DoD's $362.7M contract for Northrop Grumman's B-2 stealth systems engineering services awarded without competition

Contract Overview

Contract Amount: $39,457,238 ($39.5M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2002-01-24

End Date: 2009-12-31

Contract Duration: 2,898 days

Daily Burn Rate: $13.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200211!000379!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD1901 !20020124!20011218!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000003648600!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !336413!E! !5!B!S!C! ! !99990909!B! ! !N!Z!C!U!R!1!001!N!1G!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $39.5 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200211!000379!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD1901 !20020124!20011218!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS A… Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. Significant contract value for specialized systems engineering, indicating critical support for advanced aircraft. 3. Long performance period (2002-2009) suggests a sustained need for these services. 4. Contractor's extensive experience with the B-2 program likely influenced the sole-source decision. 5. Geographic concentration of the contractor in California may have implications for regional economic impact. 6. Lack of competition limits opportunities for other firms and potentially higher value for taxpayers.

Value Assessment

Rating: questionable

The contract's total value of $362.7 million over nearly eight years for systems engineering services is substantial. Without a competitive bidding process, it is difficult to benchmark the value for money. The cost-plus award fee (CPAF) contract type allows for cost reimbursement plus an award fee based on performance, which can incentivize good performance but also carries the risk of cost overruns if not managed tightly. Comparing this to similar sole-source systems engineering contracts for advanced defense platforms would be necessary for a more precise value assessment.

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. The data indicates that only one offer was solicited and received. This approach is typically justified when only one responsible source is available or when there is a compelling urgency. However, the lack of competition means that the government did not benefit from a range of proposals and pricing strategies that could have potentially led to a lower cost or better value.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, potentially resulting in higher costs for taxpayers compared to a fully competed contract.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives critical systems engineering support for the B-2 stealth bomber program. Services delivered include ongoing systems engineering, integration, and sustainment support essential for the operational readiness and modernization of the B-2 fleet. The geographic impact is concentrated around the contractor's facilities in Palmdale, California, and potentially at B-2 operating bases. Workforce implications include employment for highly skilled engineers and technical personnel at Northrop Grumman.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus award fee structure requires diligent oversight to manage costs and ensure fair award fees.
Long contract duration may indicate a lack of viable alternatives or a sustained, specialized need.

Positive Signals

Contractor is a major defense firm with established expertise in advanced aircraft programs like the B-2.
Systems engineering services are critical for maintaining the complex B-2 platform.
Award fee structure incentivizes performance, provided oversight is robust.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically supporting advanced military aircraft. The market for specialized systems engineering services for unique platforms like the B-2 is highly concentrated among a few large defense contractors. Spending benchmarks for similar sole-source sustainment and engineering contracts for legacy advanced aircraft programs can vary widely, but contracts in the hundreds of millions of dollars are not uncommon for such critical, long-term support.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Northrop Grumman actively engages small businesses for subcontracting opportunities related to these systems engineering services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The cost-plus award fee structure necessitates robust performance monitoring and evaluation to determine the appropriate award fee. Transparency is generally limited for sole-source defense contracts, though contract modifications and performance reports would be internal documents. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

B-2 Bomber Program Support
Advanced Aircraft Systems Engineering
Defense Contractor Sustainment Services
Air Force Major Weapon System Support

Risk Flags

Sole-source award
Lack of competition
Cost-plus contract type
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.5 million to NORTHROP GRUMMAN SYSTEMS CORP. 200211!000379!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !N!SD1901 !20020124!20011218!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000003648600!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !336413!E! !5!B!S!C! ! !99990909!B

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 $39.5 million.

What is the period of performance?

Start: 2002-01-24. End: 2009-12-31.

What is Northrop Grumman's track record with the B-2 program prior to and during this contract?

Northrop Grumman has been the prime contractor for the B-2 Spirit program since its inception, responsible for its design, development, and sustainment. Their long-standing relationship with the B-2 program indicates a deep institutional knowledge and established infrastructure for supporting the aircraft. Prior to and during the period of this contract (2002-2009), Northrop Grumman would have been actively involved in managing the complex systems, software, and hardware integrations required to keep the B-2 operational and technologically relevant. Their performance would be evaluated through various metrics, including mission capable rates, system upgrades, and adherence to program milestones, which would inform the award fee component of this contract.

How does the $362.7 million contract value compare to other systems engineering contracts for similar advanced platforms?

Direct comparisons are challenging due to the unique nature of the B-2 and the proprietary data surrounding its sustainment. However, systems engineering and sustainment contracts for other high-value, low-density platforms like advanced fighter jets or bombers can also run into hundreds of millions of dollars over several years. The key differentiator here is the sole-source nature. In a competitive environment, similar services might be procured at a lower price point. The value of this contract should be assessed against the criticality of the B-2, the specialized expertise required, and the lack of viable alternatives, rather than a direct dollar-for-dollar comparison with more common platforms or competitively bid contracts.

What are the primary risks associated with a sole-source contract of this magnitude and duration?

The primary risk is the potential for inflated costs due to the absence of competitive pressure, leading to reduced value for taxpayer money. Without competing bids, the government may overpay for the services rendered. Another risk is contractor complacency; the lack of competition might reduce the incentive for the contractor to innovate or operate with maximum efficiency. Furthermore, the government's negotiating position is weakened. Ensuring robust oversight, clear performance metrics, and fair negotiation of the award fee structure becomes paramount to mitigate these risks and ensure the government receives adequate value.

How effective are Cost Plus Award Fee (CPAF) contracts in ensuring program effectiveness for specialized defense systems?

CPAF contracts can be effective for specialized defense systems where performance outcomes are difficult to define precisely upfront or where innovation is crucial. The cost-reimbursement aspect covers necessary expenses, while the award fee incentivizes the contractor to exceed minimum performance standards. For the B-2's systems engineering, this structure allows flexibility to address evolving technical challenges. However, effectiveness hinges on the government's ability to establish clear, measurable performance criteria and diligently administer the award fee determination process. Weak oversight can lead to excessive costs without commensurate performance gains, undermining both effectiveness and value.

What are the historical spending patterns for B-2 systems engineering and sustainment, and how does this contract fit?

Historical spending on the B-2 program, including systems engineering and sustainment, has been substantial throughout its lifecycle, reflecting the aircraft's complexity and strategic importance. This $362.7 million contract represents a significant portion of the sustainment and modernization funding during its performance period (2002-2009). It fits into a pattern of ongoing, high-value support contracts awarded to the prime contractor to maintain the fleet's readiness and address technological obsolescence. Such contracts are typical for major defense platforms where continuous engineering support is non-negotiable for operational viability.

What are the implications of the contract being awarded to Northrop Grumman Systems Corporation, a major defense contractor?

Awarding this contract to Northrop Grumman Systems Corporation, a dominant player in the aerospace and defense industry and the original B-2 manufacturer, signifies reliance on established expertise and infrastructure. This reduces the risk of technical failure or program delays associated with a less experienced contractor. However, it also concentrates significant defense spending within a single large entity, potentially limiting opportunities for smaller, innovative firms. The government's leverage in negotiations may be reduced due to the contractor's critical role and deep program knowledge, underscoring the need for stringent oversight and performance management.

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: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Titan II Inc. (UEI: 016435559)

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline