts to ensure fair pricing and prevent waste. The Department of Defense's contracting process should include mechanisms to justify the lack of competition and validate cost reasonableness.

Related Government Programs

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

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
High contract value
Limited transparency on cost justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $109.8 million to NORTHROP GRUMMAN SYSTEMS CORP. IGF::OT::IGF CY 16 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 $109.8 million.

What is the period of performance?

Start: 2016-01-01. End: 2019-06-30.

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

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or the need for compatibility with existing systems. The Department of Defense should have conducted a thorough review, potentially including cost realism analyses and comparisons to historical data, to validate the pricing, even without direct competition.

What are the long-term cost implications of relying on sole-source contracts for critical aircraft maintenance?

Long-term reliance on sole-source contracts can lead to escalating costs as the incumbent contractor faces no competitive pressure to innovate or reduce prices. This can result in a sustained higher expenditure for taxpayers and potentially stifle the development of alternative maintenance solutions or providers.

How does the lack of competition on this contract affect the overall budget for B-2 bomber sustainment?

The lack of competition on this $1.1 billion contract directly impacts the B-2 bomber sustainment budget by potentially inflating the cost of programmed depot maintenance. Without competitive pressure, the government may be paying a premium, diverting funds that could be used for other defense priorities or operational needs.

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

Pricing Type: FIRM FIXED PRICE (J)

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: $208,471,738

Exercised Options: $208,471,738

Current Obligation: $109,794,275

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $4,366,790

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